ACoS stands for the average cost of sale and it can be viewed in Seller Central in the search terms report. It will help you to identify how much money you are making compared to how much you spend for your PPC campaigns.
It is a good indication of your PPC campaign performance since a low ACoS percentage often identifies that you are spending less and still getting sales. However, a low ACoS may not always be your goal so it is essential to know what your business targets are.
What should your ACoS be?
Depending on your business goals you will want to consider different ACoS targets, low isn’t always better.
- Average: Most Amazon sellers will aim for an average ACoS of around 30-35%. This percentage indicates you are making more money than you are spending on your ads which is a good benchmark. However, it means that there is not a vast amount of profit, it is just average.
- Low: This is the more profitable approach. Usually, the percentage ACoS target would be under 25%. A lower ACoS percentage correlates to a higher amount of profit since you would be paying less for your clicks. The approach is best utilized when the seller is confident that their product is in high demand. These can commonly be seen with seasonal products during peak purchasing periods.
- High: An ACoS above 40% would typically be feared and steered away from. But, with the correct tactics a higher ACoS can be a great idea if you have an awareness target. For example, when you have a new product launch, you have a limitation on the usefulness of the resources at your disposal.
A low ACoS for awareness targets would have smaller success than long-running campaigns since there is not as much product data. Having a higher ACoS will help you compete with other products top of the fold so you can gain more reviews and produce a flywheel effect to increase your organic search engine status.
Lower ACoS campaign recommendations
Keyword Optimization
It is very important to regularly optimize your keywords. The amazon selling climate is continuously changing so you need to be aware of your audience’s buying patterns. Ensuring that you are using the most relevant and effective keywords will help streamline your selling process by showing your ads to suitable audiences. This will lower your ACoS by increasing your conversion rates.
Negative keywords
Another way you can use keyword optimization to lower your ACoS is by using a negative keyword strategy. Seller Central allows you to add negative keywords to your campaign, which identifies terms that you want to remove from your ad views. This strategy is very helpful as it removes disinterested customers and prevents overspending on CPC. However, it is often most useful when you have already established your campaign and have enough keyword information. The greater amount of information available will allow for a more logical judgment when deciding if you want to negate a term. Usually, you would negate the terms that are receiving a high number of clicks with very few conversions. The more competition a keyword has then the more you have to fight in the bid; sometimes it isn’t worth it, especially if you have a low ACoS goal.
Keyword bidding
While optimizing your keywords, your report will give you an indication of which terms are performing well and which are underperforming. It would be beneficial to your ACoS targets if you reduced the bids on low-performing terms. Then increase the bids on terms that could exceed the target if they had more of a push. With that, you should then double down on high-performing keywords to optimize their success in a PPC campaign.
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SKUs
Prioritize your best SKUs to prevent wasting money on ads for products that aren’t converting. If you sell a product that has different variations, perhaps try to only advertise for the best-performing one (often the parent ASIN). Moving the bids from the low-performing ASINs would likely result in a drop in sales for these items. But, there is no need to panic since the loss would be counteracted by the rise in sales for the popular item.
You can still link the other variations on the product detail page so they will continue to get exposure. This way of assessing your data and understanding your Amazon audience is very important for a good ACoS.
Use a PPC tool
Using an automated optimization tool can make lowering your ACoS much easier and result in a lot less work for you. The tool would manage your keyword research and bid optimization with your goals. It could be a good way to remove the stress of optimizing your campaigns by yourself.
However, while using these tools it is still important to keep an eye on the performance of your advertising campaign. These tools can either be very helpful or produce mediocre results so pay attention.
As your business grows and you start to accumulate more data it can get overwhelming if you keep it in-house. Instead, an AI can do all of the heavy lifting for you so you will have more time to work on your business.
