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 to 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 matter 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 that you are missing?
We must learn about ads why ads are being used? What is the actual purpose of the advertisement?
Our Main purposes to run ads on Amazon are as follow:
1st. Item to be exposed in the market
2nd. Brand item Awareness around the location
3rd. Ranking of keywords for Amazon even Google.
About 1st purpose, even we are launching a new item or providing a copy of the same older market item with an updated version or the same.
How we can have buyers 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 items 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 about how it could be possible to show a very new launch item on the 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 consistent in ranking even next month you will have to do a same, process where you will be paying more to gain ranking, etc.….
Leave these NONE lasting processes off and use them to start Amazon internal ads, use the same even less $ on the ads, and gain permanent ranking factors which make the algorithm satisfied for long terms basis.
You can now show your items along with the competitor listings on the 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 the algorithm starts pushing the listings towards the top pages to make it easy for the buyers to approach your store item listings.
Here your item quality listings work to get visitor mindset change into a buyer. This is another topic why buyer buys your store item along standing with your competitors.
We learned about the 1st purpose of ads in actuality.
About 2nd Purpose: who knows what brand is there if we could not approach 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 buyers joining the 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 a potential buyer.
A permanent customer of a competitor will have the choice to visit your store listing for the same item and it is a kind of awareness of your brand and item. Ads will make this happen to your store’s new listings right away.
Other than you will have to create awareness events along with the location that we are brand we have these items please check our Amazon listings we are selling there. Spend a 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 is 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 the awareness they are creating and we always go to the 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 the 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 has 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 the item and click on a specific item, the algorithm starts pushing that item on top of the searches as it is automated installed in the system that pushes the item that is having a huge number of clicks. And it double pushes the items that 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 fewer pages and can have impressions and clicks. As top 5 pages of amazon.com have a high number of purchases.
When clicking starts algorithm starts pushing items on top of the pages organically as well as this process takes time but the long last ranking is being processed.
In the end, the listings start 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
$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)
$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 does it work?
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.