Understanding Amazon PPC Metrics and KPIs

Navigating Amazon’s Pay-Per-Click (PPC) advertising can be daunting for many sellers. With complex metrics and evolving algorithms, achieving desired results and optimizing campaigns can feel overwhelming. 

However, we are here to help you shift the narrative. Today’s guide will overview the main metrics you should monitor to optimize your PPC campaign’s performance on Amazon. So, if you are ready, let’s dive into it. 

Importance of Understanding Amazon PPC Metrics 

In order to ensure your Amazon PPC (Pay-per-click) campaigns are successful, it is essential to track metrics. The metrics allow you to achieve higher visibility and set better ad bids.  

Amazon PPC advertising boosts your ad’s visibility, leading to higher conversions and better campaign performance. It also provides valuable insights into your ad’s effectiveness, helping you identify areas for improvement to maximize efficiency. 

Additionally, by tracking PPC metrics, you can assess the profitability of your ads, allowing for smarter budgeting and more strategic resource allocation.

Amazon PPC Metrics

As far as we are clear on the importance of understanding Amazon PPC metrics, let’s jump into a discussion of the main ones. This section will cover every Amazon metric sellers must know and track for success. 

Average Cost of Sale 

The Average Cost of Sale (ACoS) is a metric used to measure the percentage of advertising spend relative to sales revenue. It shows how much you spend on advertising to generate a sale, expressed as a percentage.

ACoS is an essential component of PPC metrics as it directly tells you whether you are making or losing money with your current ads. A lower ACoS indicates better ad performance, meaning you spend less on advertising while earning more from sales. In other words, your ad is more cost-effective, maximizing return on investment. 

To effectively leverage ACoS, it’s essential to calculate your Target ACoS, representing the ideal spend-to-sales ratio for achieving your desired return on investment (ROI). You can calculate the target ACoS by subtracting the Desired Profit Margin from the Break-Even ACoS (where no profit or loss is made). 

Impressions 

Impressions are the number of times someone has seen your advertisement.

By keeping track of impressions, you can easily determine the areas for improvement. For instance, low impressions mean that your ad is not performing well. The reason behind bad performance can be low budget/bids or bad keyword optimization. 

Click-Through Rate 

CTRs, short for Click-Through Rates, calculate the relationship between your clicks and impressions. Tracking this metric allows you to identify whether or not the ad performs as intended. A high CTR means your ad is reaching the right audience, while a low CTR indicates that your campaign needs a few adjustments. 

CTR can be calculated by dividing the clicks by the impressions. 

Clicks 

Clicks, on the other hand, are the amount of times someone has clicked on your advertisement. If your click rates are high but the product sales are low, your page may have an issue that sends off potential buyers. 

Total Spend 

As you may have guessed, the Total Spend is how much money you have spent on a campaign. While low total spending seems profitable, the results will not be satisfactory if the budget is too low.  

Overall Sales

In Amazon PPC, overall sales consist of both advertising sales (those generated through your paid ads) and organic sales (those that happen without ad spend). 

A solid ratio to aim for is typically 6:4. Essentially, ads drive 60% of your sales, and 40% come organically. This balance indicates that your ads are effectively driving traffic while your organic presence is strong enough to capture non-paid sales as well.

Cost Per Click 

Cost Per Click (CPC) refers to the amount of money you spend every time a shopper clicks on your ad. The CPC depends on the price of the product. A product that costs around 50 cents cannot afford to have a very high CPC, while a product that costs a hundred dollars can.

Tracking CPC is crucial for optimizing your advertising strategy. By monitoring CPC, you can ensure that your ad spend aligns with your product’s profit margins. 

Conversion Rate 

The conversion rate is the number of people who clicked on your ad and actually bought what you are selling. Typically, it is measured in percentage. 

The conversion rate helps you understand how well the campaign is performing. For example, if the number of clicks is high but sales are low, there could be something wrong with the page. 

Additionally, the conversion rate is what Amazon uses to give a standing or rank to your ad, which then establishes how often people will see your ad. The conversion rate is calculated by dividing the number of orders from the advertisement by the number of clicks. Amazon’s average conversion rate is 9.55%.

Return on Ad Spend (RoAS)

Similarly to the Average Cost of Sale, RoAS shows you whether or not you are profiting from the advertisement based on how much you spend on it. However, RoAS also tells you how much you get back for each dollar spent on the ad. This metric is essential for creating a suitable ad budget to ensure positive revenue. 

For example, if you spend 1000 dollars on an ad but make 5000 from the sales, your Return on Ad Spend ends up being 5. This is calculated by dividing the total revenue (from the ad) by the total ad spend.

Optimize PPC Performance with the Help of Professionals 

Keeping track of everything can still be challenging even when you are clear on the metrics, measurements, and how everything works. Luckily, this is when professional assistance comes in handy. 

Enso Brands is a professional Amazon PPC Management Agency that provides Amazon PPC management services dedicated to maximizing your advertising success. We handle everything from A/B testing to keyword and bid optimization. 

To learn more about how we help you maximize ROI and host successful campaigns, contact us; our team will happily answer your questions.