The internet has been a galaxy of multiple facilities from building an empire to selling it. In this very vast space, lies E-commerce, with emerging world-class marketing and branding.
The largest E-commerce platform, Amazon, with its intensive seller tools and features is on the top. It does everything to take your brand to the top. But how does it hold the responsibility of the same?
What is Amazon PPC and the major Amazon ad Metrics? Let us know the hows, why’s, and how to do all of this work.
What is Amazon PPC?
As the acronym stands for Pay Per Click, Amazon PPC is a platform to run ads. These ads are to reach a larger audience for marketing purposes and to accumulate traffic as a third-party seller.
Out of many available Amazon Metrics, let us begin with the most commonly known and used Amazon Metrics.
In this blog, we will learn about major Amazon ad metrics like CPC, CTR, ACOS, and ROAS.
Every ad demands to be visible in its respective marketplace. In simpler terms, the number of people the ad has reached is called Impressions. The total number of times your ad appeared on the Amazon search results page, product listing, sponsored display ads, etc., will be visible on the AMS.
Ideally, the increased number of sales is characterized by a higher number of impressions. But not always do these terms meet or match. Impressions are to be considered the first and foremost important metric for conversions.
One must be observant about their target audience, a well-arranged product listing, and their choices of highly ranked keywords.
The very idea of visibility and brand awareness starts with impressions and sometimes higher impressions can result in lower sales, and vice versa.
The number of times people have clicked on your ads determines ‘clicks’. The clicks belong to the potential buyers or ones who are surfing the internet with the intent to make purchases.
The higher number of clicks does not determine higher conversions, rather some ads may have positive impressions and clicks, landing them on your store pages but they leave your page without making a purchase.
Just like Impressions, one needs to be highly attentive to their target audience and with their choices of keywords.
Conversion rates are the number of buyers who purchased by landing on your brand store. Every metric has its importance but no one should be looked over. Conversion rates not only tell you the growth of your brand in numbers but also lets you know where you stand as a growing brand in the Amazon Marketplace.
With higher conversions come positive ROIs. Sometimes you might notice differences between the conversion rates from the previous months, which affects your sales and profit margins but all you need to focus on is improvisation.
Enhance the content quality of the product content, work on the organic rankings, product listings, etc.
Here’s how to calculate conversion rates
CVR = (No. of orders/No. of visits)* 100
For example, if you get 500 clicks on your ad, that has resulted in 50 sales, according to the formula; CVR = (50/500)* 100, which would be 10%.
NTB stands for New-To-Brand, which is an Amazon metric measuring the orders or purchases made by new or existing customers before a year.
This metric is very helpful with the records of the customers to target future marketing campaigns with the right optimization. It works on building brand loyalty, driving customer acquisition, and targeting specific audiences with the right strategies.
NTB Orders – NTB order determines the numbers over a year and applies only to the Sponsored brands. It’s a great way to track your ad performance!
To track an NTB, an advertiser reviews the order history of a customer for a year. If they didn’t make any purchase from your brand, the order will be considered as a new-to-brand.
NTB Sales – NTB sales or New-To-Brand Sales are nothing but the profit generated (total sales) from the NTB orders.
Usually, the ratio of the profits generated by ads was not easily determined, but with NTB, advertisers get the utmost visibility. Additionally, advertisers could not comprehend the audience whether they were making a purchase for the first time or are existing customers. An advertiser needs to get a hold of the numbers to target the audience. This includes targeting new customers, retaining inactive customers, and existing customers.
What is CPC?
CPC or Cost Per Click is an ad that runs to drive conversions and traffic. It’s determined by the amount of money you’re paying whenever you get clicks on your ads.
The idea is to spend the minimum and receive higher returns when it comes to conversions.
This is a metric that is applied to all ads on all platforms. However, the advertiser needs to understand the audience, stay updated on the trends, and know what it takes to reach out to a larger audience.
If you have a higher CPC, you will fail to receive higher returns on investments. In simpler terms, the higher the number of clicks you’ve received on your ads, the more you’ll have to pay. It might cost you more than the profit margins. Similarly, the lower the CPC, the higher the amount and successful the ad campaign will be.
Here’s how you calculate the CPC with this formula,
CPC = Amount Spent to Generate Total Clicks / No. of Clicks
Here’s an example of how to calculate your average CPC,
Let’s say your ad gets two clicks, one costing $0.20 and one costing $0.40, with a total cost of $0.60. You’d divide $0.60 (your total cost) by 2 (your total number of clicks) to get an average CPC of $0.30.
What is CTR?
The CTR metric stands for Click-Through Rate which drives traffic for a successful ad. It also has to do with visibility and click rates.
With poor informational sources and ad campaigning tactics, you’re likely to face losses. Thus, here’s what you need to focus on, for better CTR
- Calculating CTR
- Finding out your CTR in Amazon
- Improving your CTR on Amazon
It’s highly important to keep up with a higher CTR when it comes to better marketing.
The better the CTR, the better the customer experience. With proper keyword research, optimization, and positive reviews, you’re closer to improving positive CTR.
Formula – CTR=(Click/Impressions)*100
What is ACOS?
This very acronym stands for Advertising Cost of Sales, which lets you see the success of your ads upon the right calculations.
