Amazon Advertising: A Deep Dive into Common KPIs

Building and executing an Amazon advertising plan is a fantastic first step, but it’s only part of a successful Amazon PPC (pay-per-click) campaign. Amazon sellers also need to understand and track Key Performance Indicators (KPIs) to be able to truly evaluate ongoing advertising and make effective adjustments to future efforts. 

Whether you are just starting with Amazon advertising or have been running campaigns for a while, you need to know where to find the insights that can measure success, optimize your strategy and achieve long-term growth for your e-commerce business.

What is a KPI?

A Key Performance Indicator or KPI is a crucial metric that helps measure the success of an advertising campaign. In the context of Amazon advertising, KPIs help to determine the effectiveness of ads in driving sales and profits. These indicators can include metrics such as click-through rates, conversion rates, cost per click, and return on ad spend.

By tracking these metrics, advertisers can identify areas that need improvement and adjust their campaigns accordingly to optimize performance. In essence, Amazon advertising KPIs provide a clear picture of what is working and what is not, allowing advertisers to make data-driven decisions that improve ad performance and drive revenue. And they are essential for Amazon advertising campaigns, as they help advertisers measure success and make informed decisions to maximize profitability.

Use these KPIs to enhance your Amazon advertising campaign

In today’s digital age, online advertising has become an essential aspect of marketing for any successful business. When it comes to Amazon advertising campaigns, it’s crucial to clearly understand the metrics that are most commonly used to measure success. That’s why we’ve compiled a list of the advertising metrics that, in our experience, are worth paying attention to. 

CTR (Click-through Rate)

Click-through rate (CTR) is one of the most important metrics for measuring the success of your online advertising campaigns. It represents the number of clicks your ad receives divided by the number of times it is displayed. A high CTR means that your ad is resonating with your target audience and generating more clicks, which can lead to more conversions and sales. 

However, achieving a high CTR isn’t always easy. You must carefully craft your messaging, choose the right keywords, and target the right audience. You can continuously monitor and optimize your CTR to improve your ad performance and achieve your marketing goals.

CVR (Conversion Rate)

Driving traffic to your website is essential, but what’s even more crucial is turning those visitors into customers. This is where CVR, or Conversion Rate, comes into play. CVR measures the percentage of website visitors who complete a desired action, such as making a purchase or signing up for a newsletter.

A high Amazon advertising conversion rate means more of your shoppers are taking the desired action of purchasing a product, leading to increased revenue and growth for your business. Understanding and optimizing your CVR is vital to achieving success in the digital landscape. With the help of analytics tools and testing, you can identify and implement changes to improve your CVR and ultimately drive business results.

ACoS (Advertising Cost of Sales)

ACoS is a crucial metric for measuring the efficiency of your Amazon advertising campaigns. That’s because maintaining a healthy ACoS is integral to keeping your campaigns cost-effective and maximizing your profits. It calculates the percentage of ad spend relative to the revenue generated from those ads. To calculate ACoS, you need two figures: the total amount spent on advertising and the total sales generated from those ads.

The formula for ACoS is: (Total Ad Spend / Total Ad Sales) x 100

For example, if you spent $200 on advertising and generated $1,000 in sales from those ads, your ACoS would be 20%, meaning that you spent 20% of your total ad-generated sales on advertising costs. Lower ACoS values indicate more efficient advertising campaigns, while higher values suggest that the campaign might need optimization to reduce costs or increase sales.

RoAS (Return on Ad Spend)

Similar to ACoS, RoAS measures the revenue generated as a result of the money spent on advertising, indicating how much you are getting back for every dollar spent. RoAS helps advertisers make informed decisions about allocating their budget and optimizing their campaigns to get the most out of their investment. Calculating RoAS requires the total revenue generated from the ads and the total amount spent on advertising.

The formula for RoAS is: Total Ad Revenue / Total Ad Spend

For example, if you spent $500 on advertising and generated $2,500 in revenue from those ads, your RoAS would be 5, meaning that for every dollar spent on advertising, you generated $5 in revenue. A higher RoAS value indicates a more effective advertising campaign, while a lower value suggests that the campaign might need optimization to improve efficiency and increase revenue.

