Introduction
Welcome to the start of a monthly blog series we’ve created for our PPC Entourage community. In this series we are going to:
- Analyze changes in the Amazon advertising landscape
- Pinpoint key areas of improvement
- Provide guidance on future market expectations
This will allow you to better understand what has happened in the Amazon marketplace so that you can strategically position your ad campaigns for future success.
Market Overview
In order to understand how we can improve our campaigns for the future, we must first understand the ever changing and dynamic Amazon marketplace. We can do this by reviewing the historical KPI’s (Key Performance Indicators) to pin-point trends that will allow us to react accordingly.
What Happened in August?
ACoS remained flat for most of August, however towards the very end of August, we saw a spike in ACoS. The big question is, will we see this ACoS increase continue throughout September?
Breaking this down further, we can see that Cost per Click is largely coinciding with the increase in ACoS, as it steadily increased throughout the month of August.
Click Through Rate (CTR%) follows a similar longer-term increasing trend since May, but instead was flat during August. The CTR% has had trouble crossing over the 0.40% mark. We’ll have to wait for September’s data to see if the CTR% can cross above the 0.40% mark or if it’ll revert back towards 0.30%-0.35%.
Match Type Breakdown
In recent months there has been an alignment in ACoS by match type. In other words, Broad, Phrase, and Exact match types are starting to have the same (or very similar) ACoS.
2020 Yearly Chart:
August 2020 Chart:
What’s Expected?
The expectation is to see Broad with the highest ACoS, Exact with the lowest ACoS. Phrase should land somewhere in between. This is because Exact campaigns should be the most highly targeted keywords that your customers search for and therefore should have the lowest ACoS. The broader that match type, the higher the ACoS should be.
What does this mean?
This means that there is room for improvement in either the Broad or the Exact match types.
- Either the Broad campaigns are not wide enough and there is lost opportunity in finding niche search terms that are profitable, OR
- Exact match type campaigns are including keywords that are not the most highly targeted.
Either way, close attention should be paid to this as we should expect to see a divergence in these values going forward.
Weird Spike in Cost Per Click – Phrase
Both Broad and Exact realized normal trends during August, however, Phrase match types had a significant increase during mid-August and have since reverted to normal levels.
This spike in CPC also was reflected in the Ad Spend per Order as seen here:
Placement Type Breakdown
This month, we were able to break out the KPI’s by Placement Type. Placement types include Top of Search, Product Detail Page, “Other” on-Amazon ads, and Remarketing Off-Amazon Ads. By breaking down these categories we are able to identify the key areas that drive ad spend.
Which Placements have the lowest ACoS?
From the graph below, we can see that Remarketing off Amazon has the highest ACoS, followed by “Other” on-Amazon, Product Detail Pages, and finally Top of Search.
2020 Yearly Chart:
August 2020 Chart:
There is a slightly increasing trend for the Remarketing Off Amazon Placement Type for the month of August.
Due to the volatility in Remarketing Off-Amazon, the graph above is a bit hard to see. Once we remove this, we can better analyze the remaining placement types.
2020 Yearly Chart:
Throughout the year, each placement type has remained within its position, with Top of Search being the clear winner. Top of Search consistently remains 5-10% lower than the other two placement types.
August 2020 Chart:
Breaking this down to just the month of August, we can see that the Top of Search ACoS has consistently decreased, while the other placement types have remained relatively stable. Be sure to use Entourage to adjust your Placement multipliers to ensure you're getting the most of these opportunities.
Sharp Decreases in Ad Spend per Order and Cost per Click
With Remarketing Off-Amazon removed to better view the other placements, we can see that there were sharp decreases in Ad Spend per Order and Cost per Click around the middle of August. We’ll see in September if Ad Spend per Order and Cost per Click will remain lower in or continue its longer-term trend of increasing.
2020 Yearly Chart:
August 2020 Chart:
2020 Yearly Chart:
August 2020 Chart:
Next Month’s Predictions
Even though 2020 is an obviously unique year in terms of consumer habits and ecommerce trends, by analyzing the Year over Year trends we can attempt to predict what to expect in the coming months. Reviewing this can help you better position your campaigns to be more competitive in the marketplace and can help you adjust ads to save on costs.
2020 has been a record year for ACoS as it has consistently remained lower than in 2018 and 2019. In 2018 and 2019, September’s ACoS had been higher than August, so we expect to see increasing ACoS next month.
Driving this increase in ACoS, we expect to see increases in Ad Spend per 1000 Impressions, Ad Spend per Order, and Cost per Click. These 3 metrics held record highs in September 2019.
Of course, we’re all eagerly awaiting the announcement of Prime Day dates since the postponement this summer - an October or November Prime Day could change everything, with sellers rushing to gain rank and prepare for Prime Deals.
Conclusion
In Summary:
- ACoS started increasing in the last half of August, and we’re expecting to see an increase in AcoS going into September.
- ACoS by match type has converged together for Broad, Phrase, and Exact. Check your campaigns for areas of improvement.
- Top of Search placement clearly performs better than all other placement types. The Top of Search ACoS, Ad Spend per 1000 Impressions, Ad Spend per Order, and Cost per Click are all trending in favorable directions. Take advantage of these favorable market conditions while they last.
We’ll be reviewing this data and including deeper insights and trends each month. If you have any questions or any data you’d like to see, leave a comment below.
