In a perfect world, everyone would have an ACoS of 1%. We all wish we could be less reliant on ads. While we cannot shake ads completely, we can keep ACoS as low as possible to maximise profitability. Here are a few helpful tips to help lower your ACoS.
What is ACoS?
ACoS or Advertising Cost of Sale is one way of determining the efficiency of your Amazon Pay-Per-Click Advertising campaign.
To calculate your ACoS, you take your ad spends and divide it by your advertising revenue.
ACoS = Ad spend / advertising revenue
For example, if I spent £250 on a PPC campaign for a gardening tool range and the campaign generated £1000 in revenue.
0.25 ACOS = Ad spend £250 / advertising revenue
My ACoS would be 0.25 or 25%
How do I bring my ACoS down on Amazon?
Before you can begin lowering your Amazon ACoS, you must first decide what you want to achieve with your Amazon PPC advertising. Do you want to increase growth (volume), or do you want to increase your return on investment (efficiency)? The reason being that a low ACoS is not always the best option.
When launching a new product, your goal is to get as many eyes on your product as possible. To do so commonly requires an increase in ad spending. With it comes a higher ACoS. Trying to adhere to a low ACoS can hinder your ability to generate growth and, therefore, may not be the best option for startup companies.
However, if your goal is efficiency, here are a few tips for lowering your ACoS.
Advertise Your Most Popular Products
If you have various variations of the same product, choose the best selling one and focus on that. Running multiple ads of the same item will cost you more money.
Analyse Your Keywords
Keyword research is vital. Know what your competitors are doing and how effective it is for them. Always be willing to reevaluate your keywords. Ask yourself the question: are these relevant? Are my keywords too broad? Pay attention to your PPC reports and use them to refine your keyword choices.
Pause Keywords that Overspend on Budget
If there is a keyword repeatedly overspending on your ad budget, pause it if it is not generating the conversion you desire. Or think about setting a spend limit if money is that much of an issue.
Adjust Bids on Amazon PPC Keywords
Make sure you calculate the optimal price when looking to bid on keywords. To ensure that you are not overspending when it comes to getting the keywords you want.
To do so, all you need to do is follow this simple formula:
Bid = Max. CPC = (Ad Sales / Ad Orders) x (Ad Orders / Ad Clicks) x (Ad Spend / Ad Sales)
Use Automated Amazon Pay-Per-Click Advertising Tools
PPC campaigns come with many automated tools that help naturally control ACoS. These automated tools can allow you to set ad budgets and shut off all ad’s when that limit has been reached.
Double Down on High Performing Keywords
Create a list of high performing keywords and invest more money in them, nurture them and watch them grow.
Create a List of Poor Performing Keywords
Add the underperforming keywords to the negative-targeting keywords tab to prevent your ads from appearing in irrelevant searches.
Become a Top Seller on Amazon
Another way ACoS can be lowered is by increasing profitability. One of the easiest ways is becoming an Amazon Best Seller and reaching the first page of Amazon’s search results.
To achieve this, make sure you are following these steps:
- Have a clear, descriptive title that utilises descriptive keywords.
- Optimise product descriptions using bullet points and listing the benefits of your products.
- Use a diverse range of clear and well-framed images to showcase the functionality and quality of your product.
- Run promotions and offer discounts in exchange for positive reviews.
- Engage with customers through social media
Hire PPC Management
If you are struggling to get your ACoS where you want it to be there is always someone willing to do the work for you.
The options you have available range from hiring a VA from fiverr to recruiting a top notch agency for the job.
At World Wide Listings, we pride ourselves in the results we have achieved for our clients. Our record speaks for itself. Contact us to discuss your needs and we can explain exactly how we can help you. better still, we can put you in touch with some of our clients who can tell you what a terrific job we have done in turning their Amazon profits around.
There you go, follow these simple tips, and you watch your ACoS fall in no time. All of the above guidance will lead to a smoother PPC campaign, lower ACoS and most importantly of all, a better profit margin.