Putting ads is only the first step. To maximize the effectiveness of ads, we need to optimize them according to the ad data report during the running process. Therefore, for a running ad campaign, we need to do two things: interpret the ad data and optimize according to the ad data.
In order to accurately interpret the ad data, we need to make three settings: “Filter Conditions”, “Columns” and Date Range. It is recommended to select “Enabled” under “Active Status” for the “Filter Conditions” option, that is, the list only displays running ad campaigns. It is recommended to select “Select All” in “Custom Columns” for the “Columns”, that is, all ad data is displayed. It is recommended to select “Last 7 Days” or “Last 30 Days” for the date range, that is, the last 7 days or the last 30 days are used as the viewing period. Compared with the incomplete or sporadic data reflected by “Today” and “Yesterday” in the date range, “Last 7 Days” is the smallest cycle, that is, data with a weekly cycle is more valuable for reference.
After setting the above three options, we can see the most important data in the advertisement in the advertisement list, which are exposure, clicks, click-through rate (CTR), cost, cost per click (CPC), orders, sales and ACOS.
Impression refers to the total number of times the advertisement is displayed on the search results page and the product details page. Since each exposure is a display of multiple product information at the same time, and consumers may not click on the seller’s products, the exposure does not directly have a significant impact on the seller’s advertisement. However, exposure is the basis of click-through rate and orders. Without enough exposure, click-through rate and orders are out of the question. In this sense, exposure is the first important data that needs to be paid attention to in the operation of advertisements. The amount of exposure is the basis for the success or failure of an advertising campaign. Little or no exposure means the failure of advertising. In addition, since in-site advertising is a pay-per-click advertising type, exposure does not generate fees. Based on a certain amount of exposure, the second data we need to pay attention to is the number of clicks. Unlike exposure, clicks will incur costs, but only clicks can bring orders to sellers. Therefore, the number of clicks reflects the effectiveness of the advertisement to a certain extent. There must be enough clicks to bring the expected orders.
Click-through rate (CTR) is the percentage of clicks and exposure. Although there is no specific indicator to measure the quality of clicks, and the click-through rates of different categories of goods will also vary, referring to the author’s many years of operating experience, the click-through rate of advertisements under most categories is about 0.5% is more appropriate. The higher the click-through rate, the higher the quality score of the advertising keywords, and the better the effect of the advertisement, and vice versa. Therefore, during the operation of the advertisement, the level of click-through rate is also worthy of attention.
The cost is the advertising cost of the selected period. Since the statistical caliber and the final accounting caliber are not completely consistent, the cost shown here may sometimes be different from the actual advertising fee to be paid to Amazon. It is recommended to refer to the cost in the payment report.
Cost per click (CPC) is the ratio of advertising cost divided by the number of clicks, which is generally lower than the seller’s bid. The reason is explained in detail in the advertising deduction formula later.
Orders refer to the total number of orders generated for the product and other products in the store within 7 days after consumers enter the store by clicking on the advertisement. Sales are calculated in the same way.
The order conversion rate (CR, Conversion Rale) is not displayed in the advertisement list. It is also an important data that we need to evaluate in operation. The order conversion rate is the percentage of the number of orders and the number of clicks. The higher the order conversion rate, the better the effect of the advertisement. Correspondingly, the product weight and keyword quality score will also be improved. What is the appropriate order conversion rate? We can use an indicator to measure it. In the “Business Report” of the seller’s “Heart” backend, you can see the conversion rate of each product. Compare the advertising order conversion rate with the product conversion rate. If the two conversion rates are basically the same, it means that the advertising order conversion rate is appropriate; if the advertising order conversion rate is too low, you can adjust the advertisement from aspects such as advertising optimization and time-sharing bidding; of course, if both conversion rates are very low, you need to weigh them from the perspective of product selection and competition.
ACOS (Advertising Cost of Sale) is a percentage value, and it is also the most noteworthy data in advertising. The high or low ACOS value directly reflects whether the input-output ratio of the advertisement is cost-effective.
According to the ACOS calculation formula, there are 4 variables that affect the ACOS value: cost per click, number of clicks, unit price of the product, and sales volume. If the competition for a product is fierce, the cost per click may be high, and the numerator of the formula will be relatively large. Assuming that the unit price of the product, that is, the denominator of the formula, remains unchanged, the ACOS value will be relatively large. In addition, for products with low unit prices, their ACOS values are generally relatively large.
ACOS The value is the input-output ratio of the advertisement, reflecting the profit and loss brought by the advertising investment. For example, assuming that the ACOS value of the advertisement is 20%, logically, it means that an investment of $20 in advertising fees can bring $100 in sales. If the gross profit margin of the product is higher than 20%, it means that the advertising input-output ratio is cost-effective and profitable, but if the gross profit margin of the product is lower than 20%, it means that the advertising investment is a loss.
In this sense, the smaller the ACOS value, the higher the advertising input-output ratio, so that many sellers’ ideal when placing advertisements is “the smaller the ACOS value, the better”. However, “ideals are full, reality is skinny”, the ACOS value will not be infinitely small, so it should be viewed rationally.
So, what is a reasonable ACOS value? Let’s analyze it below.
Case 1: ACOS value is less than gross profit margin
In this case, there is no doubt that advertising is profitable, so it is worth continuing to advertise. If the advertising fee is low in this case and the orders brought in account for a small proportion of the total orders, it is recommended to appropriately increase the advertising budget and bid to increase the proportion of orders brought by advertising.
