10 Amazon Advertising Metrics You Should Know

Having a solid Amazon Advertising strategy in place is a critical component for success, and one that involves regularly assessing how your campaigns are performing. Luckily, Amazon provides many metrics to help sellers and brands analyze ad efficiency. 

However, the challenge lies in understanding what these metrics mean, how they are calculated, and how to use these figures to identify areas in need of optimization. 

From CPC to CTR, ACoS to TACoS, and every term in between, we break down the 10 key Amazon Advertising metrics that you need to know to make sure you are driving the highest ROI on your ad dollars.

3. Cost Per Click (CPC) 

CPC is the cost you pay for each click your ad generates. It is calculated as your total ad spend divided by the number of clicks. As an advertiser, your goal is to beat competitors for the best ad position, and this is done by bidding the maximum cost you are willing to pay per click on your ad, which is referred to as your CPC bid. 

Regardless of how high you bid, you will only pay 1 cent more than the next-highest bid price for the same keyword. For example, if you bid $2 and the next highest bid was $1, your CPC would be just $1.01 even though the highest bid was $2. Of course, a lower CPC means a higher ROI. 

4. Click-Through Rate (CTR) 

CTR is a critical metric for assessing an ad’s performance. It varies based on the type of keyword, like branded versus unbranded search terms. The calculation formula for CTR is the number of clicks divided by the number of impressions. 

A high CTR means your ad is getting the attention of shoppers, while a low CTR means not enough shoppers are finding your ad compelling enough to click on it, based on what they are looking for. That can indicate that your targeted keywords may need to be adjusted for more relevancy.

7. Ad Spend

Ad spend is the total amount of money you spend on advertising per day. It can also be measured and broken down by account, campaign, ad group, and keyword. Ad spend varies from business to business depending on what the advertising strategy is.

8. Advertising Cost of Sales (ACoS) 

ACoS is the metric Amazon uses to measure advertising efficiency. It is calculated using ad spend divided by revenue multiplied by 100. ACoS is the ratio of ad spend to sales and indicates how well your ads are performing in relation to your ad spend. It is dependent on several factors, including your business goals, campaign structure, product life cycle, profit margins, and more. 

A lower ACoS reveals that you are spending a smaller percentage of sales on advertising. Therefore, if your goal is to increase a product’s discoverability, a higher ACoS for a given period would be ideal.

It is essential to determine what net profit margin you are aiming for with each product, after ad spend, to figure out what each product’s target ACoS would be.

Final Thoughts

Understanding what each of these metrics mean and how they are calculated provides you with both a detailed and birds-eye view of a campaign’s performance. As there are various components to each campaign, including keywords, bids, and more, you want to examine each campaign’s performance regularly. 

Ultimately, you want to ensure that your advertising dollars are being spent wisely and producing the desired results, whether that is expanded product visibility, higher conversions, or increased sales. Analyzing these metrics correctly also helps you identify where improvements can be made so that you can optimize your ads efficiently and effectively.