Your Amazon Ad Strategy Is Critical To Your ACoS. Here Are 3 Excellent Ways to Regain Control of Your ACoS When the Time Comes

Selling on Amazon was a lot like a drag race in the early, wild days of eCommerce. Find a product, invest in a lot of positive reviews, and then accelerate.

It now resembles Formula One. The stakes in terms of money have greatly increased. Millions of dollars are at risk, and controversy looms around every corner, as opposed to a small group of under-the-shade mechanics attempting to make their minimalistic cars move quicker in a straight line.

Amazon sellers are either downshifting, applying the brakes, or putting great effort to avoid running out of fuel as a result of the many turns and twists in the route.

Finding a technique to closely monitor your Amazon PPC advertising campaign is now more crucial than ever given the recent changes to Amazon’s ecosystem, in addition to the supply chain crisis (AND the pandemic).
Here’s when your Advertising Cost of Sales (or ACoS) comes into play.

Not Everything Depends on a Lower ACoS

Take a quick look at the first page of Google’s search results for “Amazon ACoS” to discover how many posts are concerned with LOWERING your ACoS.

Similar to dieting, maybe. You only need to look online to find plenty of information on that topic. But is less (weight or ACoS) always preferable? For example, do you wish to be in shape before cycling the Tour de France or traveling the Arctic on snowshoes? Not at all, no.

Similar to the previous two activities, an Amazon product launch can have a prolonged and occasionally difficult course. Building your brand, the launch period, and your Amazon PPC ad strategy are all important considerations.

You won’t get very far if you try to accomplish any one of those three goals while concentrating ONLY on reducing your Amazon ACoS. It’s like trying to cross the Arctic after a week of strict dieting.

How to Calculate Your ACoS

Let’s start by discussing how your advertising cost of sales percentage is calculated.

The ACoS, which measures the overall effectiveness of your advertising campaign, is the proportion of ad spend to ad revenue. Using the following formula, you can determine your advertising cost per sale:

Your ACoS would be 30%, for example, if you made $100 in sales and spent $30 on Amazon PPC advertising to make it happen.

 

Why It’s Important to Know Your Break-Even ACoS

Calculating break-even ACoS and target ACoS, two crucial ACoS-based metrics, is the first stage in developing an Amazon ACoS strategy.

The point at which your advertising expense equals your profit margin is known as break-even ACoS. (calculated after all fees and costs involved with selling on Amazon are subtracted).

For example, your profit margin is what is left after adding your product expenses, shipping costs, Amazon costs, etc. Your break-even ACoS is 30%, which is also your profit margin.

Subtract your goal profit margin from the break-even ACoS after performing the necessary calculations to arrive at that figure. The only thing left at that point is your target ACoS. The target ACoS is 18% if you’ve decided that you have a 30% profit margin to work with and would like to achieve a 12% target profit margin.

Your campaign goals will determine the optimal ACoS.

Your Amazon marketing campaign is almost entirely responsible for your ACoS. A higher ACoS ad campaign may be more effective at directing traffic further down the marketing funnel.

Your objective when launching a new product is to attract as many eyes as possible to it. You also want this to happen as soon as possible. Because of this, it could be a good idea to prioritize sales velocity over profitability in your Amazon PPC campaign.

This results in higher ACoS and increased ad spend. However, those more favorable impressions will increase your brand awareness, which is essential for making a reputation for yourself in Amazon’s crowded marketplace.
Here are just a few situations where Amazon sellers may expect to have a higher ACoS:
  • When a product is launched
  • In an effort to raise brand awareness
  • When selling off stock
  • When trying to control a niche

Knowing your ACoS is a wonderful approach to assess the overall health of your Amazon listing. This is due to the fact that a (relatively) low ACoS is a reliable sign of your Amazon product’s overall profitability.

The most crucial thing is to make sure you KNOW HOW to decrease your ACoS.

Here are three strategies you may use to reduce your ACoS and get the most of your Amazon advertising budget when the time comes.

These Three Steps Will Reduce Your ACoS

1. Get Rid of the Wrong Keywords

You undoubtedly spend a lot of time as an Amazon seller trying to find the best keywords. However, understanding the incorrect terms is also crucial.

Your search phrase is probably using up a lot more of your ad group budget than it needs to if it is underperforming. Stop the PPC campaigns it’s connected to if that’s the case.

Using negative keywords is another approach to lower your Amazon PPC management costs. 
Negative keywords, when used effectively, can decrease the likelihood that your ads will be seen by unqualified customers and boost conversions.
2. Completely optimize your product listing on Amazon

I hardly ever look at the second page of Google search results. Customers on Amazon aren’t all that different. You must structure your product listing as an Amazon seller in order to appear as high as possible in the search results.

Choose the most appropriate, popular keywords connected to your listing to ensure that it is fully optimized for Amazon. Once you’ve done that, it may seem unfair because Amazon will bring you customers with no further cost for advertising.

Researching keywords comes first. You can discover the relevant keyword (or groups of keywords) that Amazon users are using to find a product similar to yours by using a tool like Jungle Scout’s Keyword Scout or Helium 10’s Magnet.

Then, it’s all about optimizing your Amazon listing. Make sure your product description, title, bullet points, and back-end keywords are all optimized for the search terms (keywords) you’re targeting.

3. Work with an Amazon Agency
Contact an established Amazon agency like KTG Solutions if you want to increase sales, raise brand recognition, and truly dominate your Amazon category.
Hiring an Amazon agency becomes a turning point for many online merchants. A full-service Amazon agency’s collaborative synergy can assist you in growing your firm significantly. Spending more time growing your Amazon business, working on your principal employment, or, better yet, spending time with your family, may be necessary.