TACoS (Total Advertising Cost of Sales)

TACoS is yet another measurement to evaluate an advertiser’s return on investment. The Total Advertising Cost of Sales is a metric that shows how much you spend on advertising compared to your revenue generated through sales. TACoS takes into account all advertising costs, including Amazon Advertising spend, promotional offers, and influencer collaborations. 

It helps businesses understand the impact of advertising on their entire operation and optimize their marketing strategies accordingly. TACoS is determined using the total amount spent on advertising and total overall sales (including both ad-driven and organic sales).

The formula for TACoS is: (Total Ad Spend / Total Overall Sales) x 100

Putting KPIs to work on Amazon

Navigating Amazon advertising can be daunting, but with the right tools and strategies, tracking, analyzing, and optimizing your KPIs can be both efficient and effective. One way to integrate KPIs into your decision-making is by utilizing Amazon’s Performance Dashboard, which offers a clear overview of your Amazon CPC (cost-per-click) campaigns and allows you to monitor metrics such as impressions, clicks, and conversions. 

Additionally, using third-party software can simplify the process of calculating and tracking KPIs, while an advertising consulting service can assist in creating well-designed campaigns and provide ongoing evaluation. By taking advantage of these resources, you can confidently measure and improve the success of your Amazon Advertising campaigns.

One of the reasons that some sellers seek out help with their Amazon advertising is that it does differ in some ways from other online advertising options and platforms. For example, while Amazon, Facebook and Google each track impressions, clicks, and conversions, they may vary in their definition of each term or how they calculate them. Additionally, Google Ads has its own unique KPIs, such as Quality Score, while Facebook Ads may focus more on engagement metrics like likes and shares. As such, it’s helpful for advertisers to understand these differences to effectively measure their campaigns’ success across multiple platforms.

KPIs can also shed light on customer loyalty

As Amazon continues to dominate the e-commerce market, its role in online advertising is likely to grow. However, simply placing ads on the platform isn’t enough to ensure success. Keeping up with the latest key performance indicators (KPIs) is crucial for brands to achieve effective results. While brands have long used metrics such as click-through and conversion rates, new KPIs that should not be ignored are still emerging. 

Often these are focused on the value of a specific customer and identifying ways to maximize brand loyalty. Customer Lifetime Value and Cost of Customer Acquisition can be useful KPIs for Amazon sellers. Understanding and utilizing these new KPIs is essential for brands to maximize their advertising efforts on Amazon and stay ahead of the competition. However, tracking these types of metrics can be difficult for novice sellers or require additional actions, such as creating a product registration process to gather more information on existing customers.

KPIs are still just a piece of the puzzle

Amazon advertising can be a potent tool for brands looking to boost their sales and increase visibility, but it’s not without its pitfalls. One of the most common mistakes that brands make when analyzing their Amazon advertising metrics is failing to take a holistic view of their data. 

Too often, advertisers will focus too heavily on individual metrics, such as click-through rates or conversion rates, without considering how these metrics fit into the bigger picture. This can lead to skewed results and missed opportunities. 

To avoid this mistake, brands should take a broader view of their advertising performance, looking at the full range of available metrics and considering how they interact. By doing so, they’ll be better equipped to make informed decisions that drive actual results.

As you drive growth and measure campaign success, the metrics chosen to guide decisions will become increasingly important. Your success can grow if you pay attention to these key metrics, utilize analytics tools and reports, and leverage other data points with a broad business perspective and comprehensive selling strategy.

Boost your Amazon performance with Amify

Trusted by leading DTC brands worldwide, Amify delivers premium, full-scale Amazon solutions to take your growth to the next level. Our industry-leading expertise can unlock the full potential of a product listing, build a branded Amazon store, or determine the best ad spend for your Amazon advertising campaign. 

Contact us today to learn why so many brand owners choose Amify. You’ll quickly see the results that keep our partnerships growing. From marketing and sales to analysis and logistics, our team is ready to help your company win on Amazon.