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The foundational KPI of most ad campaigns is Advertising Cost of Sales (ACOS). But is ACOS really telling you everything you need to know about your advertising?
Increasingly, savvy marketers are realizing that ACOS is not the only metric they should have in their toolkits. ACOS offers a limited portrait of growth. Instead, marketers should take a more dynamic approach to PPC advertising.
In this webinar Aman Advani, Senior Director of Operations at AO2 Management, walks you through how to craft more sophisticated KPIs for your ad campaigns.
Before you even begin a major ad blitz, it’s important to first ensure that your conversion rate is strong. Without a strong product page, your ad spend will be wasted.
That means experimenting with your product page and testing new SEO strategies. How do you know if you have a good conversion rate? Conversion rates vary widely, but you ideally want to get to 2% or more as a baseline.
Turning off your ad campaign simply because the ACOS is a little high might be shortsighted. Maybe your campaign is helping boost exposure and organic rank even for non-ad-attributed buyers.
Only metrics like TACOS, which measures how your ad spend corresponds to your total sales (organic as well as ad-attributed), give you a holistic portrait of success. Other data points, like Subscribe & Save and New-To-Brand, offer critical info about your retention and growth, respectively.
Ideally, how many of your sales should be coming from ads? While it varies significantly from category to category, an ideal ratio is to have 20-30% of your sales come from ads, while the rest comes from organic.
This can’t always be the case, of course: In a highly crowded market, like the consumables space, for example, the share of ad-attributed sales tends to be much closer to 60%.
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