Amazon basics
| Term | Meaning |
|---|---|
ASIN | Amazon Standard Identification Number; unique code per listing on Amazon |
Parent ASIN | Parent ASIN = groups of products |
Child ASIN | Child ASIN = one size, colour, scent, etc. |
Product line | Our term for listings that differ only by colour, scent or size. |
SKU | A seller’s own unit id. An ASIN can have several SKUs at different prices. |
Seller (3P) / Vendor (1P) | Third party selling through Seller Central vs wholesale to Amazon through Vendor Central. |
FBA / FBM | Fulfilled by Amazon vs fulfilled by the merchant. |
Private seller | A seller (3P), usually a smaller store, that buys products to resell on Amazon at a profit rather than building a defined brand of its own. It uses Fulfilled by Amazon: Amazon stores, packs and ships its orders. |
Buy Box | The featured offer on a product page. Sponsored Products only serve while the advertiser holds it. |
SERP | Amazon search engine results page. |
Sponsored tile | A paid product in the search results. |
Organic rank | Position among unpaid results for a search. |
Market | An Amazon subcategory (browse node). |
Niche | A cluster of searches sharing one shopper intent. Never a subcategory. |
BSR | Best Sellers Rank. |
Ads & campaigns
| Term | Meaning |
|---|---|
Sponsored Products (SP) | Ads for a single product that look like normal listings with a “Sponsored” label, shown in search results and on product pages. Targeted by keyword or product; paid per click. Our primary channel. |
Sponsored Brands (SB) | Ads that show the brand’s logo, a custom headline and several of its products, or a video, mostly at the top of search results. Need Brand Registry. Targeted by keyword or product. |
Sponsored Display (SD) | Display ads that follow shoppers on and off Amazon (product pages, the Amazon home page, other sites and apps), targeted by product, category or audience, such as people who viewed a product but did not buy. |
DSP | Amazon’s demand-side platform for programmatic display and video. Runs on our own seat. |
Profile | A brand’s Amazon Ads account in one marketplace (for example the US). The top level we manage; settings and budgets roll up to it. |
Campaign | A container for ads inside a profile, with its own daily budget, targeting type (manual or AUTO) and placement modifiers. It holds the keywords or product targets we bid on. |
Search term | What a shopper actually types into Amazon search. Not the same as a keyword: one keyword can match many search terms, depending on its match type. |
Keyword | Search text we bid on, with a match type. |
Match types | Exact (known searches), phrase (search contains our text), broad (loosely related). Phrase and broad discover new searches. |
Close variant | A search Amazon treats as the same as an exact keyword (plurals, spacing, dropped function words). |
AUTO targeting | Campaign with no keywords. Amazon picks where it shows, via four clauses: close match, loose match, substitutes, complements. |
Product targeting (PT) | Bidding on a specific ASIN or category instead of a search. |
Negative keyword / negative target | A search term or product we exclude from a campaign or ad group. The ad keeps running everywhere else; it just won’t serve on searches that match the negative keyword (by its match type) or on the negated product’s page. |
Branded / non-branded | Searches containing our brand name vs generic or competitor searches. Different economics. |
Defensive targeting | Targeting our own products to protect them. |
Placement | Where an ad shows. Sponsored Products has three: Top of Search, Rest of Search and Detail Page. Each converts and costs differently, so each can get its own bid uplift. |
Top of Search (ToS) | The sponsored slots in the first row of the first page of search results. Usually the highest conversion rate and the highest click price. |
Rest of Search (RoS) | Sponsored slots anywhere else in search results: lower on page one and on later pages. |
Detail Page (DP) | Sponsored slots on other products’ pages (Amazon calls this “product pages”), such as the carousels under a competitor’s listing. |
Bid | The most we will pay for one click on a target. |
Placement modifier | A percentage uplift on the bid for one placement, set per campaign, 0% to +900%. |
Audience modifier (SH) | Uplift for Shopping History audiences. |
Dynamic bidding | Campaign setting that lets Amazon lower, or raise and lower, a bid at auction time. |
Performance metrics
| Term | Meaning | Formula |
|---|---|---|
Impression | One showing of an ad or listing to a shopper. | |
Click | A shopper clicking the ad. | |
PPC | Pay per click: we pay only when a shopper clicks. | |
CTR | Share of impressions that become clicks. | clicks ÷ impressions |
CPC | What we actually pay per click (can be below the bid). | spend ÷ clicks |
