3 Metrics Brands Should Use to Measure Advertising Efficiency on Amazon

Measuring your brand’s performance on Amazon can be a challenge. But, it’s important for brands to understand how to measure advertising efficiency properly. Especially when significant financial investment is involved. In fact, brands are spending enough to increase Amazon Advertising’s revenue by 250% in 2018. Continue reading for recommendations of what to consider when measuring the efficiency of your advertising on Amazon.

Advertising Cost of Sales (ACoS)

First, we recommend brands analyze is Advertising Cost of Sales (ACoS). This is a data point exclusive to Amazon and is essentially the inverse of the better-known metric, Return on Ad Spend (RoAS).

ACoS = ad spend/ad-attributed sales 

ROAS = ad-attributed sales/ad spend 

It’s used by brands to understand how well campaigns are performing in relation to the dollar amount invested. In general, a lower ACoS is preferred because it means your brand is spending less. But, if you want to promote a specific product during a certain time frame, a higher ACoS is acceptable. 

Total Advertising Cost of Sales (TACoS)

Secondly, brands should measure Total Advertising Cost of Sale (TACoS) on a regular basis. This is another Amazon-specific metric used to understand the impact of advertising on overall sales. So, TACoS expands the scope beyond advertising-attributed sales. It provides a more holistic view of your brand’s organic growth than ACoS.

ACoS = ad spend/ad-attributed sales 

TACoS = ad spend/total sales

Essentially, TACoS helps brands understand how their investment in advertising affects total revenue. The first step to ensure your brand’s TACoS is where it should be is to optimize your entire Amazon presence to maximize factors outside of advertising, such as conversion rate. 

New-to-Brand Metrics

In early 2019, Amazon Advertising released new-to-brand metrics to help brands better estimate customer acquisition cost (CAC). 

These metrics are most useful for brands that place a heavy focus on driving net-new customers. New-to-brand metrics provide insight into total new-to-brand sales and purchases, new purchase rates, and cost-per-new-customer. In turn, this helps determine whether an ad-attributed purchase was made by a repeat customer or a first-time buyer. As a result, we can estimate their customer acquisition cost (CAC).

It’s important to note, new-to-brand metrics are only available for Sponsored Brand ads on the search side of Amazon Advertising. For Amazon DSP, new-to-brand metrics are available for display and video ads. 

Download the Full Guide

For a deeper dive into valuable metrics designed to help you understand the health of your Amazon account, download this guide.

advertising efficiency

Hannah West

Hannah West