Amazon Advertising Terms Explained

(Page is being updated…)

Below you will find a list of all the terms Amazon uses in its advertising platforms, such as sponsored products, sponsored brands, sponsored display & AMS advertising console, with their clear definition of what they represent.

I will keep updating this page as new terms, features, reports, etc are introduced, so you can bookmark it as an ongoing resource.

ACOS

ACOS, which stands for Advertising Cost Of Sales, is a way of measuring ad spend efficiency. it is calculated as Ad Spend divided by Ad Sales and presented as a percentage. Lower is better.

For example, if you spent $10 in ads and generated $40 in ad sales, your ACOS would be 25% ($10/$40=0.25)

“True” ACOS (or Total ACOS)

“True” ACOS (or Total ACOS) is a way of measuring ad spend efficiency in relation to total sales performance. It’s similar to ACOS, however, it’s calculated as Ad Spend divided by TOTAL sales (instead of just Ad Sales). Lower is better.

For example, if you spent $10 in ads and generated $40 in ad sales, but had another $60 in organic (non-ad) sales, your True ACOS would be 10% ($10/$100=0.10)

Conversion Rate (CVR)

Conversion rate shows the efficiency of your clicks, by measuring the number of orders relative to the number of clicks. higher is better.

For example, if you had 50 clicks that generated 10 orders, your conversion rate is 20% (10/50=0.2)

COGS

COGS, which stands for Cost Of Goods Sold, is the cost you paid to accuire the goods you sold (or closely related costs like shipping). it’s calcualted when you sell goods, as a way of measuring the profit you made on the sale. Sale Price – COGS = Gross Profit

Although COGS is not strickly speaking an advertising term rather an accounting term, it’s a plays a vital rolse when trying to calculate your advertising profitiblty. 

DSP

DSP is the name of Amazon’s Agency Advertising Division, (DSP is for Demand Side Platform). It’s generally only available to big sellers & ad agencies and requires high minimum budgets to participate.

It includes many exclusive advertising features, some of which are being rolled out in seller central as well.

Read more about Amazon DSP here

Keywords

Keywords are the phrases you bid on when creating keyword targeting campaigns

ROAS

RoAS, which stands for Return On Ad Spend. this metric is the inverse of ACOS and is the most accepted metric for measuring ad spend efficiency. higher is better.

It’s calculated as sales divided by Spend and usually represented as a simple number. higher is always better. for example, if you spent $10 in ads and generated $40 in sales, your RoAS would be 4 (40/10=4), whereas your ACOS would be 0.25 (or 25%)

For some odd reason, amazon is currently displaying the RoAS value as a %, which is technically incorrect. hopefully, they correct this soon enough.

You can read more about RoAS here

Search Terms

Search terms refer to the actual word(s) or phrases customers type into the Amazon search bar.

When you create a keyword campaign, you bid on specific keywords, and amazon then matches those keywords with actual customer search terms, based on your targeting settings.