Advertising on Amazon is a great way, if not the best approach to putting your products out there to drive up sales and increase your profit. It is also used to gain exposure, to increase brand popularity and impression of what your product is about and what it is for. 

Amazon customers have strong purchasing intent, with this in mind, it is very important to create campaigns that will purposely place your products in the search results that fits exactly what the customer is looking for.

Amazon uses several metrics to help sellers have an insight with regard to the effectiveness of their marketing campaigns. By carefully reviewing these metrics, sellers will have a strong idea of what is working and what isn’t.

ROAS

ROAS or Return on Ad Spend is one important metric that Amazon uses to determine the performance of sponsored advertising campaigns. It is how much you spend on advertising per $1 of revenue you make.

Here is a simple way on how to calculate your ROAS:

                     Ad Revenue 

ROAS =        —————–      

                         Ad Spends

Generally, having a high ROAS is ideal. But there are some instances where having a high ROAS is justifiable. 

Here are some of the cases:

1. You are just new to the market and you want your products to gain traction – at this point, your main focus is for your products to gain visibility and to appear in search results along with the most popular and frequently searched items.

1. The first 2 weeks of your campaign start date – as a rule of thumb, it takes at least ten days to get a bigger picture of how well your campaign is doing.

1. The last 2 days of accrued data is not highly accurate – When reviewing your sales report, the most recent two days are not yet set in stone and may change as more data is being collected. 

1. Clearing out old inventory – to save cost on long term storage fees (fba), shelf life of items,new inventory arriving

Ultimately, your goal as a seller is to lower your ACoS and yield higher ROAS (Return on Ad Spend). ACoS measures the ratio of ad spend to your total ad revenue, and the ROAS reflects the ratio of ad revenue to ad spend.

ROAS gives you a specific idea of how much money you are getting in return for every dollar you spend on advertising. 

Here are 5 useful tips on how to lower your ACoS

1.REVIEW YOUR CAMPAIGN REPORTS AND UPDATE AUTOMATIC TARGETING CAMPAIGNS REGULARLY

Let your campaign run for a couple weeks then, generate and download the Search Terms Report under Campaign Manager in Seller Central.

Filter and review the Search Terms that are generating low ACoS, make sure that these are relevant and up to date. Remove keywords that are not making impressions. It is better to focus on a small set of search terms, that way, you can closely follow their performance and see if they are still relevant as time passes.

REMEMBER: Search terms change according to a lot of factors like the changing season and are highly influenced by market trends.

2. KEYWORD RELEVANCY

It is more important to focus on the right keywords. Make sure your keywords are specific to your target clients; otherwise, they will attract people who aren’t interested in your items, which could potentially increase your advertising cost without generating sales.

Pause keywords that may be relevant but are above your budget, for example ( It’s March and your keyword is “Halloween toy”). You may resume using these keywords at a later time, great timing is important.

3. ANALYZE YOUR BUDGET AND SET THE RIGHT BID AMOUNT

Before launching a campaign, it is crucial to determine your goals and how much you are willing to spend to attain these. Knowing your goals will help you decide on the right strategy, allocate the exact amount of money to spend on advertising and focus on the metrics that will clearly define if the campaign is going exactly to the direction where you want it to be.

It is better to be precise than do a rough estimate on your budget. Here are some important factors to think about and calculate before setting your bid amount:

• Decide on your Total Profit Margin.

• Compute your Breakeven ACoS

• Know your Target ACoS

Generally, to get the best results, your bid should not be too low or too high, a low bid leads to fewer impressions and as a result, fewer clicks and sales. It should be well under your range and should depend on the product that you are advertising.

4. PRIORITIZE

Evaluating the product is also a cost effective way to lower ACoS. Know your product and the target customers that you want to get engaged.

ACoS depends on the niche, competition, ad type and a lot of other factors. What we consider a breakeven ACoS may be too low in some categories. Again, extensive market research is the key.

There are products that do not need a lot of exposure, yet they bring in a steady stream of sales. The bigger and greater the competition, the more you will have to pay for your bid to compete.

5. OPTIMIZE

Make sure that your product listing is well optimized. Picture yourself as a potential customer and check to see if your product’s details, images or title give you the information that you need.

Let’s start with the TITLE

A lot of times we see titles on Amazon that look like a bunch of words put together. Maybe the seller is trying to cram as many high ranking search terms to the title but this can potentially result in confusion.

A well written interfluous title will give a potential customer an idea of the brand, what the product is, what it is for and some other important details (i.e. dimensions, color) at a glance.

IMAGES

High quality images that clearly show great details can enhance your potential buyer’s interest.  ********* 

A+ Content also sets the tone and focuses on the emotion that you want to convey. It also draws attention to the key features and benefits in stronger fonts and images that would otherwise be missed if the potential customer is just browsing at the product description.

BULLETS

Bullet points that are concise while highlighting the main features and the benefits of using the product is a simple yet powerful way to convince your potential buyer to click on the Buy Now button.

SEARCH TERMS

Search terms are words that you were not able to utilize on your title or bullet points but are highly relevant nonetheless.