Powerful Amazon ACoS Techniques

Launch Your Ecommerce Business Using These Powerful Amazon ACoS Techniques

A Great ACoS Is the Result of Some Mathematics and Considerable Strategy. Here’s How to Ensure Your Amazon Numbers Add Up to Huge Success!


There are two main objectives that drive most Amazon sellers, and they are profit maximization and expanding one’s online storefront. And the number of people selling things on Amazon is rising. On average, Apple News stated, Amazon added 3,700 new vendors every day in 2021.

That’s why PPC advertising on Amazon has gone from helping your goods stand out to seeming more like a cover charge in the world of e-commerce. Having an Amazon PPC campaign as part of your overall plan is crucial if you want to start your own Amazon business.

Blending Amazon sales with Amazon pay-per-click advertising would produce the one e-commerce metric by which virtually every Amazon seller evaluates their own performance.

Advertising Cost of Sales (ACoS)

There are many solid reasons why Amazon sellers should keep an eye on their advertising cost of sales (ACoS). The advertising cost per sale (ACoS) is the typical proportion of sales that goes into advertising.

Simply multiply the ratio of advertising sales to total advertising expenditures by 100 to get the percentage. (By multiplying by 100, the percentage is made more legible; 30% is written as.30 instead of.30)

With Amazon success so intimately related to ad revenue generated by your Amazon ad campaigns, no other single measure will provide you with the same picture of your company’s health and scalability.

What About Amazon ROAS?

RoAS is an abbreviation for Return on Advertising Spend. It’s a metric that calculates how much money you’ve made in sales for every dollar you’ve spent on advertising. ACoS shows how much you spend on your Amazon marketing campaign to earn a dollar from attributed sales. ROAS is the polar opposite of that coin. It shows you how much money you make for every dollar spent on Amazon advertising.
[IMAGE]

An Examination of Amazon’s ACoS
Selling on Amazon was a lot like competing in a drag race in the wild west of e-commerce. Get your hands on a product, shell out some cash to buy some glowing reviews, and hit the gas.

At this point, the closest analogy I can make is to Formula One racing. We’re talking about huge sums of money now. There are millions of dollars at stake and controversy at every turn, as opposed to a small group of technicians working under an umbrella to make their bare-bones cars move quicker in a straight line. There are a lot of corners, so Amazon merchants are either slowing down, putting their foot on the brakes, or making sure they don’t run out of gas.

Many vendors in the e-commerce industry recognize that unexpected events, such as Amazon’s ongoing adjustments and the supply chain issue, are an inevitable aspect of doing business online. Maintaining stock (the lifeblood of your online business) takes round-the-clock attention.

The ability to closely monitor your Amazon ads is increasingly crucial. The ACoS approach can help with this.

Connecting the Dots with Break-Even and Target ACoS
Two crucial ACoS-based metrics, break-even ACoS and target ACoS, must be calculated as the first stage in developing an Amazon ACoS strategy: break-even ACoS and target ACoS.

Break-even ACoS is the point at which advertising expenses equal profit margins (calculated after all fees and costs involved with selling on Amazon are subtracted).

After adding product expenses, shipping charges, Amazon fees, etc., the remaining amount is your profit margin. If your profit margin is 30%, your break-even ACoS is similarly 30%.

After doing the necessary calculations and determining the desired profit margin, deduct this figure from the break-even ACoS. At this time, your objective ACoS remains. If we apply the preceding 30% profit margin and aim for a 12% profit margin, the resulting target ACoS is 18%.

Not All ACoS is Created Equal

When Amazon sellers forget that Amazon advertising conversion rates are contingent on a variety of factors, they run into issues with Amazon ACoS.

It is essential to remember:

The ideal ACoS is tailored to an Amazon seller’s marketing and commercial objectives.

A high ACoS makes sense if sellers are concentrating on volume and sales inertia to achieve rapid expansion.

A reduced ACoS is suitable for Amazon sellers with a limited budget who must meet revenue goals.

When releasing a new product, it is often advisable to (temporarily) disregard the total profitability of the advertising effort and instead focus on volume and speed. During an Amazon product launch, the objective is to attract as much attention as possible to your product.

And you’re attempting to expedite this process. This contributes to an increase in ACoS.

There are numerous scenarios in which Amazon sellers may anticipate a higher ACoS; the following are a few:

During a product launch

While attempting to improve brand recognition

When liquidating inventory

While expanding brand recognition

When seeking to dominate a specialized market

[IMAGE]
Lowering Your ACoS

When Amazon sellers interact with one another, ninety percent of the conversation focuses on REDUCING their ACoS.