Attribution window | How long after a click an order still counts for the ad (1, 7, 14 or 30 days by ad product and report). | |
Orders / Ad sales | Orders and sales Amazon credits to ads inside the attribution window. | |
CVR | Share of clicks that become orders. The one number the bid model estimates. | orders ÷ clicks |
AOV (average order value) | Revenue per order. | sales ÷ orders |
ROAS | Sales per $1 of ad spend. | ad sales ÷ ad spend |
ACOS | Ad spend as a share of ad sales. Inverse of ROAS. | ad spend ÷ ad sales |
TACOS | Ad spend as a share of all store sales, paid and organic. | ad spend ÷ total sales |
Organic vs ads split | How much of revenue came from unpaid vs paid sales. | ad sales ÷ revenue basis |
Implied TACOS | TACOS we expect from a plan. | expected ad spend ÷ expected total store revenue |
CPA (cost per acquisition) | What we spend on ads per attributed order, new or repeat customer. Lower than CAC whenever some ad orders come from existing customers. | ad spend ÷ ad orders |
CAC (customer acquisition cost) | Customer acquisition cost: what we spend on ads to win one new customer. | ad spend ÷ new customers acquired |
Margin & order valuation
| Term | Meaning | Formula |
|---|---|---|
ASIN Price | What the shopper pays for an ASIN (not incl. taxes fees shipping); the listing price | |
COGS | Cost of goods sold; direct costs of producing or purchasing the goods a company sells | |
Trade terms | Discounts Amazon deducts from what it pays a vendor (co-op, damage, freight, early payment), as a share of cost price. | |
Contribution Margin | A product’s value after subtracting COGS from its sales price | |
CM2 | Money left per unit after Amazon fees and COGS, before ads, in the store’s currency. | price − Amazon fees − COGS |
CM2% | CM2 as a share of the listing price. The margin that prices every bid. | CM2 ÷ listing price |
CM2 (Vendor Central) | CM2 for 1P brands, where the money flows differently. In Seller Central the brand sells to the shopper: it gets the listing price and pays Amazon’s referral and FBA fees. In Vendor Central the brand sells wholesale to Amazon: it gets the wholesale price minus trade terms, pays no referral or FBA fees, and Amazon sets the listing price. Example: $20 listing price, $10 wholesale, 10% trade terms, $5 COGS gives CM2 = $4. | wholesale price × (1 − trade terms) − COGS |
CM2% (Vendor Central) | Vendor Central CM2 as a share of the listing price, not the wholesale price, because ad sales and ROAS are reported at the listing price. In the example above, CM2% = $4 ÷ $20 = 20%, not 40%. | CM2 (Vendor Central) ÷ listing price |
CM3 | Money left per unit after ads too, in the store’s currency. Not used to price bids. | CM2 − ad spend per unit sold |
CM3% | CM3 as a share of the listing price. | CM3 ÷ listing price |
Value per conversion | What one order is worth after costs. Also the most we could pay to win a customer who only ever orders once. | AOV × CM2% |
Breakeven ROAS | The ROAS at which ads pay for themselves on ad sales alone. Never 1.0. | 1 ÷ CM2% (30% margin gives about 3.3) |
Customers & how much to spend
| Term | Meaning | Formula |
|---|---|---|
NTB (new-to-brand) | Customer with no order from the brand in the prior 12 months (Amazon’s definition). | |
NTB share | Share of ad-attributed orders that come from new-to-brand customers. | NTB orders ÷ attributed orders |
Breakeven CAC | The most we can pay to win one customer and still break even, at a named horizon. | AOV × CM2% × (1 + L); L = expected additional orders per first order |
LTV | Average revenue a new customer generates across the whole brand catalog over a horizon (blended, 1 to 4 years), from AMC cohorts. | cohort revenue ÷ cohort buyers |
LTV:CAC | Lifetime value to customer acquisition cost. How much margin a customer brings in over their life for every $1 spent to win them. We target the typical 3:1, meaning $3 back for every $1 of acquisition cost. | (LTV × CM2%) ÷ CAC; target 3:1 |
Target CAC | The most a brand can pay to acquire a customer and still hit a 3:1 lifetime value to cost ratio. | cohort LTV × CM2% ÷ 3 |
Incrementality | Share of attributed sales that would not have happened without the ad. | |
CPC ceiling | The most one click is worth. It is not a bid. | CVR × value per conversion |
Data sources
| Term | Meaning |
|---|---|
AMS (Amazon Marketing Stream) | Near real-time feed of ads traffic and conversions. |
AMC (Amazon Marketing Cloud) | Amazon’s clean room for event-level queries. |
Brand Analytics | Amazon reports for brand owners (SFR, SQP, top clicked products). |
SFR (search frequency rank) | Rank of a search by how often shoppers make it. Ranks searches, not products. |
SQP (Search Query Performance) | Impressions, clicks and purchases per search for our products vs the market. |
SP-API | Amazon’s Selling Partner API. Source of total sales. |