Key KPIs for Amazon Ads

Part 2 of 11 – This is the second part of a multi-step guide on how to succeed with Amazon ads. In this section, I will go over the key KPIs you should keep in mind. These KPIs are crucial to monitor if you want to succeed with your advertising campaigns.

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When dealing with Amazon PPC, there are many KPIs you need to understand. After this blog post, I will start diving into how to actually set up your ads for optimal results. But it's very important that you understand all these concepts first, so read carefully.

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1. What Is a KPI?

KPI stands for Key Performance Indicator and is a measurable value that, over a specific period, measures a specific performance. Sales, profit, costs, and returns over a given period are all examples of KPIs. Which time period? That’s up to you to decide, and most often, you compare several periods simultaneously. For example, you can measure your sales daily, weekly, monthly, quarterly, and annually. All these periods will give you a value that you can then compare with other periods and goals.

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2. Which Time Periods Should You Focus On?

The risk of only looking at KPIs over a long time horizon is that you won’t be able to react quickly enough to potential problems and challenges. On the other hand, if you only look at shorter time periods, it’s easy to focus on minor changes that may be due to chance rather than your company’s performance. When measuring KPIs for Amazon ads, it’s most common, and in my opinion, most beneficial, to look primarily at monthly metrics (30-day periods). This will give you a clear signal of the current situation, and when you compare it with previous periods, you can easily see how the trend is developing.

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3. ACOS

ACOS stands for Advertising Cost Of Sales. ACOS is given as a percentage and shows how much money you’ve spent on advertising relative to what you’ve sold. You want your ACOS to be as low as possible because it means your ads are more effective and generate greater profit.

• If you’ve spent $10 on ads and sold products worth $100, your ACOS is 10%.
• If the ads cost $50 and you sold products worth $100, your ACOS is 50%.
• If the advertising didn’t go so well and you paid $150 but only sold products worth $100, your ACOS is 150%.

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4. ROAS

ROAS stands for Return On Ad Spend and essentially measures the same thing as ACOS but expresses the result in a different way. You really only need to look at one of ACOS or ROAS. I prefer ACOS. However, if you and your company advertise on other platforms, ROAS is often a common KPI. In that case, it can be helpful to also look at this on Amazon so that you can easily compare between different platforms.

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ROAS expresses how many dollars you have earned in sales for every dollar you spent on ads. So, if you spent $100 and earned $150, your ROAS is 1.5.

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5. Impressions

Impressions refer to how many times your ads have been shown to customers. This is an important metric to check when you want to see if your ads are actually being displayed to customers and how often. A low number of impressions can, for example, indicate that you may want to increase your bids because your ads aren’t being shown as much as you’d like.

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6. Click-Through Rate (CTR)

Often abbreviated to CTR, this is a percentage that shows how many of the customers who saw your ad also clicked on it. This is very important because it’s something you’ll want to monitor when optimizing ads. If customers aren’t clicking on your ads, it’s difficult (impossible) to get the customer to buy.

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7. Spend and Sales

This is simply how much you’ve spent and how much you’ve earned in sales through your ads. Not difficult to understand and not something I need to explain, but certainly one of the most important things to monitor when advertising.

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What’s Next?

Great, now we’ve gone through the key KPIs for ads. This will be the foundation for much of the optimization and analysis you’ll be doing moving forward, and which I’ll cover in later parts of this guide.