Your new Amazon superpower: measuring organic lift with Sales Analytics

By Kevin Michael on March 4th, 2019

As someone responsible for managing hundreds of thousands in Amazon Ad spend you may have faced the following tough questions:

  • My sales from advertising are growing, but my top-line sales are not, what is going on?

  • Am I wasting marketing dollars on conversions I would have won organically?

  • A large majority of my Amazon Ad sales are coming from branded search terms. Should I be bidding on these keywords or am I wasting my money?

  • If I turn off my Amazon Ads, how will that affect organic sales?

  • If investing in ads drives greater organic sales - what is my true ROI and can I make the case to invest more money into advertising?

Having worked with a number of large brands on their Amazon strategy, we know that finding answers to these questions is critical. In this post, we’ll break down the 4 most important sales-focused metrics and how you can analyze them to shed some light on the nature of top-line sales lift and ROI achieved by your Amazon Advertising campaigns. These metrics can be difficult to analyze with Amazon’s limited and segregated reporting tools so we have made them accessible via our Sales Analytics dashboard.

4 Key Metrics for Amazon Success

  1. Total Sales A measure of total revenue from Amazon across all sources (advertising, organic, etc)

  2. Blended ACoS A ratio of Amazon Advertising spend to total sales

  3. Organic Sales An estimate for sales originating from sources besides Amazon Advertising

  4. % Attributed A ratio of revenue attributed to Amazon Advertising

Aligning Key Performance Indicators to Strategic Objectives

By analyzing the above metrics, you may be able to better understand the nature of your business’s growth as falling into one of the following categories:

Accelerating Growth (Amazing) As you grow your investment in advertising, you observe:

  • Steady Blended ACoS

  • Steady % Attributed

  • Rising Organic Sales

When this happens:

  • You have a product that is superior to comparable products on Amazon and you are winning market share

  • Search volume for your product category is growing and you are winning much of the increased demand

Scalable Growth (Good) As you invest in advertising you observe:

  • Slowly rising Blended ACoS

  • Rising % Attributed

  • Steady Organic Sales

When this happens:

  • You have a product that is competitive against comparable products on Amazon. Your sales volume scales with the volume of exposure you gain through advertising.

  • Your product is of superior quality and price to your competitors but lacks a competitive volume of reviews thus you have a hard time ranking organically.

  • Your category is currently dominated by 2-3 monopoly ASINs and your ASIN is having trouble ranking organically.

Cannibalized Growth (Bad) As you invest in advertising you observe:

  • Quickly Rising Blended ACoS

  • Rising % Attributed

  • Declining Organic Sales

When this happens:

  • You pay for clicks you would have otherwise won organically. (This is often the case for brands with large search volume on their branded keywords)

  • There has been a change in your product’s rating or price point which has caused a decline in organic sales, and you are compensating the sales loss through advertising.

Turning insights into action with Perpetua

Regardless of how good or how bad the metrics are that you are seeing, there are ways that you can modify your advertising strategy in order to improve the quality of your growth. Below are 3 tips on how to use Perpetua to improve the quality of growth you achieve using Amazon Advertising:

  1. Leverage Perpetua’s Branded / Unbranded targeting to strategically allocate your budget towards unbranded terms which are more likely to drive top-line sales growth.

  2. Rebalance your advertising budgets towards products with a low blended ACoS. These products might be able to drive outsized growth from advertising relative to products with a high blended ACoS.

  3. Increase your ACoS target for products that have a low blended ACoS. There may be room to scale sales for such products.

And most importantly: test, test, and test again! Amazon is constantly changing and so are your competitors. Therefore it is important to review the metrics listed above regularly with your team, and strategically run experiments to uncover opportunities to move the needle.

To learn more or speak with one of our account strategists, contact us at hello@perpetua.io.