What is Amazon ACOs?
ACoS refers to the key indicator used to measure the performance of users' advertising investment in the Amazon market, that is, the proportion of advertising expenditure to advertising sales.
What is the calculation formula for Amazon's acos?
ACoS = ad spend / sales revenue
ACoS = (Amount per click * Click) / Sales generated Sales = Average order value * Sales quantity
ACoS = (click price * click) / (customer price * sales volume) sales volume = conversion rate * click traffic
ACoS = (click price * click) / (customer price * conversion rate * click traffic)
ACoS = Click Price / (Average Customer Price * Conversion Rate) = CPC / (Average Customer Price * CR)
For example:
Product A Campaign
Revenue per unit: $50
Spend: $10 ÷ Units sold 2 = CPA: $5
Spend: $10 ÷ Sales Revenue $100 = ACoS: 10%
In other words: you spent $1 on advertising and got $10 in sales.
Why is Amazon's acos so high?
Amazon’s high ACOS is mainly affected by the following factors: low conversion, lack of diversity, invalid words, too many keywords
(1) Waste of money caused by big words. For example: the product of sun glasses, because it is associated with the big word glasses, a large number of users may enter your store when searching for "glasses", but after entering, they find that it is sun glasses and close the page the next second. This huge volume has no meaning except affecting your data and consuming your funds.
(2) Diversity. A good product should fully understand user needs and consider the countless situations in which users search for products, such as: sunglasses - sun protection - UV protection - men - women - color - elderly - adults, etc.
(3) Invalid words. For keywords that perform poorly in the data, decisively reduce the budget, but do not stop the advertising directly. Campaigns are weighted. The longer they are open, the higher their score will be. When competing with other sellers, campaigns with high scores will receive equal exposure even if they are priced low.
(4) Too many keywords. The goal of diversity is to take into account the user's usage scenarios or search habits as much as possible, but it does not mean that a certain search habit matches too many keywords. At this point, screening becomes very important. We can use multiple products with different keywords to conduct short-term tests and quickly screen out high-conversion keywords.
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