Overview of the Most Important Amazon KPIs for Your Amazon Campaigns

1. What are Amazon Key Performance Indicators (KPIs)?
2. Why are KPIs important for Amazon Advertising?
3. The most important Amazon KPIs:
4. Precise KPI Measurement and Tools
5. And what about the Amazon PPC Tools?
6. The Power of KPI Monitoring and Targeted Measures
7. Conclusion

In today's e-commerce landscape, Amazon plays a central role as a leading platform for selling products. Companies that advertise and sell on Amazon face the challenge of effectively optimizing their campaigns and maximizing success. Key Performance Indicators (KPIs) are indispensable for measuring performance, analyzing it, and making informed decisions to improve campaigns.

In this article, our guest author Burak Görmez will delve into the most important Amazon KPIs. Also, it will explain why they are of importance for Amazon Advertising, and how companies can utilize them to increase their revenue and optimize their performance marketing.

What are Amazon Key Performance Indicators (KPIs)?

Amazon Key Performance Indicators (KPIs) are measurable metrics that assist companies in evaluating the success of their advertising campaigns and sales operations on Amazon. These KPIs provide insight into various aspects of performance and enable an informed analysis. They aid in measuring and optimizing revenue, conversion rates, visibility, and customer satisfaction. The use of Amazon KPIs allows companies to adjust their strategies and continuously improve their outcomes.

Why are KPIs important for Amazon Advertising?

The measurement and analysis of KPIs are crucial to maximize the success of Amazon Advertising campaigns. By accurately monitoring their KPIs, businesses can evaluate the effectiveness of their advertising investments and identify potential optimizations. KPIs reveal valuable insights about the performance of ads, generated revenue, customer satisfaction, and brand awareness. By using KPIs, companies can specifically optimize their advertising campaigns to achieve their goals and maximize ROI.

The most important Amazon KPIs:

1. Revenue

Revenue is one of the key metrics for success on Amazon. Companies must monitor the generated revenue to measure and optimize their financial performance. They should analyze various aspects of revenue, like overall revenue, revenue per product or category, and revenue compared to advertising expenditures. By analyzing revenue in detail, companies can gain insights into which products or categories are highly successful and take targeted measures to further increase revenue. An example would be a company that finds that certain products generate significantly higher revenue than others. Based on this knowledge, the company could focus its resources on the more lucrative products and specifically invest in their marketing.

Example: The company realizes that its laptops generate high revenue, while smartphone sales are stagnant. It decides to focus the marketing budget on promoting laptops more heavily and running specific promotions such as discounts or bundle offers to further increase revenue in this area.

2. Conversion Rate

The Conversion Rate is an important indicator of the effectiveness of Amazon campaigns. It indicates how many visitors to a product page actually make a purchase. A high conversion rate suggests that the ads are relevant and convincing and motivate customers to buy. Companies should monitor and continuously optimize their conversion rate to make their campaigns more effective and increase revenue. An example would be a company that notices a low conversion rate. Through a detailed analysis of product pages and ads, the company might find out that the product descriptions are not persuasive enough. By optimizing the descriptions and highlighting the product advantages, the conversion rate could be increased, and therefore, the revenue.

Example: The company realizes that the conversion rate on the smartphone product pages is lower than expected. After a thorough analysis, it finds that the product descriptions are not detailed enough and the customers want more technical information. The company revises the product descriptions and adds detailed specifications to improve the conversion rate.

3. Click-Through Rate (CTR)

The click-through rate measures the ratio between the number of clicks on an ad and the number of impressions. A good CTR indicates that the ad is relevant and appealing to the target audience. Companies should continuously optimize their ads to achieve high CTR. Factors such as an appealing ad format, meaningful product images, and a concise advertising message are significant. An example would be a company that notices a low CTR. By analyzing the ads, the company could determine that the product images are not appealing enough, or the advertising message is not communicated clearly. By improving these elements, the CTR could be increased and thus more potential customers led to the product page.

Example: The company launches a new Amazon campaign for its Bluetooth headphones. After a while, it notices that the CTR is lower than expected. It revises the ads to make them visually appealing and highlights the unique features of the headphones. As a result, the CTR increases, leading to more visitors on the product page and potentially higher sales numbers.

