How to reduce your Amazon ACoS?

How to reduce your Amazon ACoS?

Amazon Advertising

What is Amazon ACoS?

Amazon ACoS (Advertising Cost of Sale) is a key indicator to measure the performance of your ads in the Amazon market. It is the ratio of ad spend to ad revenue (in %). The low ACoS value means that the advertising investment is small, the sales are high, and the corresponding advertising effect is also better.

In a short, ACoS = Ad Spend ÷ Ad Revenue * 100

Ad Spend is the total amount of money you spend on Amazon PPC advertising, and Ad Revenue is the total amount of revenue you earn from advertising on Amazon.

If you sell household products on Amazon. In the last month, you spent $200 on Amazon’s PPC advertising campaign to promote your product, and the revenue was $800.

In this case, your advertising sales cost ACoS is: 200/800 * 100 = 25%

Why is my Amazon ACoS so high?

1. The product price is high

Do you know the price of the product from your competitors?  If the price of other products similar to you is much lower than yours, how can you prompt buyers to place orders?

Some sellers reflect the price they provided is almost out of profit, they don’t think the price is high. In this way, you’d better do the investigation to know why others have a lower price than yours and still have a profit.

We believe you can find the solution, maybe you can communicate with the supplier, either change the supplier or change the product material or increase the quantity In order to get a better purchase price.

2. No review or too many negative reviews

Most buyers are afraid to buy a product without a review because they don’t know what the product is like. Hence if there are too many negative reviews, the conversion rate must be very low.

3. The product description is not good

The buyer clicks on your advertisement to enter your details page, indicating that your picture is OK, but after coming in, they find that the description of your product is not ideal.

How to reduce your Amazon ACoS?

 1. Keyword Bidding

We usually reduce ACoS by lowering keyword bids and reducing advertising click costs. However, It is not an ideal method, when your keyword bid is lowered, your sales will gradually decrease.

Our core purpose of controlling ACoS is to reduce advertising costs as much as possible, at the same time, the overall sales remains unchanged. In this way, we recommend you to do it more carefully and be more patient. In details, we can increase keyword bids during peak traffic periods, and lower keyword bids during low traffic periods in the middle of the night.

2. Negative Keywords

Some sellers just let go of the negative keywords underestimating their effects on the overall product performance. At any time, no matter what decision we make, we must remember to keep the keywords that are making you money and take out the keywords which aren’t.

If you ignore the invalid keywords of the advertisement, you will find that more and more invalid traffic is introduced. And this part of the traffic will not produce any conversion, the conversion rate is lowered.

Negative Keywords:

  • Low click-through rate, low conversion

For some keywords, the click rate is very low and the conversion rate is low. It means that the relevance of keywords to the product itself is extremely low. Therefore, such keywords must be precisely negatived.

  • High CTR, no conversion

High CTR and no conversion means that you have incurred a lot of invalid expenses under this keyword. Therefore, we need to filter out such keywords for negative operations.

  •  High cost, no conversion

You can find the keywords that cost a lot but no conversion from the customer search terms.

These words are often the “culprits” that lead to the soaring ACOS, so we need to filter out such keywords for negative operations.

3. Ad Campaign Management

When you start to do ads, sellers can combine automatic campaigns and manual campaigns. You can easily to find the high exposure, high click, and high conversion keywords the automatic campaigns report, and add these keywords to your manual ads.

You may want to know more:

All about FBA: What is FBA? How it works? pros and cons? And Amazon fee?

Everything you have to know: Amazon Buy box

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