Amazon PPC, also known as pay-per-click is a collection of products for advertising on Amazon. The structure of the PPC campaign is so that the advertiser will only be paid when a potential customer does something they want to do on advertising collateral.
It’s a means for sellers to boost their sales through the huge and reliable retailer Amazon. To ensure that sales growth and generate more money, it is necessary to take into consideration what is known as the Advertising Cost of Sales (ACoS).
This is a crucial decision-making KPI. It permits advertisers to monitor the average cost of transporting a product.
Within Amazon PPC, ACoS is vital, which is the reason Amazon sellers need to know the importance of ACoS and how they can improve it. In Premiere innovative, we use an extensive method of Amazon Advertising that is uniquely efficient.
Amazon ACoS: Essential Points To Know
The first question is What exactly is ACoS mean? ACoS abbreviated as advertising cost of Sales is the percent of what you spend on advertising for every dollar you earn.
In other words what percentage of your revenue total is advertising accounted for? Calculate ACoS by dividing Total Ad Cost by total sales.
How Do You Know If You Have A Good Or Bad Acos?
ACoS is very important. It determines the success of the Amazon PPC campaigns.
Everybody wants to have the best one but how do you determine whether your ACoS is successful or not? To determine if it’s good or not it is necessary to determine your break-even and your target ACoS.
This will allow you to determine the extent to which your funds are effectively allocated.
Calculating Break-Even ACoS
Break-even ACoS is when your advertising costs are equal to your margin of profit. In simple terms, it is not a gain or loss.
You determine the break-even ACoS by the Pre-Ad-Profit per sale and then divide it by the cost at which you’re offering your product on the market.
So, what do you do? You can utilize the break-even ACoS percentage to assess your financial performance.
If your typical ACoS exceeds that break-even ACoS the company isn’t profitable. If your ACoS is lower than break-even ACoS the company is profit-making.
Although it might sound difficult we assure you that it’s easy once you get started adding your sales numbers. It is crucial to determine your break-even ACoS as well as your Target ACoS.
Make Sure You Hit Your Target ACoS
If you’d like your company to earn significant profits, you need to calculate the Target ACoS (TACoS). The Target ACoS refers to the figure you’re aiming to reach because the remainder of the cash you don’t spend on advertising is your revenue.
It is possible to determine your TACoS by looking at what your breaking-even-point ACoS is. When you have figured out your break-even ACoS, then you can decide on what you wish to earn and then create your TACoS. Then, you can decide on the best amount to offer.
By multiplying your average purchase value times the conversion rate, and then dividing the result by the number of times it is divided over your Target ACoS, can then decide what you are expected to pay each click.
There are many Amazon PPC tools on the market that can help you reach your desired ACoS. I recommend the SellerApp Amazon PPC audit tool to examine keyword, campaign matching type, match type, as well as sales data to give you a complete PPC score.
How To Access Your Amazon Acos
After you’ve determined your break-even ACoS as much being able to determine you have determined your break-even ACoS as well as Target ACoS, it’s time to utilize this information to determine the ideal setting for your CPC.
There are a variety of options you can choose from that’s why we have created this breakdown:
1. Average Acos: Your Ideal Benchmark
You can study the average Amazon PPC’s ACoS for each user/day. This can be a point to reference for your business and will be right in between an ACoS that is low and high.
2. Witness High Visibility With High ACoS
Many Amazon sellers are adamant about an increased ACoS because it boosts their visibility in the marketplace.
Even though it will need more upfront capital but it will enable your company to stand out in the market and will result in huge profits over the long term.
The most successful sellers prefer to utilize various TACoSs for different products to enhance their exposure.
3. Earn High Profitability With Low ACoS
For the majority of Amazon sellers, and ACoS of less than 1% is what they want to achieve as it will ensure that you make the highest profit.
An extremely low ACoS is beneficial for a business that does not need large visibility because it already dominates its market.
Recommended guide: Amazon reviews guide.
