Logging into the Amazon Advertising console for the first time can be daunting. You’ll see customizable data visualization and plenty of abbreviated metrics. To get to the meat of how your Amazon Advertising strategy is going, look for the metrics that really matter.
Impressions, Clicks, and Clickthrough Rate
At a very high level, impressions and clicks tell you how many people are seeing your ads on Amazon, and how many people are enticed enough to click on your ad. The fluctuations in impressions (how many views your ads receive while the ad is delivering) can give you an idea of changes in traffic on the platform, as well as whether or not your bids and budgets on your campaigns are enough to reach the customers you need.
When someone clicks on your ad, you can safely infer a few things. A click means that the shopper found your advertisement interesting or relevant, and that they may be interested in learning more about the advertised product.
The most important takeaway from impressions and clicks is the combined metric of the clickthrough rate or CTR. This is the percentage of clicks that were earned from impressions. If your clickthrough rate is going up, it means that your ad is reaching the appropriate audiences, that your ad is appealing, and that shoppers are more likely to consider the products in your ads.
However, if your CTR is going down, it’s time to ask questions about the ads, ad targets, and the product detail page itself. People are seeing the ad, but they’re not clicking. This could be because the ads are showing up for irrelevant searches, or because the ad is not visually appealing or does not contain the information about the product the shopper is looking for. Analyzing this can help you refine your ads by determining which negative keywords to add to your campaign to keep the ad showing in more relevant searches. A low CTR with impressions still going is also a key indicator that your ads may be dead in the water and in need of revisions.
Cost-per-Click and Top of Search Impression Share
Your CPC (cost per click) and top of search IS (impression share) are great indicators in Amazon PPC that can help you determine how competitive your market is, and what your impression share is in your specific vertical.
Rising CPCs typically indicate that other advertisers are competing for the same spots to get their products in front of shoppers. Increased competition usually results in higher bids in order to reach the coveted top spots in shopper searches. Higher CPCs can also indicate that new competition has entered Amazon and is using PPC to front-load their advertising efforts to get their new, lower-rated products showing up at the top of search results.
It’s important to evaluate how your competitors and conditions within your vertical are impacting your CPC, and overall ad spend. It could also be an indicator that your own bids are simply too high, and need to be brought down in order to not unintentionally inflate the bids on your desired targets.
The top of search IS is viewable per ad campaign, and per target. The higher the percentage is, the more your ads are showing up at the top of the Amazon search results, beating your competition for prime real estate. Watching the fluctuation trends for your top of search IS serves a similar purpose to watching the fluctuations in your CPC, enabling you to check the current market conditions in your category.
RoAS and ACoS
Your return on ad spend (RoAS) and your advertising cost of sales (ACoS) are mathematical inverses of each other. The RoAS is viewed as a dollar amount, while the ACoS is viewed as a percentage. The aim of both is to help gauge the efficacy of your ad spend.
RoAS represents the ad revenue you receive per dollar spent on ad spend. ACoS represents how much you spend on advertising per dollar of ad revenue you make as a percentage. These are essentially the same KPI regarding the efficacy of your ad spend, and focusing on RoAS or ACoS comes down to the preference of the business and key decision makers.
The higher your RoAS is, the more ad revenue you are making per ad dollar spent. The lower your ACoS is, the less you have to spend on ads to generate ad revenue. It makes sense to look at these metrics for planning budgets and gauging ad performance, however, this gives only a small part of the overall picture. It’s more helpful to look into your total ACoS, or TACoS, which represents how much you spend on advertising per dollar of total revenue — not just ad revenue — as a percentage.
Amazon’s ad attribution only goes back about 14 to 15 days since the last click, so there could be sales in your total sales that came from ads but were not attributed in the ad console. You may also want to give less focus on your RoAS or ACoS based on your business goals. If you’re a new brand or seller on Amazon, or you have new products, it costs more to gain the best placements and build brand awareness on the platform.
Other Important Takeaways
These metrics, together, are key parts of the larger picture of advertising and selling on Amazon. There are other key insights you can gain from paying attention to these. For example, if you have high impressions, clicks, and a healthy CTR, but low sales, there may be an issue with your product pricing, or perhaps the content of the product page itself is turning shoppers away.
Now that you have the key metrics to pay attention to in Amazon Advertising, don’t forget to look at the bigger picture, and don’t focus on just one particular metric. Success on Amazon means not losing the forest through the trees!