4. Impressions

The number of impressions shows how often an ad on Amazon was displayed. A high number of impressions indicates that the ad has good visibility and reaches many potential customers. Companies should monitor impressions to ensure that their ads are displayed frequently enough to achieve the desired reach. Targeted optimization measures, such as the use of relevant keywords and adjustment of the bid, can assist. An example would be a company that realizes that the impressions for specific ads are significantly lower than for others. Through analysis of relevant search terms and adjustment of the ads, the company could increase visibility and potentially reach more customers.

Example: The company wants to present its smartwatches to a broader target group. After analyzing the impressions, it realizes that the ads were only viewed by a limited number of people. The company decides to place the ads on more relevant product pages and adjust the bids to achieve a higher number of impressions and thus a larger reach.

5. Return on Advertising Spend (RoAS)

The Return on Advertising Spend (RoAS) is the ratio between the generated revenue and advertising expenditures. It provides information about how effective advertising investments are and whether they achieve a positive return on investment (ROI). A high RoAS suggests that advertising campaigns are successful and contribute to profitable revenue growth. Companies should continuously monitor and optimize their advertising expenditures to achieve high RoAS. An example would be a company that notices a low RoAS. By analyzing advertising expenditures and identifying inefficient advertising measures, the company could adjust its advertising strategy and use advertising expenditures more targetedly to achieve higher RoAS.

Example: The company invests in an advertising campaign for its gaming accessory products. After analyzing the RoAS, it finds that the advertising expenditures do not stand in proportion to the generated revenue. The company decides to realign its advertising strategy, e.g., by specifically placing ads on gaming websites and collaborating with influencers, to improve RoAS.

6. Ratings and Star Ratings

Customer reviews and star ratings play a significant role in purchasing decisions of customers on Amazon. A high number of positive reviews and good star ratings can increase customer trust and revenue. Companies should actively ask for reviews from satisfied customers and respond appropriately to negative reviews to maintain trust. It is important to maintain good communication with customers and take feedback seriously. An example would be a company that finds that its products generate a high number of impressions and clicks, but due to few reviews and a low star rating, generate low revenue. By properly responding to negative reviews and taking customer feedback seriously, the company can maintain trust and increase revenue.

The stated Amazon KPIs are determinant to measure and optimize the success of advertising campaigns on Amazon. By detailed analysis and continuous monitoring of these KPIs, companies can improve their Amazon Advertising strategies and fully exploit the platform's potential. It is crucial for companies to understand the importance and connection of these KPIs to make informed decisions and use their resources efficiently.

7. ACOS

ACOS, also known as Advertising Cost of Sales, represents a significant metric, specifically used in the context of advertising campaigns on the Amazon platform. Its essential task is to measure the ratio between the advertising expenditures made and the resulting sales revenues. ACOS is expressed as a percentage, thus providing an estimate of what portion of the earned sales revenues was used for advertising measures.

The calculation of ACOS is made by dividing the total advertising expenditures by the sales revenues. The result is then multiplied by 100 to determine the percentage. This simple formula helps to determine the ACOS:

ACOS = (Advertising Costs ÷ Sales Revenues) * 100

An illustrative example clarifies the connection: Let's say an Amazon seller invests a total of 1000 Euros in advertising campaigns, resulting in sales revenues of 4000 Euros. The calculation of ACOS results in the following value:

ACOS = (1000 € ÷ 4000 €) * 100 = 25 %

Based on this example, the ACOS is therefore 25 %. This result shows that 25 cents of every earned Euro from sales revenues were spent for financing advertising activities.

ACOS represents a major KPI, playing a significant role in evaluating the profitability of advertising campaigns on Amazon. A low ACOS indicates that the advertising measures carried out were successful and the advertising expenditures are in a favorable ratio to the sales revenues achieved. In contrast, a high ACOS suggests that advertising expenditures make up a considerable part of sales revenues, possibly requiring a revision of the advertising strategy to improve profitability. Therefore, careful monitoring and optimization of ACOS are highly significant in ensuring the efficiency and success of advertising campaigns on Amazon.

Important: The attribution of advertising revenues takes 14 days, meaning that the ACOS is meaningful only after two weeks.

Example Campaign I.

