Amazon PPC ACoS | How to calculate and Optimize | AMZ Advertising Pay Per Click | Sponsored Ads

– Yo, what's up guys, Anthony here again, back again with another episode with Seller Tradecraft So last week I just went to the Bahamas

Super cool, all-expenses paid trip, all to learn about the ocean I was fortunate enough to go swimming with sharks, diving with sharks, snorkeling with sharks, I got to tag sharks Yo, check this out I got a shark on my head, and I got a shark in front of me What? There's a shark on the boat

And it's weird enough, like sharks are pretty scary, but you know, if you're in the water, and you don't do anything crazy, they just kind of leave you alone Pretty crazy stuff, but I was fortunate enough to just be on an all-expenses paid trip to the Bahamas, just to learn more about the ocean really, and how sharks play a role in that And that's something I wanna talk about more later on in my future views about how possibly we can, you know, with other stuff with private labeling it's like, how do we build more sustainable products, or how do we build more eco friendly products, so stay tuned for that and everything But in today's episode we're gonna talk about Amazon PPC This is Amazon's pay per click program, aka Amazon's advertising platform, and how you can use it to really get more sales

But first of all, I really wanna teach you guys what ACoS is, right? ACoS is a super important factor in optimizing your Amazon PPC campaign, and a lot of people don't know what it is, and how to calculate it So let's go over that right now Alright, so first of all, what is ACoS, right? A-C-O-S, right? You probably see this in our campaigns and you're like, what the hell is this? So ACoS stands for advertising cost of sale So basically what it means is it's how much advertising dollars are you spending in order to make one sale? Did I spend $1 to make $10 worth of sales, or did I spend $10 to generate $10 worth of sales? And as just a visual cue, this is what it's gonna look like in your Amazon seller central account It's the column on the right hand side

So why is ACoS important? You wanna understand if you did spend $1 to generate $10 worth of sales, or did you spend $10 to generate $10 worth of sales? You spend $10 to generate $10 worth of sales, then you're probably losing money But say your ACoS is really low, right? So maybe you're spending $1 to generate $10 worth of sales, so maybe you net $5, right, but with advertising costing $1, then you net $4 So this is why ACoS is really important and like optimizing it, and let me tell you how we do this For example So in a situation where we have to spend $10 of ad spend to get $10 of sales, the ACoS would be 100%

So $10 of ad spend, divided by $10 of ad sales, is gonna be 100% ACoS So in most situations, if your ACoS if 100% or more, you're more than likely not making money, just saying So how do we figure out our break even ACoS, right? 'Cause that's the magic number of where we want our ACoS to be Our ACoS is gonna be different, our optimal break even ACoS is gonna be different for every single item, just because of the profit margins for every item But it's super easy to calculate, I'm gonna tell you how to do it just right now

So, first of all, you wanna understand what your net profit is So say your item is selling for $20, and you net $10 on this item That means you do not wanna spend more than $10 on advertising, right? If Amazon's only giving you $10 in your pocket, and you spend $10 on ads, that means you're gonna break even, right? Working backwards, we're gonna figure out what your ideal ACoS is, 'cause every item's different, 'cause each item has a different selling price, each item has a different net profit In this example, our item sells for $20, and we net $10, alright? So let's do the math and work backwards to determine what the ideal ACoS is So ACoS is ad spend divided by sales

So in this scenario, say you're spending $10 on ads to make one $20 sale So that's a 50% ACoS, right? So when you're tweaking your bids on your campaigns over the long run, you want your ACoS to be 50% or lower If it gets higher than 50%, what that means is instead of spending 10 on ads you're probably spending $11, $12, $13, $14, $15, right You're spending $15 on ads and you only net $10 from Amazon, guess what's happening? You're losing $5 on every single sale Every single sale on Amazon, right? So keep that in mind

And then on this slide, this is a visual cue of what it's gonna look like in the area where you update your bid price keyword Basic rule of thumb when it comes to adjusting your bid price, if your ACoS if higher than 50% you wanna lower your bid price by 25% each week until it gets lower than 50% If your ACoS is lower than 50%, then keep pushing your bid price up each single week by 25% That's the way I tweak it, right? This is the easiest way to go about it if you're a beginner in PPC, there's different strategies for it though, alright But basic rule of thumb, if you want it to, in my opinion, like hitting that break even ACoS or just lower is perfectly good

Because the role of PPC in my situation, I like to do is, I really like to have sales velocity at the highest level that I can 'Cause this gets your keyword ranked like really really high and helps you maintain that position, alright So as long as you're not losing money, then you're spending more to make more sales, and that's good for Amazon's ad renewal Got it? Cool Alright, so now that you know how to calculate your Amazon ACoS to determine your break even and profitability points, watch my other video I'm about to release on the one PPC campaign that every Amazon seller should do

It's super easy to implement, takes less than 10 minutes to do, and every Amazon seller should do it, and it's like one of the basic tips that I've learned in the very beginning of my Amazon journey And I think it's something you should know too Because if you're not, you're gonna be losing out on a lot of money, alright? And the best part of that, like I said, it only takes like five to 10 minutes to set up But that's it for today, I'm gonna head to the gym, see you guys later (upbeat techno music)

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