#28 Amazon Ads – Understanding the numbers

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This Episode, #28, has been in demand by Facebook members for a while. It’s a Pure Tactics, Nitty-Gritty on How to Set up Amazon Ads.

SHOW NOTES FOR EPISODE #28 –  Amazon Ads: Making sense of the Numbers

1. 1. Monitor at least weekly
   2. AIMS: Remember why we are doing this:
      1. End result of business: PROFIT!
      2. KEYWORDS –
         1. Which 20% are most profitable?
            1. ACTION: Increase bids and/or Peel and Stick into new Campaign
            2. ACTION: Also optimise your listing for these keywords if needed
         2. Which 20% are losing money? –
            1. ACTION: Pause or reduce Bid
   3. Analyse the Following Amazon stats:
      1. ACoS
         1. by product
         2. by campaign
         3. by keyword
      2. Absolute spend & sales ($ or £) per week or per month
         1. by campaign
         2. by product
         3. by keyword
      3. Product- based by week
         1. compare your sales for last week with ad spend for last week.
         2. What is your overall ACoS by product?
         3. What is overall ad spend
   4. Then look at the “True” profits: At least monthly (preferably weekly) compare Amazon Sales data and Amazon Ads.
      1. take a matching time period for Amazon Ads and Sales –
         1. 1. I suggest “Last week” in Amazon Ads and put in appropriate matching dates for  Sales data
      2. Work out your gross profit per unit sold
         1. Add up all your COGS (cost of goods sold) for a particular week or month
            1. TLC=Total Landed Costs=Manufacturing+Freight+Customs costs
            2. Other pre-Amazon costs- warehousing/inspection/testing plus inbound shipping
            3. Amazon costs: Sales commission (15%) plus fulfillment costs (pick and pick and weight handling)
      3. Add up all your Amazon Ad costs for a product
      4. Calculate your “breakeven ACoS”.

EXAMPLE:  (these are actual figures from a week in December for one of my products)

Product A Sales price $19.95 income per sale

COGS:

TLC=$8 (including warehousing and Amazon inbound shipping)

Amazon costs=$5.53

TOTAL COGS: $13.53

Gross profit=$6.42

So you have up to $6.42 to spend on Ads IN TOTAL average per unit, to break even

Total ad spend last week $75.50

Unit sales last week 98 units

average ad spend per sale  $0.77

So Profit after Advertising per unit = $19.95 income – $13.53 COGS – $0.77 Ads

= $5.65=28 % Gross profit

And ON AVERAGE ACoS for this product across all ad campaigns= $0.77/$15=5%!

Glossary of Technical Terms: 

If you’re wanting the detail, however, here it is:

URL: Simply a web address, e.g., www.amazingfba.com/27

ASIN: Amazon Unique Identifying Number (not sure what S stands for!) –  within the Amazon universe, this a  unique code for a product line. It is like a UPC (Universal Product Code), ie the barcode you will see on any product packaging at your supermarket, only just within the Amazon universe.

Keyword – one, two, 3 or several words entered as a search term, on Google or in the Amazon search bar. e.g. “white” “white board” “White board marker” “White board marker kids”

Keyword Match Type: Amazon will match up a search term that a customer puts in the Search bar with the keywords in your amazon ad campaign. Whether it chooses to display your ad or not depends on how precise a match you set up between a. the search term (from the customer) and b. the keywords you put in your ad campaign.

Keyword matches come in 3 types: Exact, Phrase and Broad Match.

Exact match: your ad will only display if the  search term that the customer puts in is exactly the same as the keyword in your campaign.

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Watch Amazon Ads – Making sense of the Numbers

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