When it comes to Pay-Per-Click (PPC) advertising on Amazon, measuring success can be difficult. Sure, you can track basic key performance indicators (KPIs) and metrics extracted from Campaign Manager, but is that really enough?
In order to maximize the effectiveness of your PPC campaigns and make data driven optimizations, it is essential to track metrics and KPIs beyond what is available in Campaign Manager. By leveraging additional tools and metrics, you can gain valuable insight into the performance of your account and make informed decisions to drive better profitability.
In this article, I will detail the essential metrics and KPIs to track for PPC, beyond what is available in Campaign Manager, and how you can use them to monitor and improve account performance.
Why is it Important to Track KPI’s Beyond Campaign Manager?
While Campaign Manager is designed to help you manage and optimize your PPC it does not provide you with a 3600 overview of your account performance and profitability. The success of your campaigns goes beyond just the metrics that are tracked within Campaign Manager.
By tracking KPIs beyond the advertising console, you can get a more holistic view of the impact of your campaign optimizations and listing modifications. This can help you to better understand the profitability of your campaigns and make more informed decisions when it comes to optimizations and advertising spend. In addition, tracking KPIs beyond Campaign Manager can help you identify areas for improvement in your overall marketing strategy. For example, if you see that your campaigns are driving an increased volume of traffic but not resulting in many conversions, you may need to consider the relevance of your campaign targets.
The Goal of PPC on Amazon
When determining which KPIs to track, it is important to look at the two key goals of Amazon PPC:
- To drive traffic for the minimum cost possible
- Sessions – are we driving traffic?
- Cost per session – at what cost are we driving traffic?
- Cost per acquisition – what is the cost to drive traffic for 1 conversion
2. Improve organic rank for long-term sales with no advertising costs
- Total sales – are we driving more organic traffic and seeing an increase in organic sales?
- Profit – are we seeing an increase in profit, and units sold, while maintaining a consistent PPC spend?
What KPI’s Should You Track Beyond Campaign Manager?
Found within the sales and traffic section of business reports, an important KPI to track is the total sessions. Tracking sessions provides insight into the overall traffic to your product detail pages and how engaged shoppers are with your products. A high number of sessions can indicate that your PPC campaigns are effectively driving relevant traffic to your products, while a low number of sessions may suggest that your campaigns are not performing as well as you would like.
When optimizing for performance, the goal is to increase sessions, which will proportionally produce an increase in spend. Monitoring sessions can assess the effectiveness of the increase in spend.
While the ratio will vary, if the aim is to increase spend by 100%, you expect to produce as least a 50-60% growth in sessions. If this is not the case;
- there may be a CTR issue
- multiple ad types may be being clicked by same buyer – multiple clicks, more spend, but the same number of sessions
2. COST PER SESSION
Cost per session is the average amount you are paying for each session, each unique visitor within a 24-hour time period, to your product page. It indicates the efficiency of your campaigns. A low cost per session generally indicates you are driving a decent volume of traffic relevant to your ad spend. A high cost per session indicates your ad spend is disproportionate to the volume of traffic.
To calculate your cost per session, you will need to divide the total cost of your PPC campaigns, your PPC spend, by the number of sessions it generated. For example, if your ad spend within a given time period was $100 and your campaign generated 1000 sessions, your cost per session would be $0.10.
Using the cost per session as a key metric incorporates both the organic and paid traffic being driven to a listing as a result of PPC. It provides an overview and a way to track the “cause and effect” of your optimizations. If optimizing for profitability, you can determine that you have reduced your ad spend while maintaining or increasing the number of sessions.
When optimizing for performance and aiming to increase sessions, you can determine, that at a constant conversion rate (CVR), how much you can increase the cost per session before running at a loss.
3. COST PER ACQUISITION
The aggregate cost to acquire one conversion is the cost per sale, or the cost per acquisition (CPA). This is a true measure of the cost of advertising. Changes in CPA reflects the effectiveness of campaign optimizations and it is directly influenced by the cost per session and/or the conversion rate (CVR).
To calculate your CPA;
first determine the cost per session
Then calculate the number of sessions required to make 1 conversion, using the unit session percentage from your business report
Determine the CPA by multiplying the cost per session by the number of sessions required for 1 conversion
A decreased cost per session and an increased conversion rate will reflect an improved CPA. If cost per session remains consistent but the CPA continues to increase, you can determine if there is an issue with CVR and vice versa. If you have effectively optimized and lowered the cost per session or have optimized for an increased CVR you will see an improved CPA.
Many sellers only focus on the PPC cost per acquisition; the conversions acquired through paid traffic. However, paid advertizing also impacts organic traffic and organic sales so it is important to know the total cost per acquisition when assessing campaign optimization. The total cost per acquisition accounts for both organic and paid conversions obtained as a result of a marketing campaign.
Capturing these metrics allows calculated decisions to determine where optimizations should be targeted to lower the cost per acquisition, as lowering the cost for one conversion is proportional to an increase in net profit.
4. TOTAL SALES
Paid advertising on Amazon has an indirect influence on organic rank and organic sales. When you run a paid ad on Amazon, it can lead to an increase in traffic and conversions, which can in turn improve a product’s organic rank.
Tracking totals sales data versus PPC sales is an effective way to monitor your campaign optimizations and account performance. Extracting total sales data from business reports, and comparing to the sales generated by your PPC alone is an effective way to both monitor your organic sales and the influence of your advertising efforts on your organic rank.
Your bottom line is the ultimate reference of campaign performance. It is a key indicator of the financial success of your business. Profit is the difference between the revenue you generate and the costs you incur such as advertising and cost of goods (COG).
By monitoring your overall profit, you can get a better understanding of the performance of your PPC campaigns and your overall account to identify areas of improvement.
Tracking KPI’s With an Analytics Dashboard
Using an analytics dashboard can be a useful way to track and visualise the performance of your Amazon account. An analytics dashboard is a tool that allows you to display key metrics and data in a single, easy-to-read interface.
You can develop your own analytics dashboard using a spreadsheet, or an online tool such as My Real profit, and start tracking the metrics that are most important for assessing account performance.
Building an analytics dashboard, in which you enter daily data values, once a week, is an effective way to monitor the performance, from week to week. Using a spreadsheet, such as the one below, will enable identification of percentile changes to key metrics due to campaign and listing optimizations.
When it comes to advertising on Amazon, the metrics in Campaign Manager are essential for managing and optimizing your PPC and tracking campaign success. However, those metrics alone aren’t enough to fully understand the performance of your campaigns and your overall account. In order to fully optimize your PPC efforts, you must track key performance indicators beyond campaign manager.
For more information, contact Mina Elias at Trivium.