Case 2: ACOS value is equal to gross profit margin
In this case, judging from the surface data, advertising is just a break-even. It should be noted that in addition to direct advertising orders, advertising will also bring a part of implicit orders to the store.
Suppose a certain product generates 10 orders steadily every day before advertising. After advertising, it can be seen from the advertising data that the advertisement has brought 10 orders to the product. Then what is the total order volume of the product at this time? Many sellers think it is 20, but the real answer may be 30. Why? The reason is that when there is no advertising for the product, there are 10 orders steadily every day. Assuming its BSR ranking is 100, after advertising brings 10 orders, its total daily order volume becomes 20, and the corresponding BSR The ranking may rise to 50th place. According to Amazon’s traffic allocation principle, the higher the ranking, the more natural traffic can be allocated. The natural traffic allocated to the 50th place will be higher than the natural traffic allocated to the 100th place. Assuming that the conversion rate remains unchanged, the increase in natural traffic will increase the order volume. In addition, the advertising data only counts the orders generated within 7 days of the ad being clicked. Some consumers make purchases 7 days after clicking the ad. These data are not counted in the advertising data, but they actually occur and are counted in the total order volume. It is precisely because of these situations that there is an effect similar to “10+10=30”.
Even if the ACOS value is equal to the gross profit margin, the ads do not bring profits on the surface, but the orders brought by the ads can enable us to obtain a larger market share and give us a greater advantage in the competition with peer sellers.
Based on the above analysis, when the ACOS value is equal to the gross profit margin, it is still worthwhile to continue to advertise. Case 3: ACOS value is greater than gross profit margin, 10%~20% higher than gross profit margin
In this case, the direct input-output ratio of advertising is a loss, but we should not stop there. Assuming that the advertising is stopped now, the number of orders brought by the advertising will decrease, the BSR ranking of the product will decrease, resulting in a decrease in natural traffic, and then a decrease in the total number of orders. It can be seen that the reduction of advertising is not only the orders of the advertising part, but also the orders brought by the additional natural traffic obtained by the advertising orders pushing up the BSR ranking. Of course, if the weight of the product caused by the suspension of advertising is considered, the missed orders will be even more. Therefore, the ACOS value is higher than the gross profit margin, which does not mean that the advertising should be turned off.
At this time, whether the advertising is turned off or not, another factor needs to be considered, that is, the proportion of orders brought by the advertising in the total order volume. If the proportion of advertising orders is small, the percentage of total advertising expenditure and sales is much less than the gross profit margin of the product, and the total sales volume of the product still maintains a good profit, then the advertising is still worth continuing. Case 4: ACOS value is very high, much higher than the gross profit margin, or even exceeds 100%. In this case, advertising is bound to be a loss, and a comprehensive consideration is needed at this time.
Experienced sellers know that the conversion rate of advertising is related to both the weight of the product (reflected at the advertising level, that is, the keyword quality score), and whether the advertising is continuous. Generally speaking, the conversion rate of an advertising campaign is often low in the early stage of its launch, and the ACOS value at this time is high, and even the value may be greater than 100%. Therefore, if the advertisement has just been launched, when the ACOS value is high but the actual advertising cost is not much, it should be continued for a period of time to observe whether the ACOS value has a downward trend. Do not hastily stop the advertising campaign at this stage due to temporary losses.
If the product is still in the early stage of creating a hit or in the rising stage, the overall performance of the product is getting better and better, and the advertising cost is still within the total budget, then the advertisement should be continuously launched.
If the ACOS value is always high, and all methods cannot reduce the ACOS value, and the sales volume of the product is declining, the seller has no intention to create it. At this time, the advertisement can be stopped, and the product can be abandoned, cleared out and moved on to the next product.
There are definitely more than the above 4 situations about the ACOS value. It is recommended that sellers take the above situation as an example, and comprehensively analyze and solve it according to the effect of the product advertisement.
Combining the above analysis and the ACOS formula, the following is a brief summary of the advertising optimization strategy based on the ACOS formula.
High CTR, many clicks, and high CPC can be adjusted from the following three aspects: First, optimize the product details page, increase the relevance of keywords in the product details page, and disable irrelevant words with high CTR and low conversion rate; second, in manual advertising, appropriately reduce the bidding of keywords with too high ACOS values; third, try to improve the quality score of keywords, including historical sales, historical conversion rate, rating star, account performance, etc., because the higher the natural ranking, the lower the advertising cost, so try to improve the natural ranking of core keywords.
High number of clicks, appropriate CPC, but low sales, in this case, product optimization is the key. We can compare the products of peer sellers horizontally, including products in the category hot selling list, hot selling products on the first few pages of search results, and products in the advertising position of hot selling product details page, and then optimize our own product content.
The product sales are very good, but the ACOS value is high due to the low unit price. In this case, the following three methods can be used: * Reduce the ACOS value, including adjusting the product combination, changing single-piece sales to batch sales, and increasing the unit price of the product; upgrading the product and increasing the selling price of the product; selecting highly relevant products as combination sets, and increasing the selling price of the combination sets.
In short, no matter how effective the current advertising is, it is difficult to make a correct judgment if there is too little data and the observation period is too short. For key products, it should take no less than one month to test and optimize during the advertising process. Within the total advertising budget, with months as the observation period and weeks as the evaluation unit, as long as the ACOS value gradually decreases and the overall advertising effect gradually improves, this advertising campaign is worth continuing.