• Introduction

• Understanding ACoS: What It Means & Why It Matters

• Top Reasons Why Your Amazon PPC ACoS Is So High

• 5 Powerful Solutions to Reduce Your ACoS

• Bonus Tips: How Prime Ecommerce Solutions Can Help You Slash Your ACoS

• Conclusion

“Introduction”

Are you overspending on Amazon PPC but not seeing the intended results? A high Advertising Cost of Sales (ACoS) might reduce your earnings and make your campaigns less effective. In the competitive Amazon marketplace, optimising ad spend is critical to staying profitable.

In this blog, we’ll look at why your Amazon PPC ACoS is higher than intended and offer five tried-and-true ways for lowering it. Whether you’re a new or seasoned seller, these tactics will help you maximise your returns. Learn how Prime Ecommerce Solutions can take your Amazon PPC advertising to the next level! 

“Understanding ACoS: What It Means & Why It Matters”

The Advertising Cost of Sales (ACoS) represents the ratio of advertising expenditure to generated revenue. 

The formula is as follows: ACoS = (Ad Spend ÷ Sales Revenue) × 100

If you invest £100 in Amazon PPC ads and achieve £400 in sales, your ACoS would be 25%. This indicates an expenditure of £0.25 for each £1 of revenue generated.

What Is a Good ACoS?

• Break-even ACoS is equivalent to the profit margin.
• Target ACoS should be less than the profit margin.
• Elevated ACoS results in diminished profitability.

The optimal ACoS is contingent upon your specific business model. For Amazon Private Label sellers, an ACoS of 15-25% is regarded as favourable, whereas Amazon Wholesale UK sellers might target a lower percentage owing to narrower margins. 

“Top Reasons Why Your Amazon PPC ACoS Is So High”

An elevated Advertising Cost of Sales (ACoS) can deplete your profits, rendering your Amazon campaigns ineffective. What is the reason for this occurrence? Here are the main points to consider:

• Poor Keyword Targeting

Terms are the foundation of Amazon PPC campaigns. Focussing on the incorrect audience results in unproductive traffic, diminished conversion rates, and squandered advertising budget.

Common Mistakes:

• Employing wide-ranging keywords without appropriate restrictions.
• Overlooking negative keywords leads to your ads appearing for unrelated searches.
• Concentrating on keywords that generate a lot of traffic but yield few conversions.

Example:

Consider promoting sustainable water containers while competing for the general term “containers.” Your advertisement could show up for queries such as “baby bottles” or “wine bottles,” drawing in clicks without resulting in any conversions. This increases your ACoS without enhancing sales.

Interestingly, advertising targeting new sellers who recently create an Amazon account frequently miss the point by utilising broad, non-specific keywords. This generates clicks from users with no purchasing intent, wasting both money and possibilities.

Fact: Internal data from Amazon reveals that more than 40% of advertising expenditure is squandered on irrelevant keywords in the absence of negative keyword strategies.

• Inefficient Bidding Strategies

The approach you take in bidding has a direct effect on ACoS. Overbidding on keywords without performance analysis means you’re spending more while getting less in return.

• Overbidding: Excessive bidding on low-performing keywords leads to inflated expenses without justification.
• Effortless Strategy: Not adjusting bids based on performance leads to continuous spending on underperforming ads.
• Ignoring Dayparting: Failing to optimize bids based on time of day when conversion rates are higher.

Example:

A seller bidding £3 per click on a keyword with a low conversion rate (1%) needs 100 clicks to make one sale, spending £300 to sell a product with a £50 margin. This results in an ACoS of 600%, which is unsustainable. 

• Weak Product Listings

Even with flawlessly optimised ads, subpar product listings will hinder your conversion rate. The A9 algorithm from Amazon evaluates the relevance of ads alongside their conversion rates to decide where they should be positioned.

• Poor-Quality Images: Blurry or unrefined images do not engage potential customers.
• Unclear Descriptions: Ambiguous product information diminishes customer trust.
• Missing Key Features: Absence of bullet points or advantages results in minimal engagement.

For example, sellers who make an Amazon account UK, frequently prioritise ad campaigns over optimising their product listings. Even when the ads generate a lot of traffic, this carelessness results in low conversion rates.

Fact: Listings featuring high-quality images and well-crafted product descriptions can experience conversion rates that rise by as much as 45% when compared to those that are not optimised effectively.

• Lack of Campaign Optimization

A lot of sellers take a “set it and forget it” stance on Amazon PPC, which often leads to failure.

• No Data Analysis: Overlooking essential metrics such as CTR, CPC, and conversion rates.
• Neglecting to conduct A/B tests: Overlooking the importance of comparing various ad versions to determine the most effective option.
• Overlooking Search Term Reports: Losing the chance to spot keywords that aren’t performing well.

