I wonder if you have a feeling that you don’t know how to control the ACOS of your ads. If you lower your bid, the exposure drops and you don’t get any orders. If you raise your bid, the cost is too high and you don’t make any money. How can you adjust your ads to achieve the best ROI (return on investment)?
In fact, a product has a life cycle, which is usually divided into the new product period, the rising period, and the stable period.
The new product period is when the product is just launched on the shelves. At this time, there are no reviews and no rankings for keyword searches. Advertising is needed to create exposure opportunities for the product. After all, only with exposure can conversions be achieved. At this stage, you don’t have to worry too much about the ACOS of the ad. Instead, you should focus on whether the product is exposed enough and find a better source of traffic. Therefore, the budget must ensure that the ad is not interrupted, and the bid should not be too much lower than the recommended value.
The rising stage is when the product has been receiving orders every day, has some reviews, and has been ranked in small categories, but you want to further tap the potential of the product. At this time, you need to pay attention to the conversion rate and trend of the product. Amazon's algorithm tends to give greater traffic to products with good sales and conversions (after all, Amazon takes 15% of your order, and Amazon definitely wants more revenue). At this stage, the advertisement must control the conversion rate, promptly deny or archive keywords with poor performance, and at the same time provide sufficient budget, otherwise once the advertisement is interrupted, the previous weight will drop.
The mature stage means that the product’s sales volume and ranking are stable, and it can continuously bring profits to sellers. What needs to be focused on here is the profit margin of the product. If it is not profitable in the mature stage, then the cost of the previous promotion stage will be wasted. At this stage, it is necessary to control the advertising budget and not burn all the profits at once. At the same time, it is also necessary to constantly adjust according to market changes to maintain stable exposure.
One reason why many sellers don’t know how to adjust advertisements is that they don’t realize that the advertising strategies are different at different product stages. Another reason is that there is no easy-to-use advertising management system to help sellers adjust advertisements more finely.
1. Advertising cost indicator ACOAS (the proportion of advertising expenditure to total sales),
The ACOAS data is actually the advertising cost. The gross profit margin of this product is obtained by deducting Amazon commission, FBA logistics fees, product procurement costs and head-end and advertising costs from the total sales. ACOAS directly reflects the profits taken up by advertising and is a more scientific indicator for measuring advertising effectiveness than ACOS (the proportion of advertising expenditure to sales brought in by advertising).
2. Advertising collection and budget control
Usually, everyone will run several advertising campaigns for one ASIN, such as a manual campaign and an automatic campaign. However, I personally suggest that you put these two advertising campaigns into one advertising set and control the advertising costs of the product by controlling the overall budget of this advertising set.
For the budget control of advertising collections, there are two different budget control schemes: fixed value or proportion of historical sales average.
For new products, you can set a fixed value. Regardless of sales, you will advertise according to a fixed budget to ensure that advertising is uninterrupted and the product has sufficient exposure.
For products in the growth and stabilization stages, you can set a budget control method based on sales ratio to ensure that advertising expenses do not exceed the set cost. If it is in the growth stage, this ratio can be adjusted a little higher, and in the mature stage it can be adjusted to the desired ratio, for example 10%, then the ACOAS of the entire advertising set will be controlled around 10%.
3. Keyword evaluation and automatic adjustment mechanism
Conversion rate is very important for products in the rising stage, so we need to evaluate the effectiveness of product words and classify keywords into high-efficiency keywords and inefficient keywords. For high-efficiency words, we only need to continue to maintain the current bid. For inefficient words, we need to pause or add negative words so that inefficient words no longer occupy the budget and exposure. Through continuous cumulative screening, new high-efficiency words will be retained and inefficient words will be eliminated, ensuring that the conversion rate of the advertisement is maintained at a good level.
4.Bid time-sharing price adjustment
The products of Amazon orders are not evenly distributed, but have obvious time distribution. The bid is applied to all time periods by default. It is possible that all budgets will be used up or insufficient before the peak period of order generation arrives. Time-sharing price adjustment can effectively solve this problem and bring higher ROI.
For example, the low peak of orders is from 0 to 6 o'clock at night, so the bid in this period can be lowered to 0.02. Basically, no cost will be incurred. During the peak period of orders, such as 10-12 o'clock in the morning, the bid can be adjusted to 110% of the basic value, so as to obtain sufficient exposure during the peak period and improve the efficiency of advertising.
Only by considering every detail carefully and carrying out refined operations can we achieve a perfect ROI.
