Cost-Per-Click (CPC) - Key Metrics on Amazon
What is the Cost-Per-Click procedure on Amazon?
As an advertiser on Amazon, you pay an amount every time a customer clicks on your ad. This model is called the Pay-Per-Click procedure. The amount to be paid is called Cost-Per-Click.
You can adjust the CPC amount yourself, but it depends on several factors. On the one hand, Pay-Per-Click works within an auction procedure and is therefore tied to your competitors' bids. This means that if your competition bids a certain amount for a keyword, you must bid a higher amount for your ad to be displayed. The auction winner always pays only the price bid by the second-highest bidder plus 1 cent. Furthermore, the CPC amount therefore also differs depending on the keyword on which the ad is displayed. The CPC solution is used, for example, with Sponsored Products, Sponsored Brands, and Sponsored Display.
Example
Let's look at an example:
A customer searches on Amazon for pillow. You run a campaign with a bid of 1 EUR per click and win the auction as the highest bidder. The second-highest bid was 0.80 EUR. A customer now clicks on your ad, which costs you 0.81 EUR. Three days later, the customer buys the clicked product for 19.99 EUR plus two pillowcases from your brand for 5.99 EUR each.
If this were the only action of your campaign, this transaction would be shown in the statistics as follows:
| Number of Impressions | 100 |
| Number of Clicks | 4 |
| Cost-Per-Click | 0.81 EUR |
| Click-Through-Rate | 4 % (Number of Clicks / Number of Impressions) |
| Conversion Rate | 25 % (Number of Conversions / Number of Clicks) |
| Number of Conversions 1 Day / 7 Days / 30 Days | 0 / 3 / 3 |
| Number of Conversions 1 Day / 7 Days / 30 Days (advertised SKU) | 0 / 1 / 1 |
| Revenue 1 Day / 7 Days / 30 Days | 0 / 31.97 EUR / 31.97 EUR |
| Revenue 1 Day / 7 Days / 30 Days (advertised SKU) | 0 / 19.99 EUR / 19.99 EUR |
| ACoS (Advertising costs relative to revenue) | 10 % (3.24 EUR / 31.97 EUR) |
Let's take a closer look at these numbers:
Your ad for the keyword pillow was shown to 100 potential customers (Impressions), of which four clicked on the ad (Clicks). Therefore, there is a Click-Through-Rate of 4% (4 / 100). Since you pay 0.81 EUR per click (Cost-Per-Click), you incur costs of 3.24 EUR (4 x 0.81 EUR). One of the four customers bought your product. Your Conversion Rate is therefore 25% (1 / 4).
Now there are different campaign types that consider different time periods (1 Day / 7 Days / 30 Days). The customer bought on the third day. He paid a total of 31.97 EUR for the three products. The advertised product accounts for 19.99 EUR of this. With the ACoS (Advertising Cost of Sales), you can now calculate how high your advertising costs are in relation to the revenue generated. The campaign expenses (3.24 EUR) therefore account for 10% (3.24 / 31.97) of the total revenue (31.97 EUR) generated by the ad. This results in an ACoS of 10%.
