300 Million dollars spent Deep case study on Amazon PPC sponsor ads Acos matter
It is very typical to understand the A9 algorithm of Amazon how they preserve to use third party ads to gain sales.
Always people give up on ads even selling on amazon due their mindsets made by the services provider to look into the ACOS, ACOS matters a lot if you are spending on ads having huge Acos you are losing profits
That’s not the truth.
Why this as they want to sell their services or software to show you lower Acos but they do not care about the store revenue.
ACOS does not matters if with spending on ads and with high ACOS you are having item keywords ranking and getting organic sales.
Here is the trick if you have huge ACOS , collect targeting Keywords in Manual ads / Search terms in Auto those are having no sales with at least $3 spent and above. Copy and paste those in negative targeting and within 5 hours you will see the ACOS will be dropped around 4% to 5% right away and we have even observed 10% Acos for specific categories. Like party supplies, Plush Toys, and seasonal toys, and seasonal items and Hardware. But you will be concerned as your total store revenue will get dropped as well within 24 hours. On this point you need to understand the Algorithm what you are missing?
We must learn about ads why ads are being used? What is actual purpose of the advertisement?
Our Main purposes to run ads on Amazon as follow:
1st. Item to be exposed in market
2nd. Brand item Awareness around the location
3rd. Ranking of keywords for Amazon even Google.
About 1st purpose, even we are launching new item or providing the copy of same older market item with updated version or the same.
How we can have buyer on that new listing on Amazon if there are thousands of strong listings having strong reviews and algorithm ranking?
Our goal seems to approach to that ranking and upon raking people buy item from your listings even you do not have any reviews.
So now our main goal is to show our item along with the competitors on tops pages.
What do you think how it could be possible to show a very new launch item on top page of Amazon along with competitors?
You have choices, UN ethical ways of using software, external ranking tools, Social Media Giveaways, Rebate systems where we pay tons of $ and gain ranking and it is totally faking the algorithm internal process which is not consistence in ranking even next month you will have to do same , process where you will be paying more to gain ranking etc.….
Leave these NONE lasting processes off and use to start Amazon internal ads, use the same even less $ on the ads and gain permanent ranking factors which make algorithm satisfied for long terms basis.
You can now show your items along with the competitor listings on top page get exposure of your items right away within 2 hours. Now your item gets explored by the buyers as they will see your item along with their completion. They will click item read the features the item has.
More and more clicks help your item gain indexing and algorithm start pushing the listings towards the top pages to make easy for the buyers to approach towards your store item listings.
Here your item quality listings works to get visitor mindset change into buyer. This is another topic why buyer buys your store item along standing with your competitors.
About 2nd Purpose: who knows what brand is there if we could not approach to them at the right time as they are searching for the item on Amazon, as also buyer community is increasing there are always tons of new buyer join online market to buy items. So we always need to remain up to show them what we have. Its Ads work to show the item listings to potential buyer.
A permanent customer of a competitor will have choice to visit to your store listing for the same item and it is kind of awareness of your brand and item. Ads will make this happened to your store new listings right away.
Other than you will have to create awareness events along the location that we are brand we have these items please check our Amazon listings we are selling there. Spend ton $ on events to create buzz.
Please know this is what ads are doing for your brand item in the market. So have to spend $ on ads.
Why Amazon doing advertisement sell on Amazon, why Coca Cola is doing million $ ads on the TV and google even nobody is going to grab any item from the TV set or mobiles or from google.
It is all about awareness they are creating and we always go to shop and our choice is coca cola or other brands like them we are seeing ads on TV or on our cell phones.
Advertisement is kind of making mindset of people showing them item again and again and it is true when one specific brand item seen by a human again and again he naturally be buying that item to check what is it.
About 3rd purpose: as we know Amazon is having a very broad algorithm system that have an internal database tech to collect the behaviors of the users through their searches, use of words and to show them something very matched able to their wordings.
When again and again people search for item and click on specific item, algorithm starts pushing that items on top of the searches as it is automated installed in the system that push the item that is having huge number of clicks. And it double push the items those even get conversions with the clicks.
First with bidding items could be seen on 10th or lower pages and with high bidding we can have them on the 5 or less pages and can have impressions and clicks. As top 5 pages of amazon.com having high number of purchases.
When clicking starts algorithm starts pushing item on top of the pages organically as well as this process takes time but long last ranking is being processed.
In the end the listings starts gaining organic sales. The organic sale total profitability for the store.
The given detail is the deep insight of spending around 300 Million Dollars on Amazon ads for more than 200 seller accounts.
We convert this detail into a smart summary to have your easy understanding.
For understanding TACOS we are proving you with a following specific method
First know your ads Acos NO profit, No loss point.
Retail price – Item Cost – FBA Fee – Shipping to FBA = Net Profit
Example
$16.99 – $4.99 – $5.99 – $1 = $5.01 will be the net profit
Net profit / Retail X 100 = No profit / No Loss Point (Acos)
Example
$5.01 / $16.99 x 100 = 29.48% the no profit no loss point for Acos as for example item.
Now on the point of TACOS. How it works?
A store having sales with ads section is following:
Ads 930 units sold with $7868.30 with $4605 Ads spent which led us to 58.52% Acos
Organic 1210 units sold with $11098.29
Total Store revenue is = 18966.59
Ads spent / Total store Revenue *100 = TACOS
4605 / 18966.59 * 100 = 24.27% TACOS.
Now check the no profit, no loss Acos was 29.48% and with help of ads we generated the organic sales and that led us towards the total profitability. Of 24.27% Acos which is actual to be considered.
This whole article is having actual facts regarding Advertisement and to understand the facts, to encourage the community to have proper awareness of the ecommerce business to start with.
Haroon Usman
Founder
www.amz-doc.com
136 Comments
admin
August 6, 2020
Any Questions regarding this please feel free to contact with us.
Usman
August 6, 2020
Thank you for sharing the details very unique article on ppc topic.
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August 12, 2020
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September 4, 2020
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Mehrab Sohail
September 4, 2020
Very interesting information for both sellers & Service providers. I feel it’s true to keep the ACOS% as low as possible but also get to know what the term ACOS% means. I noticed most of the sellers start shouting when ACOS% goes up to 30 % as most of the private label sellers have 40% profit in their businesses No one actually considers that what they are indirectly getting from the advertisement. I must say a great effort to change the mindset of peoples, really appreciate.
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September 6, 2020
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December 11, 2020
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