How do you know your PPC bidding campaign on Amazon is working?
Measuring Increased Revenue Won’t Work
Obviously you’d like to increase revenue. Yet revenue can be naturally highly variable. Just because revenue dips doesn’t mean your advertising isn’t working. Often revenue is seasonal. Revenue will always increase at the beginning of the season, so increased revenue alone is not a good measure of advertising success. You could measure year-over-year, but here too, the measure is inadequate. First, you need to know now that your campaign is working—you can’t wait until next year to measure your efforts. Even if you could wait, most Amazon sellers will show a year-over-year regardless—growth that is largely due to growth in organic sales, not because of advertising.
Ad Sales Proportion Gets Closer
An increase in ad spend should generate an increase in the overall proportion of revenue that is coming from advertising. For most sellers, this can only be measured at the campaign level. The Ad Sales Proportion is calculated as Total Ad Sales divided by Total Sales.
The problem with this Ad Sales Proportion is that doesn’t take into account ACoS. How much was spent on advertising to get those additional dollars of revenue? The amount spent on ACoS is absent from the ratio.
Ad Sales Proportion to ACoS Ratio (Ad Sales–ACoS Ratio)
The Ad Sales-to-ACoS ratio is the correct method for measuring PPC campaign success on Amazon. The proportion of revenue associated with advertising is divided by the ACoS required to produce that revenue. For example, if the Ad Sales Proportion is 50% and ACoS is 5% the Ad Sales–to-ACoS ratio is 10. If the Ad Sales Proportion is 20% and the ACoS is 20% the ratio is 1. The higher the Ad Sales-to-ACoS ratio the more effective the campaign. 900%™ will increase your Ad Sales-to-ACoS ratio.
900% Impact on Ad Sales–ACoS Ratio
In the results shown here 900%™ was used to determine placement bid adjustments percentages for Top of Search and Product Pages as well as determine the base bid amount for each campaign.
The chart shows the moving average of the Ad Sales–ACoS ratio over a three month period. In a nutshell 900%™ steadily increased the ad sales proportion of overall revenue while simultaneously decreasing ACoS.
900%™ is the seller’s front end to Amazon’s AI back end. There is an optimal money-making bid for every campaign placement—900%™ helps the seller find it. Amazon sellers increase ad sales proportion of overall sales while driving down ad costs.