A commonly asked question Amazon Sellers ask us here at Sellozo is “What’s the difference between Click Through Rate and Conversion Rate?”
Click-Through Rate is figured by using the number of Impressions and the number of Clicks that the Advertising Campaign has received. Amazon Advertising Impressions are how many times your Sponsored Ad (whether Sponsored Product, Sponsored Brand, or Sponsored Display) is shown on Amazon. Clicks are how many shoppers actually clicked on the Pay-Per-Click Sponsored Ad.
As a formula, this is how to calculate Click Through Rate as a percentage:
(# of Advertising Clicks / # of Impressions) x 100
Now you may be wondering, what is a “good” Click-Through Rate? It depends on the life phase of the product – newer products may have a lower click-through rate while they are getting established. In general, a Click Through Rate of 0.3% or below may indicate Amazon listing optimization would be beneficial. Improvements to the product’s photos, bullet points, title, and A+ content would be a nice place to start as these are the foundation of your listing on Amazon, what sets you apart from your competition. Notice that Click Through Rate does not factor in how many PPC sales were actually obtained from the number of Clicks in the Advertising Campaign because…
Conversion Rate takes into account the number of Pay-Per-Click Clicks and the Conversions. When selling on Amazon, a conversion is a term for a Pay-Per-Click Advertising Sale. It is vital to analyze your Conversion Rate because it is a key metric in determining how well your Product is at getting the initial Click AND the Conversion!
To figure Conversion Rate, we divide and then multiply by 100 to obtain the percentage:
(# of Conversions / # of Advertising Clicks) x 100
Typically, a strong Conversion Rate is between 10 – 15%. It would be amazing to convert 100% of the time, however, buyer behavior doesn’t always make that possible. In regards to Conversion Rate, consider the following:
- Review your Amazon Ads Strategy – what your Targets are (keywords/product ASINs) and analyze if they are relevant to your product. Are you using an automated Amazon PPC Software to help adjust your targets?
- Refer back to your listing: Are your backend search terms filled out to help Amazon’s algorithm index your item to the best of its ability? Are there 10+ Ratings/Reviews? How are your inventory levels? Are you out of stock of your most popular size/color of your product?
- Consider your Competition – how does their product listing compare to yours? How competitive is your niche?
- Sample Size – 5 Conversions after 20 Clicks equals a 25% Conversion Rate. 200 Conversions after 1,000 Clicks is also a 25% Conversion Rate. While the Conversion Rate is the same in both of these examples, the data is more reliable on the Advertising Campaign with 1,000 Clicks.