How to manage your Amazon PPC campaigns through Coronavirus (COVID-19)Mar 17, 2020
As the impact of Coronavirus on our daily lives and businesses continue to grow, it's not surprising that many Amazon sellers are feeling anxious right now.
Keeping yourself and your family safe and healthy is the most important thing. Only then can you take care of your business.
During this time of uncertainty, we remain as committed as ever to supporting our customers and serving our audience.
Despite there being so much outside of our control, from supply chain disruption to unpredictable sales, there are some steps you can take to help your business weather the storm.
One such step is that you can leverage PPC to maximize your profit so you can make every sale count.
I'm not talking about price gauging here. I'm talking about focusing on campaign profitability to ensure you get the most out of your Amazon Advertising spend.
The first thing you need to do is calculate your break-even Advertising Cost of Sale (ACoS).
Break-even ACoS is the theoretical ACoS if you spent your entire profit margin on advertising.
Or to put it another way, it's how much you can spend on advertising without losing money. Your break-even ACoS is also your profit margin before ad spend.
How to calculate your profit margin
First, you need to calculate your gross profit:
Sales Price - Cost of Goods Sold + Amazon Fees = Gross Profit
For example: $200 - $100 + $50 = $50 Gross Profit
Next, to calculate your profit margin, you simply divide the profit per unit by the product price and multiply by 100.
To follow on from the example above: $50/$200 x 100 = 25%
Now you know that if your ACoS is lower than your break-even ACoS of 25%, you are making a profit (and vice versa).
Now pause any keywords in your campaigns with an ACoS higher than your break-even ACoS, or those with lots of clicks but no sales.
By doing this, you are eliminating as much wasted ad spend as possible, and focusing your ad budget only on profitable keywords that drive sales and maximize profit for your business.
This is a perfect example of how you can adapt and leverage PPC, something you can control, to achieve a specific business goal.
I hope you can use this in your business and that it goes some way to helping you overcome the challenges we are currently facing.
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