With the growing prevalence of internet access and extensive digital interconnectivity, online sales are emerging as a significant source of revenue for the beauty and personal care sector. In the United States in 2023, beauty products sold online generated approximately $86 billion in revenue, while personal care items generated nearly $54 billion in revenue.
Beauty category on Amazon
Beauty represents a challenging and fiercely competitive category, standing out as one of the most popular segments on Amazon. According to Jungle Scout, beauty & personal care ranks as the second most popular category on the marketplace, with 23% of sellers offering products within this category.
Furthermore, Amazon has become increasingly competitive over the years to such an extent that the only way to enhance product views and boost brand recognition is through advertising campaigns. The primary challenge lies in maintaining Amazon PPC campaigns profitable while striving to improve brand recognition and drive more sales within this highly competitive landscape. The most important KPI for assessing advertising profitability in Amazon is ACoS (Advertising Cost of Sales)
Why is the ACoS so high, and how can I reduce it?
There is no universal benchmark for a “good” ACoS, as it depends on the business strategy. Various factors come into play, including the product type and its associated profit margins. For instance, if your product boasts a 50% margin, you can comfortably tolerate a higher ACoS than one with a narrower 20% margin.
However, maintaining a low ACoS is key to a successful advertising strategy. The following are some tips to help you reduce it.
Tip 1: Focus on relevant keywords
Focusing on the most relevant keywords will help your product show up in front of the right audience, meaning your advertising spend will be more effective. Conducting keyword research is the best way to identify the important keywords you want to target. You can use several tools, such as Amazon brand analytics, and external tools, such as Helium 10 or Jungle Scout, to get good-quality keywords.
Tip 2: Negative Keywords
Negative keywords are essential for maintaining a low ACoS in Amazon’s advertising campaigns. By isolating search terms through negative targeting and optimizing bids, you gain control over which search terms not to display ads. This strategic approach enhances profitability by directing ad spending toward relevant terms with higher conversion potential, thus driving sales effectively.
Tip 3: Product Detail Page Optimization
Amazon will use your product information to determine search relevancy according to the keywords on your listing. If this information isn’t relevant to the product someone is searching for, your conversion rate will be low. It is crucial to ensure the product information is relevant and helpful to your target audience before activating Amazon-sponsored campaigns.
Tip 4: Effective bid management
Effective bid management in Amazon PPC campaigns is essential for maximizing profitability, strategically adjusting bids based on performance data, market dynamics, and campaign objectives, and optimizing ad placements. It will help drive desired outcomes effectively. As Amazon’s advertising ecosystem evolves, mastering bid management will remain fundamental to a successful advertising strategy.
Even though the adequacy of an ACoS depends on your marketing and business objectives, a low ACoS always means high profitability and a high ACoS means low profitability. Usually, the aim is to push for low ACoS, unless there is a specific brand awareness or sell-out strategy.
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