Amazon Advertising: Nailing It in 5 Key Metrics

Maximize your advertising return on investment (ROI) by monitoring key metrics like Ad Conversion Rate, Cost Per Click (CPC), and Total Advertising Cost of Sale (TACoS). Calculate and analyze these metrics regularly to make data-driven decisions and drive up profits.

Isiah Kurz

November 6, 2023

Advertising fuels the grind for Amazon sellers. It takes a significant amount of time and money on advertising to make your products stand out from the competition and attract customers. But how do you know your ad investments are actually paying off?

Let’s dive into five essential metrics every Amazon seller should track to understand the ROI of their advertising campaigns.

A quick-view Junglytics dashboard with top advertising KPIs.

Top 5 Amazon Advertising Metrics

Ad Spend

Ad Spend: Ad Spend comprises the total amount spent on Amazon advertising. It includes sponsored products, sponsored brands, and sponsored display advertising. The goal here is to understand how much you’re spending on Amazon advertising and how it’s changing over time. Additionally, it’s important to understand how your ad spend is allocated between the different ad types and make sure that aligns with your goals.

Return on Ad Spend

Return on Ad Spend (RoAS): Return on Ad Spend, also known as RoAS, measures the revenue generated by your advertising investment. It is calculated by dividing your revenue generated by the advertising costs. For instance, if you spend $100 on advertising and get $500 in revenue, your RoAS is 5.

Ad Conversion Rate

Ad Conversion Rate: Ad Conversion Rate is the percentage of advertising clicks that result in the customer purchasing the product. The higher the Ad Conversion Rate, the more effective your advertising campaigns and listing content are in attracting and converting potential buyers.

Tracking your Ad Conversion Rate is critical because it helps to understand whether your advertising campaigns are well-targeted and whether your ad copy, images, and landing pages are optimized to drive sales.

Cost Per Click

Cost Per Click (CPC): The amount you pay each time someone clicks on one of your ads. Various factors, including your bid strategies, your competitors, and your chosen keywords determine Amazon's CPC. Keeping an eye on your CPC is super important. It gives you valuable insights into how much you're shelling out for ads versus how many clicks you're getting. By understanding how CPCs are changing you can determine if that’s the root cause of other critical metrics changing. When CPCs rise, often strategies on expensive keywords need to change.

Total Advertising Cost of Sales

TACoS (Total Advertising Cost of Sale): Total Advertising Cost of Sale (TACoS) refers to how much you spend on advertising for every sale you make. To calculate TACoS, divide your total advertising spend by your total sales. This metric gives you a holistic view of how advertising affects your business's profitability.

Maximize Your Advertising ROI

By monitoring metrics like Ad Conversion Rate, RoAS, TACoS, and CPC, you'll have a clearer picture of where to put your advertising budget. Remember to monitor these metrics regularly to pinpoint areas for improvement and make data-driven decisions to keep costs down and drive up profits.

‍To easily view these important metrics and more, use the Amazon seller data analytics tool, Junglytics. See a self-guided demo with real data.

ABOUT THE AUTHOR

Isiah Kurz

Isiah is an experienced content writer with more than a decade of experience in journalism, public relations, and marketing.

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