Our campaign's Advertising Cost of Sales (ACOS) is determined by the interplay of three essential factors: the average selling price (ASP) of the advertised product, the cost per click (CPC) you incur, and the conversion rate of the ad campaign.
When aiming for an improved ACOS in your campaigns, it's beneficial to have a higher average selling price (ASP), a lower cost per click (CPC), and a higher conversion rate. This trifecta of factors working harmoniously can lead to more favorable ACOS outcomes for your campaigns.
However, it's worth noting that altering the average selling price might be challenging in most cases. Nevertheless, there are strategies you can employ to influence both the cost per click and the conversion rates, thereby positively impacting your campaign's ACOS.
1. Decrease bids for the High ACOS targets:
One effective approach to reducing your CPC is to strategically lower your bids for keywords or targets that have shown a history of generating a high ACOS. Adjust the bids for these specific targets, lowering them to a level that maintains visibility but helps control costs.
Within the Adbrew platform, you can identify these specific targets using filters on the Target Analyzer page, as illustrated below:
In the above example, we have used ACOS filters to find keyword targets with an ACOS exceeding 50%. Once we have identified the targets, we have the option to select these targets, click on ‘actions’, select the "update bids" option, and reduce the bids by a desired percentage.
You can do the same using a bid management automation rule. (If ACOS > 50%, set the current bid to 0.75x)
If you're already using the Adbrew default bid management rule and looking to aggressively decrease your ACOS, you can consider raising the percentage of bid reduction within your rule configuration.
2. Target Less Competitive Long Tail Keywords:
Long tail keywords are more specific phrases that generally have lower search volume but are often associated with higher intent. These keywords tend to have less competition, leading to lower CPCs. Tailoring your campaign to include a mix of these keywords can help reduce overall CPC.
An indicator of the level of competition can be obtained through the suggested bidding range of a target by Amazon.
In the example above, the second keyword appears to be less competitive compared to the first and last ones. However, it's important to note that in many instances, lower competition also implies lower search volume.
3. Switch to the “Down only” bidding Strategy:
Are your campaigns with high Advertising Cost of Sales (ACOS) using the 'up & down' or 'fixed' bidding strategy?
(Utilizing the up and down strategy, Amazon can automatically increase your bid by up to 100% for placements at the top of the first page of shopping results and by up to 50% for other placements.)
We suggest considering a shift to the "down only" bidding strategy, as it tends to yield improved results in most cases.
You can review and adjust your campaign's bidding strategy within Adbrew. Simply navigate to the campaign manager page and check the bidding strategy column.
4. Leverage Negative Keywords:
Utilizing negative keywords is an effective way to trim down your CPC. Negative keywords prevent your ads from being triggered by search terms that are not relevant to your product or target audience. By excluding irrelevant traffic, you can reduce wasteful ad spend and potentially improve ACOS.
Within the Adbrew platform, you can identify these specific search terms using filters on the Search Terms Explorer page, as illustrated below:
In the above example, we have used clicks and order filters to find search terms with more than ‘20’ clicks and ‘0’ orders. Once we have identified these search terms, we have the option to select these terms, click on ‘actions’, and add them as negative keywords or products in their source ad group.
You can do the same using a target management automation rule. (If clicks>20 & order = 0, move target as negative exact or phrase in source ad group)
Helpful resource: https://adbrew.io/blog/click-threshold-for-search-term-negation
5. Refine Target Selection:
Utilizing a thoughtful and refined keyword selection strategy can help increase your conversion rate.
Weed out overly broad keywords that might attract irrelevant clicks, as these tend to raise your costs without driving valuable conversions. Instead, opt for highly relevant and specific keywords that resonate with your target audience, leading to higher purchase intent and potentially lower conversion rates.
6. Optimize the Placement modifier of the campaign:
As of now, Amazon provides you with placement-level control for two placements in each Sponsored Product campaign: Top of search and Product page.
Therefore, if you observe that one of the two placements has a high ACOS in a campaign and you are using a placement modifier, reducing the modifier can help you decrease CPC and potentially achieve a better ACOS.
