Kpis on Amazon: What Amazon Data Tells Us About Marketplace Performance
With millions of daily visitors, Amazon offers enormous potential for merchants to present and sell their products. In this way, the marketplace attracts more and more sellers, who are consequently exposed to constantly growing competition. In order to successfully market one’s own 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?
This is where KPIs on Amazon come into play. Key performance indicators are performance indicators that enable sellers to measure and improve their own marketplace performance using Amazon data. But which KPIs on Amazon are relevant at all and what does Amazon data say about marketplace performance? In this article, we show how KPIs on Amazon can help to optimize the performance of sellers on the marketplace.
Why Are KPIs Relevant on Amazon?
First things first: Why are KPIs relevant on Amazon? A sale on Amazon and the use of Amazon Advertising is characterized by many decisions. Which products are suitable for sale via the marketplace and which products perform better than others? Which prices work and how much effect do advertising campaigns have?
With the KPIs on Amazon, sellers can check the performance of their products and identify and compensate for deficits compared to the competition. This means that KPIs on Amazon enable the defining of realistic targets and informed decision making based on Amazon data.
Relevant KPIs on Amazon
If you look at the multitude of KPIs on Amazon, you can quickly be overwhelmed with the amount of data. You can find your own KPIs for different advertising formats, industries and shipping methods. In addition, there are separate KPIs for sellers and vendors. But are all of them really relevant?
Yes and no. Individual KPIs on Amazon are always justified for their specific area of activity. However, it is sufficient to know the Amazon KPIs that provide insight about one’s own activities on Amazon. We have therefore divided frequently used KPIs into three subject areas and presented them one by one. This clustering does not specifically include whether the KPIs are more applicable to sellers or vendors, but rather classifies KPIs according to their thematic application.
KPIs for Measuring General Performance
First, we will look at Amazon KPIs for general performance. These refer to the sales performance, which can be considered independently in regard to the applied promotion of one’s own products on Amazon.
Measuring the Success and Failure of Products
To measure the success of products on Amazon, it is essential to include the KPIs for the number of impressions and the number of page views. Both performance indicators can provide information about the extent to which the selected keyword set is aligned with search queries 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 merchants who own the Buy Box for a product have greater sales opportunities, many sellers are concerned about monitoring ownership. KPIs such as LBB (Lost Buy Box) or Buy Box Gains in % can be used to measure how often a seller has lost the Buy Box for their own products due to the price they set themselves, or how often the Buy Box could be won proportionately for all ASINs. While a high LBB value can indicate a problematic pricing policy that does not adapt to the competition and the resulting price fluctuations, a high proportion of Buy Box wins suggests great sales opportunities.
The RepOOS KPI indicates the page impressions of an ASIN in the selected time period that were not available at the time of the call, but were stored as reorderable in the automated calculation procedure for the ordering process for vendors. A high value may indicate that inventory management or supply chain processes should be optimized so that constant availability of products can be guaranteed.
Sellers can also use the Amazon data to see how much profit is generated after deducting all costs for products sold. A high Net Pure Product Margin (PPM) indicates profitable products and high margins.
KPIs for Customer Satisfaction
Customer satisfaction is the be-all and end-all of establishing a consistent customer base. Various KPIs can be used to monitor satisfaction, dealing with different aspects of the customer journey or the points of contact between sellers and customers.
For example, the rate of validity of tracking numbers can provide insight into the customer experience, which should be more positive if users can check the status of their order.
For example, a high rate of late deliveries or a long average shipping time may indicate negative customer experiences with shipping processes. Similarly, a long average response time on the part of Sellers to respond to customer inquiries in the last 90 days suggests negative customer service experiences.
This condition would then also affect the performance metrics of dissatisfaction with customer service, returns, or average seller rating. However, a poor average seller rating may also find its origin in shortcomings in the product itself, which in turn could be reflected in the rate of order defects. Therefore, in order to gain insights into criticism, reviews should always be kept in view and criticism should be responded to as quickly as possible.
Key Performance Indicators for New Customers
Continuous growth of the customer base goes hand in hand with increased sales of the company’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 key performance indicators “new customer” orders or “new customer” sales and their respective percentages of total customers show how many orders were placed by new customers and how large the sales generated are.
Advertising KPIs on Amazon
When looking at Amazon Advertising, it quickly becomes clear that these are various interlocking processes that should be viewed differently. For a good overview of advertising success and costs, it is therefore essential to look at the individual KPIs.