An advertiser maintaining the same campaign for half a year without modifications may observe a gradual increase in ACoS as competition and market dynamics evolve. Consistent evaluation and enhancement might have reduced their advertising expenses by 30-40%.

• Targeting the Wrong Audience

Amazon PPC campaigns do not succeed when they target individuals who have no interest in your product.

• Broad Geographic Targeting: Promoting to areas where your product is not accessible or applicable.
• No Viewers Segmentation: Approaching every customer uniformly, without considering their buying patterns.

For instance, if you offer a winter jacket while aiming at customers in warm climates, you may attract attention but struggle to convert that interest into purchases, leading to a significant increase in your advertising costs.

Fact: Advertisers that effectively categorise their campaigns according to location, interests, and purchasing habits can achieve as much as a 25% decrease in ACoS.

“5 Powerful Solutions to Reduce Your ACoS”

Lowering ACoS goes beyond merely slashing expenses; it focuses on enhancing efficiency. Here are five practical solutions:

•  Enhance Your Keyword Approach

• Use Long-Tail Keywords: These are more targeted, feature reduced competition, and draw in buyers with strong intent. For instance, replace “shoes” with “comfortable running shoes for long distances.”
• Implement Negative Keywords: Eliminate unnecessary search terms that deplete your resources.
• Regular Keyword Audits: Determine which terms lead to successful outcomes and which ones fall short.

Expertise of Prime Ecommerce Solutions:

We perform thorough research and consistently enhance campaigns, assisting clients in decreasing irrelevant clicks by as much as 30%.

• Enhance Your Bidding Approach Dynamic Bidding

• Dynamic Bidding: Implement Amazon’s dynamic bidding capability to modify bids instantly according to the probability of conversion.
• Modify Bids According to Results: Raise bids on keywords that are performing well and lower them on those that are not meeting expectations.
• Dayparting: Plan your advertisements for optimal buying times to enhance returns.

A seller focussing on UK customers observed that the highest conversion rates occurred between 6–9 PM. Modifying bids during these hours lowered ACoS from 40% to 22%.

• Improve Product Descriptions for Increased Sales

• Exceptional Visuals: Incorporate professional photography showcasing various angles and lifestyle imagery.
• Crafted Titles and Descriptions: Seamlessly incorporate pertinent terms.
• Use bullet points to emphasise distinct advantages effectively.

Products featuring improved A+ Content see an average 10% boost in conversion rates.

Expertise of Prime Ecommerce Solutions:

Our optimisation strategies have enabled sellers to enhance their conversion rates by 35%, resulting in a direct reduction of ACoS.

• Leverage Data-Driven Decisions

Examine the reports on search terms: Discover lucrative search phrases and cut down on unnecessary expenses.

• A/B Testing: Experiment with various headlines, visuals, and promotional text to discover what connects best.
• Consistent Evaluations: Modify campaigns according to performance metrics.

For instance, a client’s ACoS decreased from 60% to 28% once we pinpointed high-spending, low-converting keywords and put them on hold.

• Segment and Personalize Your Campaigns

Separate Campaigns for Branded vs. Non-Branded Keywords: Allocate budgets with greater precision.

• Target Your Audience: Tailor advertisements according to customer behaviour, demographics, and interests.
• Product Targeting Ads: Focus on rival listings to capture market share.

Prime Ecommerce Solutions’ Expertise:

We helped a UK-based seller reduce their ACoS by 45% through advanced audience segmentation and personalized ad creatives.

Bonus Tips: How Prime Ecommerce Solutions Can Help You Slash Your ACoS

Having difficulties with Amazon PPC marketing? At Prime Ecommerce Solutions, we focus on managing Amazon PPC for sellers in the UK. We offer a range of services that include:

• Thorough keyword analysis – Focus on high-performing terms while reducing unnecessary expenses.
• Dynamic Bid Adjustment – Modify bids in real-time to enhance return on investment.
• Boosting Conversion Rates – Improve product listings to drive increased sales.
• Continuous Campaign Oversight – We review performance metrics each day to implement informed modifications.

Those who partner with us have experienced reductions in ACoS of up to 40%, resulting in greater profitability and boosted sales.

Join forces with Prime Ecommerce Solutions now and watch us elevate your Amazon advertising results. If you’re facing challenges with elevated ACoS or aiming to expand your business, our customized strategy for Amazon PPC ads and extensive Amazon services UK will support you in attaining lasting growth. 

Reducing ACoS entails not only lowering expenses, but also optimising all aspects of your advertising approach, from keyword targeting and bidding to product listings and data analysis. By identifying the primary variables contributing to your ACoS and applying effective solutions, you may drastically increase your advertising performance and profitability.

However, getting these results necessitates experience, ongoing monitoring, and a data-driven strategy. Having the appropriate support can make all the difference. With the appropriate methods in place, you can transform your advertising budget into a powerful weapon for development and long-term success.