As an eCommerce business owner, you want to make sure your advertising efforts are bringing you the best return on investment (ROI) possible. This is especially true when it comes to Amazon advertising, where the competition is fierce and ad spend can get expensive quickly.
The key to success in Amazon advertising is to continually measure your campaigns and make adjustments as needed to ensure you are getting the results you want. Let’s take a look at the most important metrics for measuring the success of your Amazon advertising campaigns.
Key Metric: MER - Measuring your Marketing Efficiency
Marketing Efficiency Ration (MER) is a way to cross pollinate the data from advertising (cost data is 100% accurate) with revenue data from the shopping cart (close to 100% accurate) to make financial decisions around customer and revenue acquisition. This ratio is the MER and is the one ratio to rule them all for making business decisions (MER = Total Revenues / Total paid media spend).
Using MER mitigates the challenges we face when assessing the impact of paid media:
- Double counting (ex. buyer journey involving more that 1 marketplace, i.e. Google Search, retargeted through a Facebook campaign, and then converting through an organic search)
- Cookie blockers
- iOS blocking
- Random revenue tracking errors
Every eCommerce brand will have a different tolerance for MER, so you should work with the larger management team to set your target. But, as long as the MER is inside the agreed upon target (and you have products available to sell), the marketing team and/or agency should have open budgets to drive more profitable business through paid media.
Key Metric: Conversion Rate - Understanding Conversion Rate and Improving it
Conversion rate is the percentage of people who click on your ad and then make a purchase. To calculate your conversion rate, divide the number of sales by the number of clicks and then multiply by 100. The higher your conversion rate, the better your ROI.
Improving your conversion rate is key to maximizing the success of your Amazon advertising campaigns. There are several strategies you can use to improve your conversion rate, including:
- Optimizing your product listings: Make sure your product listings are complete, with high-quality images and detailed product descriptions. Also, consider using customer reviews and ratings to build trust and credibility with potential buyers.
- Running promotions: Running promotions, such as discounts or special offers, can help increase conversions.
- Using retargeting: Retargeting allows you to reach customers who have previously shown an interest in your products. By showing these customers ads for products they have previously viewed, you can increase the chances of making a sale.
Key Metric: Customer Engagement - CTR, Impressions, and Time on Site
In addition to tracking sales and conversion rate, it's also important to measure customer engagement. Customer engagement metrics, such as click-through rate (CTR), impressions, and time on site, give you insight into how customers are interacting with your ads.
Time on site is measured by tracking the time a user enters and exits a website or a specific page within the site. It is typically calculated by subtracting the time the user entered the site or page from the time they left. This metric can be used to determine how engaging and valuable the content on a site is to its visitors.
CTR is the number of clicks your ad receives divided by the number of impressions it receives. Impressions are the number of times your ad is displayed to customers.
Impressions are simply the number of times your ad creative is served to and seen by someone you are targeting.
By tracking these metrics, you can see how customers are engaging with your ads and make adjustments to improve performance. For example, if you have a low CTR, you may need to adjust your ad copy or targeting to make your ad more compelling.
Analyzing & Optimizing Amazon Ad Campaigns for Success
To maximize the success of your Amazon advertising campaigns, it's important to continuously analyze and optimize your campaigns. This means regularly reviewing your performance metrics and making changes to your campaigns to improve results. Some best practices for continuous optimization include:
- Regularly review and analyze campaign data: Reviewing campaign data regularly helps to identify trends and areas for improvement. Analyze the performance of each campaign, including impressions, clicks, conversions, and spend.
- Use keyword research to refine targeting: Use keyword research tools to identify new and relevant keywords to target in your campaigns. Refining your targeting with the right keywords can improve your ad relevance and reduce wasted spend.
- Optimize your product listings: Optimize your product listings to improve your relevance score and help your ads rank higher in search results. Use high-quality images and informative product descriptions to entice potential customers to click on your ads.
- A/B test ad copy and creatives: Experiment with different ad copy and creatives to determine which messaging and design perform best. A/B testing allows you to make data-driven decisions and continuously improve your ad performance.
- Adjust bidding strategies: Adjusting your bidding strategies based on campaign performance can help you optimize your ad spend. For example, if you're not seeing a good return on investment from a particular keyword, consider lowering your bid or pausing the keyword altogether.
Measuring the success of your Amazon advertising campaigns can be a complex process, but it is essential to ensure that you are making the most of your advertising budget. By setting clear goals, tracking relevant metrics, and continuously optimizing your campaigns, you can increase your chances of achieving a positive ROI and growing your sales on the platform. Remember to stay up-to-date with industry trends and best practices, and don't be afraid to experiment with new strategies to see what works best for your business. With the right approach and a commitment to ongoing improvement, you can maximize the effectiveness of your Amazon advertising campaigns and take your eCommerce business to new heights.