KPIs on Amazon: What Amazon Data Says About Marketplace Performance
With millions of daily visitors, Amazon offers sellers enormous potential to showcase and sell their products. The marketplace attracts more and more sellers in this way, who are consequently faced with constantly growing competition. To successfully market their products in this highly competitive environment, Amazon Advertising is the key to success. But which advertising campaigns are suitable for which products, and how profitable are the ads?
At this point, Amazon KPIs come into play. Key Performance Indicators are understood as performance metrics that enable sellers to measure and improve their marketplace performance based on Amazon data. But which KPIs on Amazon are actually relevant and what do the Amazon data say about marketplace performance? In this article, we show how KPIs on Amazon can help optimize sellers’ performance on the marketplace.
Why are KPIs on Amazon relevant?
First things first: Why are KPIs on Amazon relevant? A sale on Amazon and the use of Amazon Advertising is shaped by many decisions. Which products are suitable for distribution through the marketplace and which products perform better than others? Which prices work and how much impact do advertising campaigns show?
With the KPIs on Amazon, sellers can check the performance of their products and identify and compensate for deficiencies compared to the competition. KPIs on Amazon thus enable the definition of realistic targets and informed decisions based on Amazon data.
Relevant KPIs on Amazon
When looking at the multitude of KPIs on Amazon, one can quickly become overwhelmed by the amount of data. For different advertising formats, industries, and shipping methods, specific KPIs can be found. Additionally, there are specific KPIs for sellers and vendors. But are all of them really relevant?
Yes and no. Individual KPIs on Amazon always have their justification for their specific area of impact. However, it is sufficient to know the Amazon KPIs that make statements about one’s own activities on Amazon. Therefore, we have divided frequently used KPIs into three thematic areas and will introduce them gradually. This clustering does not specifically consider whether the KPIs are more applicable to sellers or vendors, but rather categorizes KPIs based on their thematic application.
KPIs for Measuring Overall Performance
First, we look at Amazon KPIs for overall performance. These relate to sales performance, which can be viewed independently of the advertising applied to one’s own products on Amazon.
Measuring the Success and Failure of Products
For measuring the success of products on Amazon, the KPIs for the number of impressions as well as the number of page views should definitely be considered. Both performance metrics can provide insight into how well the selected keyword set is aligned with the search queries posed and how high the visibility of the positions in the ranking on the search results page is. The CTR (click-through rate) can also show how relevant a positioning is for certain keywords, so that users click on the offered product.
Since sellers who own the buy box for a product have greater sales opportunities, monitoring ownership is a concern for many sellers. KPIs such as LBB (Lost Buy Box) or Buy Box wins in % can measure how often a seller has lost the buy box for their own products due to the price they set, or how often the buy box has been won proportionally for all ASINs. While a high LBB value may indicate a problematic pricing policy that does not adapt to competition and resulting price fluctuations, a high share of buy box wins suggests significant sales opportunities.
The RepOOS KPI indicates the page views of an ASIN in the selected period that were not available at the time of the visit but were recorded as reorderable in the automated calculation process for the ordering process for vendors. A high value may indicate that inventory management or supply chain processes should be optimized to ensure a constant availability of products.
Sellers can also have Amazon data show how much profit is made after deducting all costs for sold products. A high Net PPM (Net Pure Product Margin) indicates profitable products and high margins.
Customer satisfaction is the be-all and end-all in establishing a lasting customer base. Various KPIs can be used to monitor satisfaction, which address different aspects of the customer journey or the touchpoints between sellers and customers.
Thus, the rate of validity of tracking numbers can provide insights into the customer experience, which should be more positive if users can check the status of their order.
A high rate of late deliveries or a long average shipping duration can, for example, indicate negative customer experiences with the shipping processes. Similarly, a long average response time from sellers, which was needed in the last 90 days to respond to customer inquiries, suggests negative experiences with customer service.
This condition would also affect the performance metrics of dissatisfaction with customer service, returns, or average seller rating. However, a poor average seller rating may also stem from deficiencies in the product itself, which could be reflected in the rate of order defects. To gain insights into criticism, reviews should always be monitored, and feedback should be responded to as quickly as possible.
Performance Metrics for New Customers
Steady growth of the customer base goes hand in hand with increased sales of one’s own products. Insights into developments regarding new customers can therefore provide sellers with relevant insights into the composition of the customer base.
High values of the performance metrics “new customer” orders or “new customer” revenues as well as their respective percentage shares of the total customer base show how many orders were placed by new customers and how large the generated revenue is.
Advertising KPIs on Amazon
When looking at Amazon Advertising, it quickly becomes clear that it involves various interrelated processes that should be viewed differently. For a good overview of advertising success and costs, the consideration of individual KPIs is therefore essential.
Amazon KPIs for Advertising Costs
To keep track of advertising costs, the KPIs CPC (cost per click) or Ad Spend (advertising expenses) can be helpful. The CPC indicates the advertising costs incurred when clicking on the set ad. It has a significant impact on the advertising costs incurred during an order. The performance metric of Ad Spend provides an overview of total advertising costs. To optimize and control advertising expenses, these KPIs should be monitored. However, they do not provide information about the achieved profitability, as this can also be reached despite high advertising costs.