It also gets compared to all the campaigns meant for cost efficiency and performance with the profit margins.
Amazon ACOS is considered an important metric to draw profitability and to lay an eye on the success metrics which starts from visibility. Monitoring ACOS allows businesses to optimize their advertising strategies, maximize return on investment, and ensure efficient allocation of resources in the competitive online marketplace.
However, with lower ACOS, comes higher profitability. Similarly,
- It’s the ratio of your total ad expenditure and sales revenue.
- ACOS is based on your objectives for a well-planned ad campaign based on the market values and understanding the buyers.
- Continuously monitoring and optimizing your ad campaigns can significantly impact the ACoS. Regularly analyzing metrics such as click-through rates (CTR), and conversion rates, and adjusting bids and targeting can help improve the ACoS over time.
Formula: ACOS = Spend/Sale
For example, if you spent $50 for an ad campaign and earned $100 from the same, your Amazon ACOS would be 50%.
What is ROAS?
ROAS stands for Return on Advertising Spend, which determines the effectiveness of the ad campaigns. Your brand needs to be checked with these metrics.
To define ROAS in simpler terms, it’s the profitable return on your well-planned and strategized ad campaign meant for your brand.
A higher ROAS does not mean you have a successful business but it depends on your strategies for making your brand. A well-built brand might do well with a lower ROAS but an emerging brand needs to take wise decisions for a successful brand in the e-marketplaces.
However, we also recommend you bring out a balance on ROAS with the right tactics, optimizing rules and strategies.
Now that we’re familiar with the most commonly known Amazon Metrics, let us learn how to run ads.
How to Run Ads?
To run successful ads on Amazon, you need to sign in with an Amazon seller or Vendor account. If you want to sell your products from Amazon Seller Central, you’re considered a third-party seller. And as a first-party seller, you need to sign up as a Vendor.
Once you’re clear on these parameters, you’re good to go with Ads and their types. As we’ve mentioned at the beginning of this blog, there are three types of sponsored ads; you can now run all three depending on your products and strategies.
Let’s focus on how to run ads keeping the foremost ideas and metrics on the e-marketplaces. Always keep these 5 things in mind for your ads.
✔Strategised ad campaigns:
Lay an eye on your product categories to strategize ad campaigns. You need to create separate campaigns based on your categories, and then create different ads under the campaigns for better visibility.
Here’s what to need to take care of, the keywords! Yes, look out for relevant keywords for your brand, ad copies, and ad groups.
Note: The Amazon metrics are user-friendly and just cut off loads to drive higher ROIs. A well-built account of your brand does nothing but better to be privileged with Amazon advertising benefits.
✔Creative, advanced, and urgent ad copies:
Time to add creativity and engaging content to your ads. Try to keep it as precise as possible, among multiple ads with zero clarity. Make your ad and product visible with an urgency that targets higher sales.
Urgent ad copies simply mean to create an idea in the mind of your buyers to make an instant purchase. It can either be a limited edition, a product with a huge discount, or a combo product that’s available at a reasonable price in a limited time or days. It might not deliver the same idea when it comes to the regular days but the urgent ad copies are to bring in sales and more buyers.
While we focus on the urgent ads and their motive, be very clear and stagnant on the idea it delivers. A detailed ad in terms of graphics, imagery, and content brings in more buyers, and if not buyers, it brings in traffic.
Though ad copies are bound with limited content and details, try to explain more with images or animation.
✔Start bidding on competitors:
Brand bidding simply means to make your brand known to others and increase your market value. You can now make your brand visible on the top brands searched on Amazon. Your product is set to be visible on the top when you search for specific popular brands.
For example, you’re searching for Duffle Bags. Amazon shows you the best available bags from well-known brands. Here’s when you follow bidding your brand with these competitors. You get to choose a brand and get, set, and bid!
Note: Always remember to keep an eye on the search keywords and competitors.
✔Try all the 3 ad types for your brand:
If you’re new to the world of Amazon ads and starting with your new-hand experience, we recommend you start with applying all three available ad types.
Trying out all these three ads for your campaigns gives you clarity on your specific targets, statistics, data, and a brief on the buyer’s mind. Having this information, you’ve got a lot to move on with the best among these 3.
Based on the notes and information, you also get to follow or apply the most relevant ad for your brand with time and season. For example, if you’re selling sweaters in winter but people require a lightweight, warm, and breathable material, make your brand visible while targeting these very specific parameters. But you need to try-the-trio first!
✔Utilising negative keywords for higher ROI:
To utilize the negative keywords, start with targeting the right and relevant keywords first. Now add an opposite keyword jumbled with the relevant one.
For example, if you’re selling water bottles, and compact water bottles is the right and highly ranked keyword, make it paper water bottle which does not make any sense. Here’s what happens with this feature:
- They help to reduce irrelevant clicks that make you spend.
- If someone searches for paper water bottles accidentally and clicks on your ad, you’re charged.
- The motive is to flourish and filter out the quality of your ads.
Here’s a walkthrough of the Amazon PPC and ad metrics you needed to know with the basics. Every category can be detailed with a deep-diving explanation for your understanding, for which you can visit the provided links.