Amazon KPIs on Advertising Costs
To keep track of advertising costs, the KPIs CPC (cost per click) or ad spend can help. The CPC indicates the advertising costs that are incurred when an ad is clicked. It has a significant influence on the advertising costs incurred during the course of an order. An overview of the total advertising costs is provided by the Ad Spend performance indicator. To optimize and control advertising spend, these KPIs should be monitored. However, they do not provide any information about the profitability achieved, as this can also be achieved despite high advertising costs.
Measurement of Advertising Success on Amazon
To measure the success of advertising, performance indicators should be used that provide information about the visibility and use of individual ads. The Amazon KPIs of clicks, impressions, click-through rate (CTR), view-through rate (VTR), and impression share serve this purpose.
- Impressions indicate the visibility of an ad and show how many people have seen an ad. The clicks go one 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 and consequently click on an ad. 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 the advertising success is provided by the Amazon KPI of impression share, which reflects the percentage of impressions for the top search results that one’s own campaign received from the total impressions for the top search results.
- The conversion rate (CR) takes into account the entire customer journey and indicates how many people who clicked on an ad actually bought the product. Since most ads are paid per click, this performance metric is crucial to 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 the prices also influence the conversion rate and should be taken into account when optimizing.
- The ad share also provides insights into the ratio of advertising revenue to organic revenue. Even if a balanced ratio should generally be aimed for, the value must be evaluated with regard to the individually defined strategic goal.
Performance Metrics for Profitability on Amazon
To measure profitability, the investments made are compared with the success of an ad. For this purpose, it is worth calculating the KPIs ROI (Return on Investment) and ROAS (Return on Ad Spend). Amazon also offers the key performance indicators ACoS (Advertising Cost of Sale) and TACoS (Total Advertising Cost of Sale).
- ROI shows the efficiency of advertising campaigns in terms of profitability and pure profit figures. The performance indicator 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 capital invested. If the ROI is less than 1.0, the project can be described as unprofitable. However, these assumptions should be treated with caution, as cross/up-selling and other positive side effects are not taken into account.
- In contrast, the ROAS compares the general advertising costs with the advertising revenue generated. In this way, it evaluates the overall efficiency of a particular sponsored campaign, ad group, or product.
- Using the ACoS performance metric created by Amazon, advertisers can find out how profitable the advertising campaigns are in relation to the advertising spend. The lower the Average Cost of Sale, the more profitable the campaign. The ACoS is therefore one of the most important target indicators for measuring advertising success.
- The TACoS is calculated in the same way, but includes not only advertising spend, but total spend compared to total revenue generated, and is therefore well suited to assessing overall profitability.
Amazon KPIs for Sponsored Brands Videos
Sponsored Brand Videos is a specific version of Amazon Advertising, which has its own KPIs for measuring advertising success and costs incurred.
Measurement of Advertising Costs of Sponsored Brands Videos
The cost-per-click billing method applies here as well, but for videos it is delivered by means of the Amazon performance indicator CPV (cost-per-view), which shows the costs for a video view. The Amazon KPI VCPM can also be used to show the costs per 1000 visible impressions, which gives a better feeling for the costs of successful reach.
KPIs for the Advertising Success of Self-Service Videos
Unlike other ad types, the success of videos can be largely evaluated by the length of time users have watched the video. Various performance indicators can be used to show the number of impressions with which the video was viewed for a certain duration. This makes it possible to evaluate how relevant or interesting the video is:
- Video, first quartile: number of impressions where the video was viewed 25% of the time.
- Video, second quartile: number of impressions where the video was viewed 50% of the time.
- Video, third quartile: number of impressions where the video was viewed 75% of the time.
- Completed video: Number of impressions where the video was viewed 100% of the time.
Additional performance indicators such as the number of visible impressions or the number of videos that were unmuted provide information about triggered interactions that can be considered a success. In particular, the number of detailed page views of the brand products that are attributable to ads provide information about the success of Sponsored Brands videos, as this is a necessary intermediate step for the goal of the sale.
Conclusion: What KPIs Say About Marketplace Performance
A wide range of KPIs can be found on Amazon, each of which can be applied to different areas and provide insights into different issues. In this way, they can form the basis for well-founded strategic decisions or also define realistic targets. If some products perform better than others, concrete insights into the advertising success or the profitability of ads can also influence the pricing or product range strategy of the products.
Knowledge of current processes and performance is necessary for continuous optimization of one’s own marketplace performance. If sales via Amazon do not achieve the desired results, KPIs can often be used to find explanations and derive possible solutions or improvements. Sellers should therefore pick out the KPIs relevant to them and raise brand performance on Amazon to the next level through regular monitoring and reporting.
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