High ACoS, low converting advertisement campaigns is a worrying issue for sellers using Amazon pay-per-click. Amazon is becoming a quid pro quo; assertive bidding is now imperative to keep up with this massive competition and get low ACoS and high converting campaigns, especially in extremely competitive product categories.
Otherwise, how would you ensure your ad campaign success in this highly competitive arena? How would you lower your Amazon ACoS without disturbing ad placement and visibility?
This write-up outlines twelve proven tips (gathered from interviewing ACoS experts) for reducing your Amazon ACoS and increasing ROI.
What is Amazon ACoS?
ACoS, an abbreviation of Advertising Cost of Sale, is the amount you spend on ad campaigns against the revenue you make for a specific product category. It is an advertising KPI used to ascertain the profitability/success of an ad campaign.
Here’s the standard formula to calculate it:
| Advertising Cost of Sales (ACoS) = Total Ad Spend/Total Ad Sales x 100 |
12 Proven Tips to Increase ROI & Reduce Amazon ACoS
A lower Amazon ACoS represents splendidly working ad campaigns- resulting in higher conversions & profit for the business. So, for every Amazon seller, lowering ACoS is imperative.
Here are some proven ACoS-lowering tips for Amazon ads:
#1 Initiate with thorough keyword research
Reaching your Amazon advertisement campaign goals isn’t challenging if you are meticulous with the preliminaries.
Envisioning your campaign is jam-packed with all the search terms you’ve added feels excellent, but this presumption doesn’t do good in reality and curtails the ad campaign’s potential. Thus, before setting up an ad campaign, conduct thorough keyword research using professional tools like SEMRush, Google keyword planner, Ahrefs, etc., to ensure improved campaign performance and lower ACoS.
#2 Use suitable keywords in the right way
To bring in higher traffic, lower ACoS, and maximize the ROI of your ad campaigns, break down relevant search terms into three types:
- Broad Match Types
- Exact Match Types
- Phrase Match Types
Usually, advertisers prefer using a broad match type. This helps them avoid passing over leads, broadens their scope, and improves rankings and visibility. Undeniably, this search term type opens the mill dams to traffic. However, it does not always get you qualified leads. Moreover, its extreme usage can increase wasted spending.
Thus, the best practice is to combine all three types and adjust bids.
#3 Examine what works best for your product categories
Thoroughly study the market, competition, accessible ad campaign types, bidding options, targets, & ad placement availability, and determine what ad campaign type will work exceptionally for your business.
One of the best practices here is to find a placement, unclicked search terms, or targets where bids are lower but the chances of conversions are higher.
#4 Correct your Sponsored Display targeting techniques
Fix your targeting techniques if you have higher ACoS because of Sponsored Display ads. For this, keep an eye on competitors having higher prices and lower reviews (as compared to you) and make that your target.
#5 Incorporate negative search terms carefully
Negative search terms in your Amazon ad campaigns lower impressions and clicks, having zero chances of conversions. Thus, one of the best practices to lower your ACoS and maximize ROI is to diligently add negative keywords to your ad campaigns.
#6 Avoid keyword overstuffing/dumping
Keyword overstuffing/dumping is a practice of adding numerous keywords into an Amazon ad campaign to increase visibility, performance, and profitability. But this is what you do not get by overstuffing.
Over-adding irrelevant keywords in your Amazon ad campaigns bring non-convertible traffic to your amazon product listing, resulting in an increased bounce rate and wasted ad campaign budget. Therefore, the best tip here is to add a few high search volume yet pertinent keywords that bring in quality, convertible traffic to your listing and ensure a higher conversion rate and profits.
Must Read – What is Technical SEO: And why is it important?
#7 Ensure a well-prepared listing
Before investing in ad campaigns, ask yourself whether your listing is traffic-ready.
If not, prepare your listing as it is all-important for conversion, sales, and profits. Your product title, description, bullets, images, feedback, reviews, and everything needed to convert a shopper should be well optimized. You don’t want your potential customers to click away and move to your competitor’s listing just because your titles were too vague, descriptions were unclear, or images were of low quality.
A well-prepared, customer-focused product listing has:
- Clear, crisp, and compelling product title, description, and bullet
- Minimum 15 positive reviews with a 3.5+ star rating
- High-quality HD product images
- Inventory availability
- Amazon Prime eligibility
#8 Prioritize your best-selling products
Create ad campaigns, including products that make most of your revenue.
The high conversions attained by your best-selling products will indemnify high ACOS Amazon ad campaigns with under-performing and newly-started products.
#9 Estimate the effectiveness of your keywords in your ad campaigns
Keep a consistent tab on your keyword performance. Its benefits are twofold: you can assess a keyword’s profitability and identify why your ad campaign isn’t meeting your determined ACoS objectives.
The best practice is revisiting the keyword performance report at least three times weekly to gather negative search terms, set apart convertible phrases, and adjust bids.
- Pause search terms that aren’t profitable: Trimming down wasted spending is the best and most effective tip to lower your ACOS and increase ROI. Quickly scan through phrases in your ad campaign and pause the pricey search terms eating your revenue.
- Stand pat on profitable/convertible keywords.
- Increase bids on search terms with low impressions and check how they perform in two weeks.
#10 Construct your ad campaigns effectively
Effectively construct automatic ad campaigns. It will let you discover converting and non-converting keywords, giving you better control over your products’ primary keywords.
#11 Create branded ad campaigns
An Amazon ad branded campaign includes keywords and phrases with the company’s name or other brand elements. Undeniably, they are important because not only do campaigns with brand-specific keywords help you lower your ACOS, but they also keep off competitors trying to steal your targeted customers.
#12 Hire Amazon virtual assistant for better advertising
If you find managing your Amazon ad campaigns difficult, let Amazon virtual assistants take the pressure off your head. By letting experts handle your Amazon ad campaigns, you’ll have the capacity to scale your eCommerce business on Amazon.
4 Situations where having a High ACoS Doesn’t Matter
A list of situations where a high ACOS ad campaign is acceptable:
#1 New product launch
If you plan to run an ad campaign for a new product launch, the primary aim is to get the orders, not improve profitability. Therefore, it is best to not focus on ACoS and concentrate on hitting the revenue targets through ad campaigns.
#2 Brand/Product awareness
Often, entrepreneurs run ad campaigns wanting their product to be seen and their brand to be known. In such situations, running an ad campaign at higher ACoS makes sense because the objective is to get impressions.
For brand/product awareness ad campaigns, having a 50% or higher ACoS isn’t an issue.
#3 Inventory clearance
Not every product turns out as a best seller.
Considering running a high ACoS ad campaign isn’t wrong to move dead inventory. After all, running a high ACoS campaign is better than paying long-term FBA or stock removal fees.
#4 Seasonal products
A brand selling Christmas trees will only get better revenue in December, but that doesn’t mean you stop running PPC campaigns during no-sale months. The low ACOS for December and the months leading to December will compensate for the high ACOS during January-September.
Final Thought
Using the above-mentioned ACoS-lowering tips, you can keep a check on your ACoS and run profitable ad campaigns.
But if you find yourself overwhelmed with Amazon ppc campaign management and optimization tasks and feel you don’t hold expertise in the area, it is best to offload ad campaign management tasks to professional Amazon virtual assistants.
With their skills and expertise, they’ll propel your business to a whole new level.