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Product Optimization
It cannot be stressed enough how important your product listing, title, and description are to your ACOS goal. You will need to ensure that you have the most relevant product information in the appropriate places to optimize the searchability of your product. The easier your product is to find and the clearer the information about the product is, then the higher the conversion rate will be. You want your customers to feel confident in what they are buying.
Title
Your product title is the first thing that customers will see when they are researching their desired product. To ensure you are using the best possible practices within your campaign your title should be crystal clear about what your product is. You want your title to highlight exactly what the customer is searching for, descriptions can be in the PDP.
A good practice for titles is to include your highest-ranked keyword within it to increase the searchability of the product. This will help with your organic ranking, which leads to spending less on your advertising and still getting sales naturally. You only want interested customers clicking on your PPC ads!
Descriptions
Use excellent product descriptions for your product listings. You should outline the key specifications and make sure the benefits and use of the product are clear. Anything unclear about the product will make people hesitant to purchase. You don’t want to pay for the click and be let down by your description.
Naturally, you want to keep your description honest, include relevant keywords, and accurately describe your product. Having accurate descriptions will increase the likelihood of a repeat purchase and lead to more positive reviews.
Add Media
Media such as explainer videos and images can have a significant impact on sales by reducing your ad spend. The Amazon seller’s community is very saturated with hundreds of businesses selling and advertising on Amazon. As a result, you need to do all you can to have an edge over your competition. What does this look like? Well, it could be as simple as including better-quality images or a video demonstrating your product in use.
- Images: Amazon SEO is optimized to be most effective when 6 good-quality images are used in a product listing. Ensure to give a range of angles and clearly show the use of the product in the image. A common method is the ‘make it obvious’ method, here you would include note distinctions on a product image to show information.
It is important not to overdo it with the text on an image and certainly not include it on all of your images. A common example is adding dimension comparisons on the images so customers get a better idea of the size of the item. This helps to consolidate conversions, but it also increases the time spent on the product detail page, which Amazon uses when considering your ranking in the search results.
- Explainer videos are also an excellent way to reduce your ACoS. Include a small clip demonstrating your product, show dimensions, appearance, how it works, etc. It is completely dependent on what your product is and how you feel it could be best represented and sold through a small clip.
These videos add significant value to your product listing and can give you a real edge over your competition. They lead to a much greater number of conversions by leaving no room for questioning the product specifications and capabilities. It will also drastically increase the amount of time spent on your product page.
Use A+ Content
A+ content plays a significant role in reaching your target ACoS. Amazon essentially lets you produce a mini landing page for you to include content that cannot be added to a product detail page. A+ content lets you add more refined explanations to your listings; this may look like enhanced images or text or even a brief overview of your brand.
This extra bit of content bodes extremely well for your conversion rate so you should use this feature where possible. The more information about your product and brand that is included in your product listing, the greater the chance a customer will finalize a purchase.
The goal is to leave the customer certain of what they are buying and know that it is the right product for them. The greater the conversion rate, then the lower your ACoS will be since you will be making more than you spend. Anything that decreases the rate of unsuccessful clicks is brilliant.
For brand-registered sellers, it is called A+ content, but vendor sellers have the same capability, called an A+ detail page.
Get more reviews
Customer reviews are very important for business growth and lowering your ACoS, but they can also be extremely difficult to accumulate. Once you have a decent number of positive reviews all the elements of a campaign will start to fall into place; all because you sell from the recommendation of other customers. You would begin to see an increase in your total sales and raise your search ranking, reducing your ad spend.
For new product launches, it is far more difficult to get the number of reviews you need. This is when a high ACoS can be useful, it can give you the boost you need for a short time to increase conversions on your new product. You can then set up automated review requests to be sent out after a customer triggers the email through buying the product.
Amazon already gives you the template for the request, so you don’t need to worry about creating it or staying within their guidelines. The requests are made to be quick and simple to fill out.
It may prove beneficial to use a review tool, which would automate the review process for you. This way you will have very little work to do for your reviews and can focus on your business.
