Advertising Cost Reduction
The best way to reduce your ad costs involves identifying areas where you’re overspending and allocating ad dollars to high-performing campaigns.
This results in a dramatic decrease in ACOS as well as your overall ad spend. With these optimizations, you’ll pave the way to scale your growth profitably.
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Ad Cost Reduction Area of Focus:
- Ad Spend Over Target
- Focus on Relevancy
- Eliminate Non-Performing Keywords
- Click-Through Rate (CTR)
- CPC - Cost Per Click
Ad Spend Over Target
Improve Keyword Targeting
To ensure ads aren’t being displayed for irrelevant searches, keyword targets need to be adjusted. We’ll shift the focus to what we call AAA relevant keywords: highly relevant keywords that impact your ranking efforts. Shifting our focus here will rein in ACOS that may otherwise be thrown away.
Eliminate Non-Performing Keywords
Any keywords that don’t bring in impressions, sales, or clicks should be paused. It’s the most effective way to cut down on your ad spending. We’ll inspect click-through rates, with a target CTR of over 1%. Any keyword with over our standard minimum 10 clicks and a CTR of below 1% and no sales won’t make the cut.
Eliminate Non-Performing ASINs
If your advertised products have over 10 clicks and have high ACOS or show no conversions, we’ll check to see if they’re closely related. Generally, the flavor or theme used for parentage should be sufficient for ad groups. If they’re closely related, but still experiencing low conversion rates, it might be that an ASIN is experiencing catalog problems. This could be due to several factors from a poorly written title, lack of clear benefits and features, low-res photos, and more.
Actual Cost Per Click vs Bid
Once we’ve eliminated irrelevant ads and keywords, the next focus will be on the CPC. High CPCs will blow through your daily ads budget, so correcting that must be prioritized. You can calculate the correct CPC by using the expected conversion rare and the target ACOS. The conversion rate will be higher for AAA relevant keywords (36%) compared to other keywords (10%). They’ll also vary by product category. The formula for Maximum CPC bid can be calculated as follows:
Maximum CPC bid = (Target CPA) x (Estimated Conversion Rate)
