Amazon PPC Management: How to Lower ACoS and Boost Profits

If you’re fighting to lower advertising costs on Amazon without noticing a good return on investment, it is time to refocus your attention to ACoS. Many sellers experience high advertising costs when competing against big brands that are also utilizing Sponsored Product Ads. In order for you to remain profitable, executing an efficient Amazon PPC strategy is a must. You can hire Amazon account management services for the same purpose.

This guide will show you how smart optimizations can generate differentiation for your products, minimize wasted spend, and positively affect your ACoS. Continue reading to discover how to improve ad performance and attract conversions for your products without breaking the bank.

The Connection Between ACoS and Profitability  

ACoS (Advertising Cost of Sale) is one of the most significant metrics one can look at when examining Amazon PPC performance. It is a metric expressed as a percentage of your total advertised costs and compares that cost to the sales generated by your ads.

Essentially, it is calculated by the following formula:

• ACoS = (Ad Spend ÷ Sales) × 100

A lower ACoS means you are spending the money more efficiently, whereas a higher ACoS means the ads are cutting into your margins. The goal of profitability is to align your ad spend with your conversions.

Here are a few things you could do to directly improve profitability:

• Bid Management: In a campaign, for keywords that have high ACoS values, cut back on the bids. You should certainly raise the bids for strong performers, but cutting back on the high ACoS keywords should come first.
• Optimized Listings: Titles with clear details, well-written bullet points, and keyword-focused descriptions will help attract qualified traffic.
• Variation Optimization: Properly targeting relevant keywords as well as properly refining your ad copy will help you earn more clicks.
• Great Imagery: High-quality images and A+ content, such as better enhanced brand content, will help you gain more engagement.
• Reviews: Positive reviews will help build trust with future customers and increase conversions.
• Brand Strategy: Work to avoid bidding wars with large brands to avoid paying much higher CPC costs for insignificant bidding amounts.

If ACoS becomes a primary focal point of your PPC strategy, you will be sure that all the money you have spent is working harder to grow and not costing you your profits.

Reducing your ACoS for improved ROI  

1.Take advantage of precise ASIN targeting and product targeting.  

With Amazon’s product targeting, you can place ads on competitors’ listings or on listings of complementary products – ideal for redirecting sales to your product from much weaker competitors.

• For Product Targeting, focus on competing by category, brand or price.
• For ASIN targeting, advertise on ASINs with both a higher price and lower review counts.

2. Optimize bids and budgets  

• Create a strategy that allows for better bidding.
• Increase your bids on the few products that are converting at a strong rate and lower your bids on the few products that are not performing.
• Optimize your bids and review performance.

Deciding how to allocate budgets.

If you run out of your budget in the middle of the day, you miss out on sales all day.

Allocate more budget to the best-selling SKU and reduce budgets on the products that are not performing well.

Deciding between fixed and dynamic bids.

• Fixed bidding – lets you keep your bids consistent, but you may miss out on sales.
• Dynamic Bidding (down only) – Amazon will lower your bids when a conversion is less likely to happen.
• Dynamic Bidding (up and down) – this type of bidding allows for more exposure of your advertisement.

3. Enhance Keyword Research and Usage  

Choosing the right keywords is key to success with Amazon PPC, and

• High-Converting Keywords: Search terms that lead to sales, which you can uncover with tools like Helium 10 or Amazon’s Search Term Reports.
• Broad vs. Long-Tail Keywords: Broad keywords reach a lot of customers; however, long-tail keywords typically convert better (and more customers will be like yours), and often have considerably less competition.
• Negative Keywords: Exclude words or phrases that are not relevant and create advertising waste.

4. Utilize Dayparting Strategies  

Dayparting is simply when you set up your ads to appear when customers are likely to buy. For example:

• Lower the spend in periods of the day that do not convert.
• Increase budgets during times of heavy traffic to customers’ shopping.

This will help create the most for your ROI while minimizing excessive spend during “off” hours.

5. Optimize Listings and Product Pages  

Simply put, your ads only work if your product page is robust enough to persuade customers to make a purchase. IMPORTANT focus on:

• High-Resolution Product Images: Be sure the images used are of high-quality.
• Compelling Titles and Bullet Points: Naturally use primary keywords.
• A+ Content: Adds pictures, infographics, charts of comparison, or storytelling to differentiate products and raise conversion rates.

Well-optimized, robust product pages can significantly lower ACoS (Advertising Cost of Sales) simply by raising conversion rates.

6. Evaluate Strategies and Pricing of Your Competitors  

Your ACoS reacts to all types of competition. Be sure to track how similarly priced items are priced and promoted.

• Pricing: Don’t go too low, but be sure you are competitive.
• Promotions: Coupons, promotions, lightning deals, etc. Also, those triggered by promotional discounts allow you to stand out from the competition.
• Gap Analysis: What are your competitors not doing? For example, if they don’t have reviews or good images, take the opportunity to call these out in your listing.

7. Assess and Adjust Campaign Performance  

Amazon PPC is not a set it and forget it system. After your campaign’s solution, being able to adjust based upon performance is extremely important.

• If there are keywords or ad groups that have high spend with low results, then pause those keywords or ad groups.
• If there are keywords or ad groups that are performing well and profitable, then leverage that success and increase the bid to capture more sales for those keywords.
• Similarly, you should be constantly testing ad copy and creativity with A/B tests.
• You should be regularly adjusting the backend search terms.

Final Thoughts: Aiming for Best ACoS  

Improving your ACoS doesn’t mean you necessarily have to reduce spend-it is about getting smarter with your spend. Keyword targeting, bidding strategy, product listing enhancements, and dayparting- every small adjustment helps to contribute to a better ACoS and better profits.Open to improving your Amazon PPC campaigns and achieving an accepted ACoS? Contact us at Selling OS, your trusted Amazon account management service. You want to optimize your Amazon PPC campaigns, and we can help. Get started with our Amazon PPC management plans today!