Measuring Advertising Success on Amazon
To measure advertising success, performance metrics should be used that provide information about the visibility and utilization of individual ads. The Amazon KPIs for clicks, impressions, click-through rate (CTR), view-through rate (VTR), and impression share serve this purpose.
- The impressions indicate the visibility of an ad and show how many people have seen an ad. The clicks take a step further in the customer journey and represent the views of an ad. Combined, this results in the click-through rate, which represents the percentage of users who see an ad and subsequently click on it. The VTR relates these performance metrics to video formats and shows how many views of a video were achieved after an impression.
- An additional indication of advertising success is provided by the Amazon KPI of impression share, which reflects the percentage of impressions for the top search results that the own campaign received from the total impressions for the top search results.
- The conversion rate (CR) includes the entire customer journey and indicates how many people who clicked on an ad actually purchased the product. Since most ads are paid for per click, this performance metric is crucial in determining how successfully an ad ultimately performs. The conversion rate can be optimized by selecting appropriate keywords for a campaign and optimizing the product page. The competitiveness of your products and prices also influences the conversion rate and should be considered during optimization. If your conversion rate is not in the desired range, we have put together a checklist that you can use to check your product page for optimization needs and thus achieve more conversions in the long term.
- The ad share also provides insights into the ratio of advertising revenue to organic revenue. While a balanced ratio should generally be pursued, the value should be assessed in relation to the individually set strategic goal.
Performance Metrics for Profitability on Amazon
To measure profitability, the investments made are compared with the successes of an advertisement. It is worthwhile to calculate the KPIs ROI (Return on Investment) and ROAS (Return on Ad Spend). Amazon also offers the performance metrics ACoS (Advertising Cost of Sale) and TACoS (Total Advertising Cost of Sale).
- The ROI indicates the efficiency of advertising campaigns in terms of profitability and pure profit figures. The performance metric is calculated by dividing the profit by the capital invested. If the ROI is greater than 1.0, the pure profit is higher than the invested capital. With an ROI below 1.0, the project can be considered unprofitable. However, these assumptions should be taken with caution, as cross/up-selling and other positive side effects are not taken into account.
- In contrast, the ROAS compares the overall advertising costs with the generated advertising revenue. In this way, it assesses the overall efficiency of a specific sponsored campaign, ad group, or product.
- Using the performance metric of ACoS created by Amazon, advertisers can determine how profitable the advertising campaigns are in relation to the advertising expenses. The lower the Average Cost of Sale, the more profitable the campaign is. Therefore, ACoS is one of the most important key indicators for measuring advertising success.
- The TACoS is calculated in the same way, but it takes into account not only the advertising expenses but also the total expenses in relation to the total revenue generated, making it well-suited for assessing overall profitability.
Amazon KPIs for Sponsored Brands Videos
Sponsored Brand Videos are a specific version of Amazon Advertising, for which there are specific KPIs to measure advertising success and the associated costs.
Measuring the Advertising Costs of Sponsored Brands Videos
Here, too, the cost-per-click billing method applies, which for videos is provided through the Amazon performance metric CPV (Cost-per-View), which shows the costs for a video view. Additionally, the Amazon KPI VCPM allows for the representation of costs per 1000 visible impressions, providing a better sense of the costs associated with successful reach.
KPIs for Advertising Success of SB Videos
Unlike other ad types, the success of the videos can largely be assessed based on the duration that users have watched the video. Various performance metrics can show how many impressions the video was viewed for a certain duration. This allows for an assessment of how relevant or interesting the video is designed:
- Video, first quartile: Number of impressions where the video was viewed for 25%.
- Video, second quartile: Number of impressions where the video was viewed for 50%.
- Video, third quartile: Number of impressions where the video was viewed for 75%.
- Completed video: Number of impressions where the video was viewed for 100%.
Additional performance metrics such as the number of visible impressions or the number of videos where mute was unmuted provide insights into triggered interactions, which can be considered a success. In particular, the number of detail page views of branded products attributed to ads provides insight into the success of Sponsored Brands Videos, as this is a necessary intermediate step towards the goal of sales.
Conclusion: What KPIs Indicate About Marketplace Performance
On Amazon, a variety of KPIs can be found, each applicable to different areas and providing insights into various questions. In this way, they can form the basis for informed strategic decisions or define realistic targets. If some products perform better than others, specific insights into advertising success or the profitability of ads can also influence the pricing or assortment strategy of the products.
For continuous optimization of one’s marketplace performance, knowledge of current processes and performance is necessary. If sales on Amazon do not achieve the desired results, KPIs can often provide explanations and help derive possible solutions or improvements. Sellers should therefore select the KPIs relevant to them and elevate brand performance on Amazon to the next level through regular monitoring and reporting.
Image credits in the order of the images: © Jesse Bettencourt/peopleimages.com – adobe.com / © Movesell
