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Terminology

Concepts​

There are some key terms that you need to know going forward.

Targets​

A target is used to match your ads to a portion of the audience on Amazon.

There are millions of shoppers on Amazon, but only a portion of them are potentially interested in your product. Targets are how you find those people.

One example of a target would be a keyword (search term), or a competitors product.

We are going to learn much more about targets in the Targets section. But for now just understand that targets are associated with your ads and are used to match your ads to shoppers on Amazon.

ASIN​

The Amazon Standard Identification Number (ASIN) is a 10-character unique identifier assigned by Amazon for product identification. The ASIN is visible on every product page, and is unique for each variation of that product.

asin

For example, a shirt that is for sale in three different sizes, will have three different ASINs.

The term ASIN is often used interchangeably with the term product. For example, you might hear someone say "I am advertising 10 ASINs". What they really mean is that they are advertising 10 products.

Metrics​

Metrics are the data that we get back from Amazon, which describes how our ads are performing. For example

  • Impressions
  • Sales
  • Cost
  • Etc

A limited number of metrics are found in the Amazon Advertising dashboard/console, with many more being available through downloadable reports.

It is common for people to refer to a subset of these metrics as Key Performance Indicators (KPIs). KPIs are the metrics that are most important to you and your business.

One commonly referred to KPI is ACOS.

There are dozens of metrics available, and while I don't want to slow us down with a dictionary of terms at this point, let's review some of the really important ones.

ACoS​

Advertising Cost of Sales (ACoS).

ACOS=ad spend (cost)salesACOS = \frac{ad\ spend\ (cost)}{sales}

This is the ratio of ad spend to sales. For example, if you spent $10 on ads and made $100 in sales, your ACoS would be 10%.

Ad Spend is commonly referred to as Cost.

This is one of the most commonly cited metrics, and for good reason. Because this is a percentage based metric, it is relevant for campaigns of all sizes.

It is a common goal to lower this percentage.

TACoS​

TACoS, or Total Advertising Cost of Sale, extends the concept of ACoS to provide a more holistic view of how advertising impacts overall sales. TACoS is calculated by dividing the total advertising spend by the total revenue (including both ad-driven and organic sales):

TACoS=(Advertising SpendTotal Revenue)×100\text{TACoS} = \left( \frac{\text{Advertising Spend}}{\text{Total Revenue}} \right) \times 100

TACoS helps you understand the broader impact of advertising on your total sales. It factors in how advertising may be driving organic sales growth, not just sales directly from ads.

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While ACoS can be calculated using only the Amazon Advertising reports. To calculate TACoS you need a value for total sales, which is only available in Seller Central performance reports. That means you need to download reports from both location and combine them to get this metric.

Ad Revenue Percentage​

Ad revenue percentage is another critical metric that measures the portion of your total revenue that comes directly from your advertising efforts. It is calculated by dividing the revenue from ads by the total revenue, then multiplying by 100 to get a percentage:

Ad Revenue Percentage=(Revenue from AdsTotal Revenue)×100\text{Ad Revenue Percentage} = \left( \frac{\text{Revenue from Ads}}{\text{Total Revenue}} \right) \times 100

Sales​

This is surprisingly a little bit complicated. It is the amount in dollars of sales that were attributed to your ads. How is this measured? If someone clicks on an ad, looks at my product and buys it 10 days later, does that count as a sale on that ad?

The answer to that depends on the type of ad:

  • Sponsored Products - Sales are attributed to the ad if the sale occurs within 7 days of the click.
  • Sponsored Brands - Sales are attributed to the ad if the sale occurs within 14 days of the click.
  • Sponsored Display - Sales are attributed to the ad if the sale occurs within 14 days of the click.
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What happens if a user clicks on more than one ad? Or what if they click on an ad on Amazon, but then an attribution link on Youtube. Which ad gets the sale? The answer is that the last ad that was clicked on gets the sale. This is call the Last Touch Attribution Model.

Impressions​

This is the number of times your ad was shown. For example, if your ad was shown 100 times, your impressions would be 100.

To be specific, it means that at least 50% of your ad was visible on the screen for at least 1 second. If the ad is a video, then it means that at least 50% of the video was visible on the screen for at least 2 seconds.

If your ad was loaded on a page and the user never scrolled down to see it, then it does not count as an impression.

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These standards are set by the Interactive Advertising Bureau (IAB) and Media Rating Council (MRC) are used by all major advertising platforms.

CTR​

Click Through Rate (CTR).

CTR=clicksimpressionsCTR = \frac{clicks}{impressions}

This is the ratio of clicks to impressions. For example, if your ad was shown 100 times and clicked on 10 times, your CTR would be 10%.

CPC​

Cost Per Click (CPC).

CPC=costclicksCPC = \frac{cost}{clicks}

This is the average cost of a click. For example, if you spent $10 on ads and got 100 clicks, your CPC would be $0.10.

CR​

Conversion Rate (CR).

CR=ordersclicksCR = \frac{orders}{clicks}

This is the ratio of orders to clicks. For example, if your ad was clicked on 100 times and resulted in 10 orders, your conversion rate would be 10%.

This often overlooked metric is one of the most important things to monitor. A very low overall CR is an indicator that something is wrong with your listing or your product. Bad product images, description, reviews etc. It can also mean that your keywords or product title are not accurately describing the product.

It is difficult to have a successful advertising campaign with a very low CR. It is an uphill battle.

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Watch your conversion rate! This is a key indicator of whether the product page is performing well.

Auction Terms​

We are going to learn more about the auction system in the next section The Auction System. But you must understand these two items.

Bid​

A bid is the amount of money you are willing to pay for a click. You give a different bid for each target.

Budget​

A budget is assigned to a Campaign or Portfolio. It is the maximum amount of money that Amazon is allowed to spend bidding on the targets assigned to that Campaign or Portfolio in a given period of time.

For example you may assign Campaign "Socks" a budget of $100/week. This guarantees that Amazon will not spend more than $100/week bidding on the targets assigned to the "Socks" Campaign. When the budget is reached your ads will stop.