Number One Thing To Know About Your Amazon ACoS
Today Kris Gramlich and Dustin Kane discuss Amazon ACoS and what numbers are important. What is the number one thing you should be looking for regarding your ACoS?
What is your Amazon ACoS goal? How is ACoS calculated? Why is my ACoS high? Listen to this podcast for some great Amazon seller tips.
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Number One Thing To Know About Your Amazon ACoS
– Hello everyone and welcome to episode 83 of Two Amazon Sellers and a Microphone, brought to you by Sellozo. You got me and Kris today again as always. What’s up, Kris? How are you?
– Good, man. How you been?
– I’ve been good. Nice little weekend and good news. The cargo ship in the Suez Canal made its way out. It’s not possible, not crazy. That was insane.
– It is.
– It’s insane. It’s amazing to me one little event like that can totally disrupt, I mean, commerce. It’s fascinating. The billions of dollars a day that were being lost just from something like that. I mean, it’s probably not a huge effect if you’re an American, a US seller, but a lot of those European and UK sellers were waiting and waiting for stuff to ship.
– It was all in the hands of that one little crane, just getting…
– Yeah. It’s crazy what can happen, but it’s all gotta stay on your toes in this business, anything. Whatever you’re prepared for, something else is gonna happen. Something’s gonna get stuck sideways in the canal, which is crazy. But anyway, we want to just jump on real quick. We want to just do a nice little short episode here, and we’re gonna talk about the number one thing to know about your Amazon PPC ACoS. And this is, I feel so important, Chris, because this is something we talk to sellers all the time and they’re just stuck on that ACoS number. Like I’ve got to get it lower or I’ve gotten, you know, and the number one thing that you have to know about your PPC ACoS is that a lot of times, it can be somewhat of a irrelevant or a misleading metric. What you really should be looking at is your TACoS, which is your total ACoS, which includes your organic sales. And I just feel like it’s so important to get this point across to people, especially new sellers who are launching ad campaigns.
– Yeah, for sure. And I think it gets lost in all the training and everybody’s always talking about their ACoS. I just got off a demo and a guy said he has ACoS at 10%. He’s like, “But I want to increase my sales.” Okay, well, we’re gonna have to get that ACoS higher than ’cause you can’t hit the target ACoS at 10 and expect to have thousands of dollars in sales in a couple of weeks. Like you’re gonna have to increase that target ACoS. Just because you increase it inside Sellozo, it doesn’t necessarily mean that that’s what your ACoS is gonna be. It just allows a tool to continue to raise the bid. So back to like, you know, looking at your ACoS goal, you know, don’t be scared of, you know, fluctuate that and move it higher because that’s how you’re gonna get more sales. And you need to know where your goal is. Like if you’re trying to just rank product and move up the ranking organically with your ads, then you’re gonna need to have a higher ACoS goal. But if you’ve already maintained that rank, you’re just trying to get profitability. Well, then that’s where you can focus a little bit more on a more profitable ACoS goal. But it all starts with knowing where you want to be as far as your goal goes, and then just putting that to work really.
– Yeah. And I think the important thing is to break down how these numbers are calculated. So the ACoS number inside of your ad campaigns that you see that’s your PPC ACoS is your ad spend divided by the sales directly attributed to ads. So if you spend $10 and you make 10 sales, or you do a hundred dollars in sales from your ads, then you’ve got a 10% ACoS. And so what it’s leaving out is it’s leaving out all the organic sales that are most likely directly related to your advertising. I mean, now the more advertising you do, the more aggressive you get, most likely or ideally, the more highly organically you’re get ranked which increases your organic sales. So when you leave that revenue out of the equation, you’re getting a misleading number. That’s why inside Sellozo, we’re calculating this total ACoS for you, where it’s your total sales that is inclusive. You take your ad spend divided by all your sales. That’s your actual ad spend per unit sold on Amazon. So that’s all you need to know, and you may have a really high PPC ACoS. But if that’s driving a lot of organic sales and you’ve got a low ACoS, then you shouldn’t be scared about that high ACoS number of your campaigns. You might even want to be more aggressive. And all that you’re drilling, the only thing that when you set your target ACoS inside of an automation tool like Sellozo, or if you’re doing it by hand and you’re just going towards a goal, all that means is how much are you willing to spend per unit that you sell from ads on advertising, you know? And if you’re willing to lose money on a sale from ads, but that’s boosting your organic ranking and building revenue, then that’s a great strategy. Set your target ACoS high. Don’t be scared. It’s not indicative of your actual profitability across your account. It’s only talking about just the sales from ads. We talk to people all the time, especially if you’re in a competitive niche, they’ll come in and their ACoS is 150%, 200%, and it’s okay. They’re actually killing it when you look at their overall accounts. So I really think that that’s a stumbling block for people, especially if when they get started is they want a low ACoS so bad that they get there to the detriment of how they could grow their business.
– Yup. No, I think that’s why Amazon got rid of it in the columns that now look at RoAS. So, I mean, you can still pull it up. But it defaults to RoAS. So I’ve liked being aggressive on ads, I like trying to scale it up through advertising, go after all the keywords. I want to go after raise my bids top of search multiplier, all that stuff’s important. So knowing what your TACoS is. I hear 10% is pretty common to be around as far as total ACoS goal. So if you’re below 10%, you’re doing really good, but you want to be around that 10% total ACoS goal.
