How Can I Lower My ACoS Without Reducing Sales?
If you’re running Amazon ads, you’ve probably heard of ACoS—Advertising Cost of Sale. It’s a key metric that shows how much you’re spending on ads compared to the revenue generated. A lower ACoS means you’re spending less to make more, which is every seller’s goal. However, lowering your ACoS without hurting your sales can be tricky.
Step 1: Optimize your keyword strategy
Keywords play a huge role in determining your ACoS. If you’re targeting irrelevant or broad keywords, you might be wasting money on clicks that don’t convert. To lower your ACoS, focus on high-performing keywords that drive sales. Here’s how:
- Review your search term report: Identify which keywords are converting and which aren’t. Pause the ones that are costing you too much without generating sales.
- Add negative keywords: Use negative keywords to filter out irrelevant searches. For example, if you’re selling luxury watches, you might want to exclude terms like “cheap watches.”
- Prioritize exact match targeting: Broad match and phrase match keywords often result in wasted ad spend. Shift your focus to exact match keywords for better control over who sees your ads.
If managing keywords feels overwhelming, consider working with an Amazon sponsored ads management service. Experts can refine your keyword strategy, helping you focus your budget where it matters most.
Step 2: Adjust your bids
Your bidding strategy directly impacts your ACoS. If you’re bidding too high on certain keywords, your costs can skyrocket without delivering a proportional increase in sales. Here’s how to adjust your bids smartly:
- Lower bids on non-converting keywords: Reduce your bids on keywords that are driving clicks but not sales.
- Increase bids on high-converting keywords: Allocate more budget to keywords that are generating a good return.
- Use dynamic bidding: Amazon’s dynamic bidding automatically adjusts your bids based on the likelihood of conversion. This can help you spend less on clicks that are unlikely to lead to a sale.
Step 3: Improve your product listings
Even the best ad campaign can’t save a poorly optimized product listing. If your ad clicks aren’t converting into sales, the problem might be your product page. Make sure your listing is polished and persuasive.
Here’s what to focus on:
- High-quality images: Use professional photos that show your product from multiple angles. Include lifestyle images to help customers visualize using your product.
- Compelling title and bullet points: Highlight key features and benefits in a clear, concise way.
- Detailed descriptions: Answer common customer questions and show why your product is better than the competition.
- Customer reviews: Positive reviews build trust and encourage purchases. If your reviews are lacking, focus on delivering great customer service to encourage feedback.
Step 4: Segment your campaigns
If you’re running a single campaign with all your products and keywords lumped together, it’s time to break things up. Segmenting your campaigns allows you to fine-tune your strategy for different products and audiences.
Here’s how to do it:
- Separate branded and non-branded keywords: Branded keywords (e.g., your brand name) tend to have a lower ACoS because customers searching for them already know your brand. Non-branded keywords might need a higher budget but can bring in new customers.
- Group similar products: Create campaigns for specific product categories or similar items. This allows you to tailor your targeting and bidding strategies.
- Test Sponsored Products vs. Sponsored Brands: Sponsored Products work well for individual listings, while Sponsored Brands are great for building awareness of your product line.
By segmenting your campaigns, you can allocate your budget more effectively and avoid overspending on low-performing ads.
Step 5: Retarget your audience
One way to lower your ACoS is by focusing on audiences that are more likely to convert. Retargeting lets you re-engage with customers who have already shown interest in your products.
For example:
- Target customers who viewed your product but didn’t buy.
- Show ads to customers who previously purchased from you and might be interested in related items.
- Use Sponsored Display Ads to reach shoppers both on and off Amazon.
Retargeting typically results in a higher conversion rate because you’re advertising to people who are already familiar with your brand.
Step 6: Monitor and optimize regularly
Amazon ads aren’t a “set it and forget it” process. To keep your ACoS low, you need to consistently monitor your campaigns and make adjustments based on performance. Regular optimization includes:
- Testing different ad types and creatives.
- Reviewing your budget allocation.
- Adjusting bids and keywords based on real-time data.
An account management for Amazon service can help you stay on top of these tasks. These agencies handle everything from campaign monitoring to optimization, ensuring your ads remain effective over time. They can also provide insights on areas you might overlook, saving you time and reducing wasted ad spend.
Step 7: Focus on increasing your average order value
Another way to lower your ACoS without reducing sales is by increasing your revenue per transaction. When customers spend more on each order, your advertising costs as a percentage of revenue go down.
Here are a few ideas:
- Offer bundles: Pair complementary products together at a discounted price.
- Promote higher-margin items: Focus your ads on products with better profit margins.
Use cross-selling strategies: Suggest related products on your product pages or in your ads.