On the other hand, if you notice that one of the two placements has a significantly better ACOS than the other and you are not using any placement modifier, setting up a placement modifier can help you in directing your spend toward the high-performing placement rather than the low-performing one in campaigns.
You can navigate to the "Placement" page in Adbrew to get a quick overview of how different placements in a campaign are performing for you and adjust the modifier accordingly.
For instance, in the first campaign, the product page placement is performing worse than both 'top of search' and 'rest of search'. The brand is currently using a higher placement modifier on the product page compared to the 'top of search'. Therefore, reducing the placement modifier for the product page could potentially help in reducing the wasted ad spend.
Similarly, in the fourth campaign, the "Top of Search" placement is performing way better than the other two placements. However, the brand is not using any placement modifier for "Top of Search." Setting up a placement modifier can help in driving more orders from the placement with a better ACOS.
7. Utilize Dayparting based on hourly performance data:
If you have access to 'marketing stream data,' you can identify the low converting and high CPC hours & and days of the week.
For instance, in the above example, ACOS for the brand tends to trend higher in the First few hours and last few hours of the day.
Here, the brands have an opportunity to set up a dayparting strategy in Adbrew to decrease bids during these specific hours, aiming to reduce wasted ad spend.
Additionally, marketing stream data or hourly control is not limited solely to bids. You can also delve into the hourly placement-level data of your campaign and optimize placement modifiers on hourly granularity.
To access marketing stream data in Adbrew, navigate to the 'Hourly Performance' tab on the dashboard page.
To adjust bids during a certain period, go to the 'Dayparting' page and create a dayparting strategy to increase/decrease bids accordingly.
Helpful resource- https://support.adbrew.io/knowledge-base/dayparting-v2
8. Optimize Product Listings:
Your product listing plays the most important role in the conversion rate of the product. Here are some tips to help you optimize product listings:
High-Quality Images & Infographics: Use high-resolution main images that accurately showcase your product. Ensure you have multiple supporting infographics to help customers visualize the product better.
Compelling Titles: Craft clear, concise, and keyword-rich product titles. Include key product features, benefits, and relevant keywords that potential buyers might use in their search.
Informative Bullets and Descriptions: Use bullet points to highlight the most important features and benefits of your product. In the product description, provide detailed information, specifications, and how the product solves a problem for customers.
Clear and Accurate Information: Be transparent about your product's specifications, dimensions, materials, and any potential limitations. Avoid exaggerations or false claims that could lead to negative reviews and returns.
Compelling Product Story: Create a unique and engaging brand story that resonates with your target audience. Highlight what sets your product apart from competitors and why customers should choose it.
Competitive Pricing: Research your competitors' prices and set your product's price competitively. Highlight any discounts, promotions, or value-added bundles in your listing.
Variation Listings: If applicable, create variation listings for different product options (colors, sizes, etc.). This streamlines the buying process for customers who want specific variations.
Use of Enhanced Brand Content (EBC): If you have a registered brand on Amazon, take advantage of Enhanced Brand Content to add more detailed product information and engage customers with your brand story.
Fulfillment and Shipping: Clearly communicate the shipping options, estimated delivery times, and any associated costs. Offer reliable fulfillment methods, such as Amazon FBA, to ensure timely delivery.
How to benchmark your conversion rate?
Understanding the conversion rate of similar products within your product category is essential to determine if your own product's conversion rate meets the industry standard.
Here's a step-by-step process for benchmarking your conversion rate against the category.
Open the Seller Central campaign manager.
Go to "Insights & Planning" and select "Brand Metrics" from the left-hand menu.
Click on 'Change Category' and choose the relevant category for your product.
4. Set the desired date range for the data you want to analyze.
5. Click on the “View detailed metrics for your brand in this category” link.
6. Here, you can review the conversion rate of your product, the median rate for the category, and the top brand's rate within the category.
If you observe that your conversion rate falls below the category median, it's crucial to focus on improving your conversion rate promptly.