5 Amazon Ad Terms You Should Know Part 1

January 9, 2024


In this video, we're breaking down essential Amazon advertising terms. Through the building blocks of any successful Amazon sellers toolkit and armed with these, you'll be on your way to navigating your campaigns with more confidence. Stick around.

About the Channel

Welcome back to the channel. If you're new here, my name's Cameron Scott. Amazon seller with more than 3 million in sales over the last five years. As Amazon sellers, we have a lot to juggle. And effective advertising is a huge chore. On this channel, we simplify and automate our Amazon advertising so we can focus on what matters most.


First up, impressions. Imagine your Amazon ad as a billboard on a busy highway. Impressions are like the cars passing by that billboard. They represent how many times your ad is shown to your potential customers. But here's the key. While impressions don't directly drive your optimization decisions, they are important for understanding if your ad is getting the exposure it needs to drive clicks and conversions. Impressions act as a pulse check for your ad's visibility and your bid's competitiveness. If you're not getting any impressions at all, your bid might be too low to win ad placements. So don't overlook impressions, especially for newer campaigns. They're the first sign of whether your ad is in the game or sitting on sidelines.

CPC (Cost Per Click)

Next up, we've got CPC short for cost per click. Just like it sounds, it's the amount you pay every time someone clicks on your ad. You can calculate your CPC by dividing your ad spend by the number of clicks you received. But why is CPC important? Well, outside of being the primary cost component of what you pay Amazon for your ads, it also gives you insight into the competitive landscape of your keywords. A higher CPC indicates fierce competition for the search terms you're targeting, while lower CPC indicates lower competition or lower interest in those terms. So you can use CPC as a barometer for the level of competition you're encountering.

CTR (Click-Through Rate)

Next is click-through rate or CTR for short. You can think of your click-through rate as your effectiveness score of your ad. It measures the percentage of people who like what they saw enough to click on your ad. To get your CTR, divide the number of clicks by the number of impressions, then multiply by 100 to get the percentage. A high CTR suggests your ad is hitting the mark. It's resonating with shoppers, it's relevant to their searches, and it's compelling them to click with an appealing product listing, imagery, and pricing. On the flip side, a lower CTR might be a sign that your ad isn't as appealing or as relevant as it could be. Maybe your targeting is a bit off or your product images and pricing isn't standing out in a crowded marketplace.

CVR (Conversion Rate)

Now on to conversion rate or CVR. This metric is the bridge between interest and action. It tells you how many people who clicked on your ad ended up buying your product. You can calculate by dividing the number of orders by the number of clicks that multiply by 100 for the percentage. A higher conversion rate means more of your clicks are turning into actual sales, making your ad spend more efficient. It's a key indicator of your ad's effectiveness and the appeal of your product. And there's more. Conversion rate directly impacts your cost per click. How? With a higher conversion rate, you can afford a bit more on each of those clicks, knowing that more of those clicks are turning into sales. Conversely, if your conversion rate is low, you need to have a lower CPC to maintain the same level of profit.

A-C-O-S (Advertising Cost of Sale)

Last but definitely not least, we have A costs. Advertising cost of sale. A-C-O-S. It's one of the most important metrics for measuring your ad performance. And it gives you direction at how to optimize your campaigns. Consider it as the thermostat of your Amazon ad campaigns. It helps you find the right balance between the ad spend and the revenue that ad spend generates. To determine your A costs, simply divide your ad spend by the revenue made from that ad spend. And just like temperature, it's all about finding your comfort zone. If your A costs too low, you might be under investing your ads and leaving potential sales and profit on the table. If it's too high, it could mean you're spending too much to acquire each sale. So it's not always about having the lowest A costs, but about finding the right setting for your specific goals.


That's it for part one of our Amazon advertising terms series. Make sure to subscribe for part two where we'll explore more key terms. See you in the next video.

Need more help?