– And on that same note, if you’ve got a good ACoS that you’re excited about, but maybe you’re only selling 10 units a day, okay? Well, what if you were more aggressive with advertising, your ACoS goes up a little bit, but now you’re doing a hundred sales a day, which scenario is better? A little bit more percentage off the bottom line, and a ton more revenue. I think that was finally the way to go. So I do think this is just a quick video episode here that we’re just gonna hammer this point home, know your TACoS, use your PPC ACoS as a tool, but don’t get hung up on what it is because it’s a really misleading indicator. And so to help you out, we can get you set up with Sellozo. You can come on, you can talk to Chris or I, we can do a demo, we get you signed up for our free trial. During that free trial period, all your data is gonna import to Sellozo. You’ll be able to see right there what’s your TACoS for all of your products, ’cause this can be hard to calculate that sometimes. I mean, if you’ve got a lot of goods you’re selling, and you know, you got to separate all that revenue out, organic sales, et cetera, our tool is doing for you. You can look, you can change the date range, you’d be like, okay, last 90 days, my total ACoS is 6%. Let’s be more aggressive with advertising. It’s gonna be great for you. So I encourage you guys to go to sellozo.com, book a demo with Chris or I, stand out for the 14-day free trial. We’ll talk about anything you want on Amazon, but we’ll also be able to just quickly look right there at your total ACoS. Oh, we got a question coming in here. Our buddy, Francoise Jaffres, what’s up Francoise? He’s got a question. How long should you let a PPC campaign run to see an effect on conversions and to calculate TACoS? I mean a while, especially if you’re launching a product. Chris, I’ll let you get your take on this, but from if you’re launching a brand new product, you’re not really super focused on either one of those, your ACoS or your TACoS early on. You’re super concerned about trying to get your ad to show at the top of search for all your main keywords and get your organic ranking up. There’s not gonna be much difference between your PPC ACoS and your total ACoS in the beginning if you’ve launched a brand new product because the majority of your sales are probably gonna be coming from ads anyway. But what you want to watch is that trend. So you’re gonna watch hopefully your total ACoS starts decreasing over time. So you gotta let that product get through your launch phase first and then start monitoring it. Chris, what’s your take on that?
– Yeah It’s all about collecting data. So you’re collecting data. You’re trying to figure out where you rank out for keywords. If you’ve done the right keyword research, you’re gonna be able to see changes to your conversion rate and you’re gonna be able to calculate your ACoS goals probably faster, but with running Amazon ads, it’s all about collecting data and just keeping an eye on your conversion, right? And if there’s something that’s not converting, that’s where it’s, you know, a tool like ours or other whatever tool out there is gonna get rid of that for you. But I’m a big fan of, especially if your campaign is meeting your ACoS goal, then just continue to run with it. But if a campaign and starts out, and the ACoS is just through the roof, and it’s been two, three weeks, it might be time to restart a new one like, or four weeks maybe. But it might be time to start a new one. There might be something wrong with the listing. You could be indexed for the wrong keywords. There’s a lot of factors like especially in advertising, if your listing is just terrible, and you haven’t done the right job of getting an optimized and putting good titles in there, you’re gonna confuse Amazon, and you’re gonna just be in a big flywheel circle that you don’t want to be in. So yeah, if you’ve done the right listing, and if you’ve got really good keywords you’re targeting, you’ll start to understand more of your TACoS within a couple of weeks for sure.
– And the hammer on that point that you just brought up, you really want to look at your reports and look at your conversion rate on a lot of these. I mean, if you’re getting a really, really good conversion rate on a certain keyword, be more aggressive with that. Try to get your organic ranking up ’cause the organic search is gonna have a really similar high conversion rate, which is gonna really help your TACoS overall. But big shout out to Francoise for that question. Francois’s our buddy from over there at New Vinland. So if you’re looking to source a product, he’s the guy to go to, which is great. But let’s say, yeah, he’s asking again, and he’s got more questions. So yeah. General rule of thumb three to four week trial at a minimum. Yeah. I mean, and there’s a couple of other factors that go into this. The amount of budget that you have to allocate to your campaigns, you know, the competitiveness of your niche, et cetera. But if you start to see yourself ranking organically on some of your main keywords, that’s when you want to really be looking at your TACoS to see what impact those organic sales are having on to see where you want to continue. But that’s the main thing we wanted to get across today in this podcast is just the number one thing to know about your ACoS and to summarize, it’s just a tool. That ACoS, it can be very, very misleading. So don’t get hung up on it. You’ve got to be willing to spend money on advertising. You gotta be willing to spend money to rank. Your competitors are doing it. So there’s really no way to go in and just like have no or super, super low ACoS in terms of sales. Those are kind of those unicorn products that exist out there that people talk about, but we don’t see them very often. So anyway. But that’s it for today with the, know your TACoS, sign up for Sellozo, sign up for the 14-day free trial, and find out your TACoS within 10 minutes of signing up for your account. You’ll know your total ACoS for all your products. All right. Again, to do that, sellozo.com, start your 14-day free trial. You’ll be talking to me or Chris the next day usually after you click that button. Also, for everybody watching this, if you’re watching this right now on YouTube, on Facebook, make sure you like the page or subscribe to our YouTube channel. It’s over here. Subscribe right now to this channel so that you get notified when we go live. We go live almost every day with great tips, advice, news that’s happening in the Amazon world, great guests like Francoise, who just asked this question. So it’s a great resource for you to learn and just become part of this community and just help everybody out with knowledge. So I really encourage you to subscribe and make sure that you also subscribe to the podcast so that when you’re driving down the road to work, you can listen to us and learn more about Amazon. All right, everybody. We’ll be back at this tomorrow. Have a great day and…