3 Ways to lower Amazon Advertising ACoS

Amazon Advertising revenue topped $10B in 2018, creeping up right behind Facebook and Google, as the third largest ad platform in the US. There would be a major influx of brands investing more into Amazon advertising. Why is this important? More advertisers = more demand = higher CPC. When CPC increases, so does ACoS (Advertising cost of sale). With more ad dollars being allocated to Amazon than ever before, lowering ACoS may seem like a tall task. Here are some ways to make Amazon more profitable.

Negative Keywords - Negative keywords play a key role in keeping ACoS low with Amazon’s advertising platforms. Negative keywords allow you to control what search terms not to serve ads for, which ultimately improves your profitability by focusing ad spend on relevant terms that are more likely to convert and drive sales. Adding negative keywords to your campaigns from the start will help you optimize the campaign faster, as you won’t be wasting money on clicks for irrelevant searches.

Tips – Use keyword planner tools to find negative terms. Create an auto-targeting campaign AND a manual targeting campaign with Broad and/or Phrase match keywords. Once your ads have accumulated enough clicks, use the search term query report. Find and add negative keywords back into campaigns.

Isolate your search terms - In Amazon’s eyes, broad and phrase match keywords are actually “buckets” of search terms often yielding thousands of results for off-topic items. What does this mean? If you target a broad or phrase match keyword, you can only set one bid for that keyword. Amazon then applies that bid to the entire bucket of search terms that match to it. Search term isolation redefines how brands should manage their advertising on Amazon.

Tips - Look at your search terms report frequently and find important keywords. Move these converting search terms into specific campaigns as an Exact Match keyword. Negate the same converting search term from all other campaigns.

Effective Bid Management - Bid management is a lot more complex than most advertisers realize. As we mentioned above, Amazon’s advertising platform only really allows you to control bids for exact match keywords. Phrase and Broad keywords manage a bucket of search terms, which limits your ability to control the CPC. Below are some common scenarios one might encounter when optimizing bids:

If there are low ad sales and high ad spends – Bid down on keywords.

If there is a high conversion rate and low impressions – Increase the bid to capture more traffic and sales

If there are high clicks but low sales and low conversion rate – Check your price and detail page content to make sure they’ve competitive and encouraging conversions.

If there are high impressions but low clicks – Optimize your product image and product title to get better CTRs.

Use below equation to calculate your bids –

Bid = Average Sale Price X Target ACoS (decimal) X Search term conversion Rate (decimal)

I hope these tips to lower your ACoS will help you save money on wasted ad spend and reinvest those funds in your business. Whether you decide to tackle this on your own, with the help of auto-bidding technology, or hire an agency partner, these strategies will help stretch your ad dollars further. Even if your ACoS isn’t skyrocketing yet, Amazon is just getting started with their advertising business and things are about to get crazy, really soon.