The ONLY 3 Amazon PPC Metrics That Matter

Adam Weiler
February 17, 2024

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Stop obsessing over vanity metrics…

These are the ONLY 3 Amazon PPC KPIs that make (or break) your ad campaigns:

The clickthrough rate. The conversion rate. The almighty ROAS.

Master these 3 vital signs of digital ad health and your campaigns will thrive.

Neglect them and watch your hard-earned profits go down the drain.

I see it all the time...

Ambitious sellers pour endless energy into "optimizing" metrics that have ZERO impact on their bottom line.

But while it may feel productive to obsess over granular stats, this misguided effort rarely pays off. Because most KPIs don't directly correlate with sales or profits.

So why waste time splitting hairs over irrelevant numbers?

To truly dominate Amazon PPC, hyperfocus on the metrics that matter most:

CTR, CR, and ROAS.

Make incremental improvements to these 3 north stars and your earnings will skyrocket.

In this quick guide, we'll demystify these top metrics, look at healthy benchmarks, and uncover tips to start optimizing your way to advertising greatness...

ACoS - Advertising Cost of Sales

ACoS gives you an at-a-glance view of your advertising efficiency. It reveals how much you're spending to acquire each new dollar in sales.
The formula is simple: Total ad spend ÷ Total sales from those ads.
For example, if you spent $100 to run Amazon-Sponsored ads last month and generated $500 in sales from clicks on those ads, your ACoS would be 20% ($100 ad spend ÷ $500 in revenue).
This means you're paying $0.20 in advertising for every $1.00 you earn in sales.
As a benchmark, aim to keep ACoS under 30% to maintain healthy margins. Any higher and your profit starts eroding.
If you notice your ACoS creeping up month over month, it signals declining advertising efficiency. It means your ads are becoming less capable of driving profitable sales.

Tips to bring a high ACoS back down:

Review search terms reports and bid down or pause unprofitable keywords
Tighten up ad groups around more closely related keywords
Test new long-tail keywords, match types, and creatives to find more converting search terms
Dig into campaign analytics to identify low-performing product ads and placements

Keeping an eye on ACoS lets you catch slipping ad performance early.

You can then take swift action to optimize campaigns and maximize your ROAS.

CR - Conversion Rate

Conversion rate is one of the most telling indicators of how compelling your ads are. It reveals what % of website visitors take that next step to actually purchase your product.
To calculate CR, you simply divide your total sales from clicks by the total number of clicks your ads received. For example, if you had 50 purchases out of 1,000 clicks last month, your CR would be 50 ÷ 1,000 = 5%.
This shows that 5% of shoppers who clicked your ad ended up converting into a paying customer.
Top-performing Amazon PPC campaigns convert between 5-15% of clicks into sales. Anything below 3-4% indicates your ads aren't resonating.
Low CR also suggests mismatch between how you portray your product in ads versus landing pages.

Ways to start improving CR:

Revise copy to more clearly communicate product benefits
Showcase your best-selling ASINs to social-proof quality
Analyze clicks to identify and exclude low-intent traffic
Test segmentation tactics to laser focus on your ideal buyer

Monitoring CR helps you diagnose issues turning site visitors into customers.

By testing and optimizing, you can create ads that compel more clicks to convert.

ROAS - Return on Advertising Spend

ROAS gives you the true bottom line of your advertising after accounting for costs. It reveals how much revenue you generate for each $1 spent.
The formula is simple: Total sales revenue attributable to ads ÷ Total ad spend
For example, if your campaign drove $5,000 in sales last month, and you spent $500 to run those ads, you would calculate a $5,000 ÷ $500 = 10x ROAS.
This means for each $1 you invested in advertising, you generated $10 back in incremental sales.
As a sustainable benchmark, aim for at least 3-5x ROAS per campaign. Top-performing accounts frequently see >10x.

Tips for improving ROAS:

Ruthlessly cull low-performing keywords that drag down campaign earnings
Continuously test new keywords, match types, and ad copy to unlock more high-converting search terms
Analyze traffic sources in analytics to optimize targeting and bids for your highest ROI placements
Review product metrics to ensure ads are directing traffic to your best sellers

Monitoring ROAS provides full transparency into campaign profitability.

By testing and tweaking to incrementally improve ROAS, you can scale a winning strategy.

Final thoughts

Mastering ACoS, CR, and ROAS is crucial for PPC success.

Track them closely to catch underperformance fast.

Test new keywords and creatives relentlessly to optimize.

Tiny tweaks to boost these metrics lead to big sales growth over time.

What's working for you right now?

Reply and let me know!

Talk soon,

Adam

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