Assessment: The campaign shows good overall results. The conversion rate of 10 % shows that the product pages are convincingly designed and motivate customers to buy. The click-through rate of 3 % could be improved further to lead more customers to the product page. The number of 50,000 impressions indicates good visibility of the ads. A RoAS of 5 indicates that advertising expenditures generate a positive return on investment. The reviews and star ratings are overall positive and contribute to customer trust.

The campaign can be evaluated as successful; however, there is potential for optimization in some areas. Through specific adjustment of the ads, improving the click-through rate (CTR), and continuous monitoring of the key performance indicators (KPIs), the success of the campaign could be further increased.

Example Campaign II.

Screenshot of a campaign from the Ads Manager. Source: Amazon

Precise KPI Measurement and Tools

Correct measurement and analysis of the Amazon Key Performance Indicators are crucial to maximally succeed in Amazon Advertising. By companies monitoring and optimizing the relevant KPIs like revenue, conversion rates, click-through rates, impressions, return on advertising spend (RoAS), reviews, and star ratings, they can specifically improve their Amazon campaigns and reach their goals more effectively. Using specialized tools like Adspert simplifies the analysis and optimization of these Amazon KPIs and supports companies in making informed decisions to increase their success on Amazon.

Overview of the Tools:

Adspert

Adspert is an AI-based tool that aids companies in analyzing and optimizing their Amazon advertising campaigns to increase revenue and profitability.

Jungle Scout

Jungle Scout offers a comprehensive suite of tools for Amazon sellers, including product research, competition analysis, and keyword monitoring features.

Perpetua

Perpetua is an all-in-one platform that helps sellers manage and optimize their Amazon advertising campaigns. It offers keyword research features, performance tracking, and competitive analysis.

Helium 10

Helium 10 is an extensive platform with tools for keyword research, product optimization, monitoring of inventory and rankings, as well as revenue analysis on Amazon.

AMZScout

AMZScout provides various tools for product research, inventory data monitoring, keyword analysis, and competition analysis for Amazon sellers.

EMAX Digital

EMAX Digital is a digital marketing platform for Amazon advertising campaigns. It offers detailed analytics, ad optimization, competitive monitoring, and automated efficiency-enhancing features.

And what about the Amazon PPC Tools?

Amazon PPC Tools simplify the creation, management, and automation of pay-per-click campaigns on Amazon. They save time and cost and enable better placements for more visibility and traffic. If you are looking for a comprehensive comparison of the most popular PPC tools, you will find it in the Amazon PPC Tools category on OMR Reviews.

The Power of KPI Monitoring and Targeted Measures

Comprehensive and continuous KPI monitoring allows companies to better understand the success of their Amazon Advertising strategies and to initiate targeted measures. Attribution Modeling, A/B testing, keyword optimization, and targeting can be useful.

By accurately analyzing their revenue metrics, companies can find out which products or categories are particularly successful and focus their resources on the most lucrative areas. Targeted optimization of the conversion rate allows improving the effectiveness of product pages and ads and convincing potential customers more effectively. A high click-through rate indicates that the ads are relevant and appealing to the target group, while a high number of impressions point to good visibility and reach.

The return on advertising spend (RoAS) is a central KPI that provides information about how effective advertising investments are and whether they achieve a positive return on investment (ROI). By precisely analyzing the advertising expenditures in connection with the generated revenue, companies can identify which advertising measures are particularly successful and adjust their strategy accordingly.

Reviews and star ratings play a key role in the purchasing decisions of customers on Amazon. A large number of positive reviews and a good star rating strengthen trust and can significantly increase revenue. Therefore, it is important for companies to actively request reviews from satisfied customers and to respond appropriately to negative reviews to maintain trust and protect their reputation.

Conclusion

Metrics analysis in Amazon performance marketing provides valuable insights into the performance of advertising campaigns and allows companies to make efficient use of their resources and continuously increase success on the platform. Through precise analysis and optimization of these Amazon KPIs, companies can specifically improve their visibility, revenue, and customer satisfaction. However, to achieve long-term success, it is essential to continuously monitor and adjust the KPIs so as to meet changing market trends and customer requirements and to stand out from the competition. Through such targeted measures, companies can further strengthen their position on Amazon and continually optimize their performance.