Optimal PPC performance on Amazon requires frequent and consistent optimization
Optimal PPC performance on Amazon requires frequent and consistent optimization. Sellers who actively and efficiently optimize their ad campaigns almost always see better results. To effectively optimize campaign performance, it is essential to have a robust system in place with a manageable workflow procedure.
The most critical part of any system is having a clear and concise overview of account performance and a method of tracking performance following optimizations and modifications. Building an analytics dashboard simplifies the process by providing a snapshot of account performance and a 360o view into tracking changes and analyzing how modifications have impacted account metrics.
No matter which system you use, there are important consistencies:
- Have clear objectives
- Analyze the data
- Optimize based on the data
- Review
Building an Analytics Dashboard
Building an analytics dashboard, in which you enter daily data values, once a week, is an effective way to monitor the performance, from week to week. Using a spreadsheet, such as the one above, will enable the identification of percentile changes to key metrics due to campaign and listing optimizations.
METRICS TO COLLATE:
- PPC Spend โ paid advertising costs extracted from the campaign manager
- PPC Sales โ sales from paid traffic extracted from the campaign manager
- Total Sales โ a total of organic and sponsored ad sales, extracted from business reports
- Units โ total units sold, both organic and paid, extracted from business reports
- Sessions โ a total of organic and paid sessions, extracted from business reports
- Click through rate (CTR) โ the ratio of clicks to impressions, extracted from the campaign manager
- Cost per Click (CPC) โ the average cost per click, extracted from the campaign manager
- Sale Price – listing price per unit
- Amazon Fees โ referral and fulfillment fees, extracted from seller central, manage inventory
- Cost of Goods (COG) โ landing cost per unit
CALCULATIONS:
What are the main metrics we need to track?
When determining which metrics to track, it is important to look at the two key goals of Amazon PPC:
1) To drive traffic for the minimum cost possible
- Sessions โ are we driving traffic?
- Cost per session โ at what cost are we driving traffic?
- Cost per acquisition โ what is the cost to drive traffic for 1 conversion
2) Improve organic rank for long-term sales with no advertising costs
ยท Profit โ are we seeing an increase in profit, and units sold, while maintaining a consistent PPC spend?
Analyzing the numbers in the dashboard
SESSIONS and COST PER SESSION
With the first goal in mind, the most important metric to monitor traffic volume is sessions, and when aiming for increased sessions it is important to monitor the cost per session. (Not to be confused, sessions are the number of unique visitors to a listing whereas clicks are the total number of times an ad was clicked).
When aiming to increase revenue, such as during keyword discovery, your goal is to increase sessions, which will proportionally produce an increase in spend. Monitoring sessions can assess the effectiveness of the increase in spend.
While the ratio will vary, if the aim is to increase spend by 100%, you expect to produce as least a 50-60% growth in sessions. If this is not the case;
a) there may be a CTR issue
b) multiple ad types may be being clicked by same buyer โ multiple clicks, more spend, but the same number of sessions
COST PER ACQUISITION
The aggregate cost to acquire one conversion is the cost per sale, or the cost per acquisition (CPA). Changes in CPA reflect the effectiveness of campaign optimizations and it is directly influenced by the cost per session and/or the conversion rate (CVR). A decreased cost per session and an increased conversion rate will reflect an improved CPA. If cost per session remains consistent but the CPA continues to increase, you can determine there is an issue with CVR and vice versa. If you have effectively optimized and lowered the cost per session or have optimized for an increased CVR you will see an improved CPA. Capturing these metrics allows calculated decisions to determine where optimizations should be targeted to lower the cost per acquisition, as lowering the cost for one conversion is proportional to an increase in net profit.
PROFIT
Your bottom line is the ultimate reference to campaign performance. Viewing a snapshot of profit provides a summary of how optimizations have affected overall account performance.
Steps to get Metrics Back on Track
1) To lower the cost per session
- reduce bids on high ACoS keywords
- reduce bids on keywords with clicks and no sales
- adjust bid by placement for low ROAS campaigns
- negative exact non-profitable search terms in auto, broad, and phrase campaigns
- Pause non-profitable sponsored brand and sponsored display ads
- Improve organic rank
2) To lower the cost per acquisition
- Lower the cost per session
- Optimize the product listing to improve the CVR
Assessing the performance of your account and your optimizations depends on what you are trying to achieve. If you are in a discovery phase you are expecting higher spend, increased sessions, and lower profits. If in a maintenance phase your goal is to maintain or reduce spend while continuing to drive more profitable traffic and sales.
To effectively optimize it is essential to have a robust system in place with a manageable workflow procedure.
Building an analytics dashboard simplifies the process;
It provides a snapshot of account performance Allows a 360o view into tracking changes and analyzing the impacts to account metrics.
No matter which system you use, there are important consistencies: Have clear objectives Analyze the data Optimize based on the data Review
It is an effective way to monitor the performance, from week to week. to identify percentile changes to key metrics due to campaign and listing optimizations
Determine the best metrics to track;
1) To drive traffic for the minimum cost possible
Sessions โ are we driving traffic? Cost per session โ at what cost are we driving traffic? Cost per acquisition โ what is the cost to drive traffic for 1 conversion
2) Improve organic rank for long-term sales with no advertising costs Profit โ are we seeing an increase in profit, and units sold, while maintaining a consistent PPC spend?
Analyze the numbers in the dashboard Determine the steps to keep metrics on track