This is easily understood. If the Amazon product is popular and selling, every dollar saved on advertising is deposited directly into the profit column. This is money Amazon merchants can spend to purchase additional inventory, introduce a new product, or save for a Tesla Cybertruck.

Successful Amazon sellers alter their pay-per-click (PPC) strategy in response to their competition, changes in the marketplace, and their own internal sales and inventory KPIs.

Success on Amazon is a changing target that demands knowledge and focus.

[IMAGE]

TACoS are the Amazon Cool Kids’ Metric of Choice

Amazon ACoS only considers the sales that sellers make through ads. Because of that, experienced Amazon sellers often add a ‘T’ to their ACoS.

TACoS (total advertising cost of sale) includes total sales, rather than just Amazon sellers’ sales from the ads themselves.

Here is the basic formula for calculating TACoS:

TACoS = (Advertising Spend/Total Revenue) x 100

According to the BIGGEST sellers on Amazon’s platform, TACoS are the most important metric.

TACoS gives you a holistic view of ALL your sales in relation to advertising spend. By taking into account your organic sales (your sales NOT made through ads) TACoS will show you how your PPC ad spend aligns with your overall business plan.

ACoS Best Practices

1. Eliminate the wrong keywords

Amazon sellers spend a great deal of time attempting to uncover the correct keywords, but it’s equally crucial to understand the WRONG keywords.

Consider the expensive keywords that are eating into your budget. Stop the PPC campaigns they’re affiliated with if all they’re doing is costing you money.

To keep your ACoS low, you will need to utilize negative keywords. Negative keywords can help you save money and enhance conversions by limiting the possibility that your advertising will be displayed to unqualified shoppers.

2. Optimize your page content

Shoppers at Amazon rarely look beyond the first page of search results. If you’re an Amazon seller, you need to give serious thought to how you can get your goods to the top of search results pages.

Relevance is determined in part by the details you provide about your products in your Amazon listing, so it’s important to get those right.

Find the most popular search terms associated with your listing and use those as a starting point. You may get customers from Amazon without spending any money on ads if you utilize the appropriate keywords.

Finding appropriate keywords is the first step. To begin, utilize a tool like Helium 10’s Magnet or Jungle Scout’s Keyword Scout to research the terms people enter into Amazon to find products like yours.

Then you should make sure that your title, bullet points, product description, and back-end keywords are all optimized for the search terms (keywords) you’re targeting.

3. Use an Amazon Agency

Amazon Sponsored Ads are crucial if you want to improve sales, brand recognition, and ad revenue.

Sponsored product campaigns are the starting point for the vast majority of Amazon sellers. Use of an Amazon PPC Agency is a terrific method to get things rolling.

For many vendors on Amazon, the situation is critical at the moment. Working with a group of Amazon insiders and specialists can be invaluable. Which could mean devoting more time to your primary occupation, or even better, to your loved ones. On the other hand, it could mean having the resources to expand your Amazon business more quickly.

Whatever the case may be, consider these three advantages of contacting the experts at KTG Management.

Your PPC campaigns will be managed by Amazon advertising specialists, not A.I.

It all starts with optimizing your PPC campaigns to reduce wasted ad spend so your budget can go farther. That’s more money you can use to reach new audiences, drive sales, and ultimately, help you dominate your category on Amazon.

KTG wrote the playbook on PPC optimization

Our optimization process, which has been adopted by sellers and agencies around the world, was originally developed by KTG Co-Founder and globally-recognized PPC expert, Brian R. Johnson. It’s a replicable, results-driven process that allows us to achieve better results (and an average 105% year-over-year PPC profitability increase) for our KTG Partners time and time again.

At KTG, you’re a partner not a client.

We’re completely invested in our Partners’ success. That’s why open and direct communication through regular meetings and simple, transparent reporting is a vital part of our business ethos. By getting to truly know our partners and their vision, we are able to customize our strategy to meet (and exceed!) their unique business goals.



How KTG Management Can Help

KTG Management is a “full service” marketing agency for Amazon sellers, and our team consists of former Amazonians, multi-million dollar sellers, and award-winning experts. When you consider the ways in which KTG Management is able to help you grow your Amazon business, you’ll know why.

• Strategic Growth Planning
• Listing Copywriting Optimization
• Listing Photography
• Advertising Management
• Amazon Posts
• Full Service Management

Are you looking to expand your income stream, or transition away from your primary career? It’s a new year and with the growth of eCommerce, now is a great time to reap some benefits yourself!

Ready to Grow Your Amazon Business?

[ APPLY NOW BUTTON ]