How To Lower Your Amazon ACoS?

  • July 4, 2020

Planning the amount of your spendings on Amazon Advertising has become the most crucial strategy that you should rely upon. If you are a newbie to this platform, let me tell you only PPC’s shall help you survive on this wide and competitive platform. And 1into2 has the expertise perfectly filling all the gaps for its clients on the platform of Amazon. You definitely do not want your ad spends to dominate your profit margin, do you? And if you’re investing your time and energy on Sponsored products on Amazon, you must practice keeping your eyes on ACoS. Scroll to learn how?

As you know that Amazon Advertising Cost of Sales is a metric that shows how much money you have spent on advertising versus the sales you have received on that product. A lower ACoS is commonly considered as a positive sign but that’s not all. 

Say, a company has generated $600 with an ad spend of $150 over a certain period of time, then your ACoS is (150/600) x 100 = 25%

What makes a good or bad ACoS?

As such, there is no guaranteed rate of ACoS to earn a profit. It is crucial to know the profitable ACoS for your company. But this solely depends on your profit margin. In the above example, your ACoS rate was 25% but if your profit margin is 22% then you are making a loss of 3%. 

Have a look here:

What causes higher ACoS?

  • Targeting unrelated keywords and products.
  • Poorly structured campaigns.
  • Completely running on automatic campaigns. 
  • Poor optimization of campaigns.
  • Improper product listing optimization.
  • Not using negative keywords.
  • Launched a new product.

Higher or Lower – How to decide the best fit?

Higher profitability = Lower ACoS

If you have already established your image in this marketplace, then you might want to shift your focus from getting more audience to increasing profitability. If your product has surged a good demand, lower ACoS should be your target. 

Higher visibility = Higher ACoS

Once you have launched your product, your next aim should be to gain visibility. In order to create awareness regarding your product, you might end up spending more money. The higher cost will lead to higher ACoS But if this higher ACoS is giving you the desired sales or reviews, you can opt for it for a temporary time period.

Tips for lowering your ACoS

Auto-campaign service should be used effectively. 

Running an auto-campaign along with a manual one can be a good strategy. This will help you get the most profitable keywords and additional search terms. Do not forget that you are simultaneously looking at two campaigns. So, adopt the profitable keywords from the auto-campaign and add it to your manual ones. Bid these keywords at a higher price and see how it affects your ACoS. 

Use Negatives to turn positive.

Negative keywords must be used in order to reduce your ACoS. Using negative keywords or product targeting can help you save money from the positions wherein you don’t want your ads to appear. This will help you control your budget by blocking certain clicks. Use search term reports and identify the poor performing keywords and filter them. 

Search Term Isolation can be strengthened.

This can be used to isolate the best performing keywords so that you can have higher CPC bids and profitably run the entire campaign. For example, If you targeting keywords to sell a white shirt is “shirt”, you can isolate the term “shirt” and set up a higher bid of $2 for the entire collection – be it a cotton shirt or a khadi shirt. This will not only lower your ACoS but help you target specific keywords.

Keep a track on CPC bids.

Make an ACoS target and once that is done regularly optimize your CPC bids. This can be done by keeping a consistent watch on your bids. Here’s what you can do:

  • If keywords ACoS > Target value, then lower your bid.
  • If keyword ACoS < Target value, then increase your bid.

Dynamic bidding can be used when you decide your bidding price based on the preference of the placement. 

Final thoughts:

These tips will definitely help you reduce your ad spend and to reinvest the amount in your business. Add your dollars further by taking the help of Amazon services provided by 1into2. Get ready to skyrocket your sales on Amazon and trigger the competitor’s 

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