How Do I Maximize ROI With a Profit and Loss Dashboard in Amazon Advertising?

July 19, 2023
By The Badger

Maximize your ROI with a Profit and Loss Dashboard in Amazon Advertising and become a better marketer too.

In this blog post, Michael Facchin and Alfredo Roselli from Ad Badger dive into the world of Profit and Loss Dashboards in Amazon advertising, exploring how it can revolutionize your Amazon PPC advertising strategy.

From structuring the data well to analyzing insights and making timely changes, we’ll equip you with the tools to maximize your Amazon PPC success. Let’s dive in!

Everything This Article Covers

Add a header to begin generating the table of contents

Why Is A Profit and Loss Dashboard So Important In Amazon Advertising?

Think of a Profit and Loss Dashboard in Amazon advertising as your secret weapon for understanding the money side of things. It’s like a one-stop shop where you can easily see how your advertising campaigns perform financially. This nifty report gives you a snapshot of important stuff like revenue, costs, and net profit, all presented in an easy-to-understand way.

With a Profit and Loss dashboard, you can quickly determine which products or campaigns are making you the big bucks and which might need a boost. Armed with this knowledge, you can make smart decisions to optimize your ads and make sure your Amazon game is always on point.

Say hello to bigger profits and a lot less guesswork!

What Goes Into A Profit and Loss Dashboard for Amazon PPC?

In your Profit and Loss Dashboard for Amazon PPC, you have the flexibility to track various costs based on your preferences.

By tracking these costs, you gain a comprehensive understanding of expenses associated with advertising your product and how they are allocated. These costs can include sponsored product revenue, campaign-specific costs, personnel expenses, and more.

It is entirely your decision on how to categorize and distribute these costs. However, Alfredo prefers to classify them as either marginal costs or fixed costs.

Marginal costs, in the context of selling on Amazon, refer to expenses that fluctuate depending on adjustments in your business, such as PPC goals, like TACOS.

On the other hand, fixed costs pertain to the stable expenses involved in operating on Amazon, like your Seller Account fees.

By tracking costs within the Profit and Loss dashboard, you gain valuable insights into how these expenses impact your overall profitability. This information enables you to assess the trajectory of your profits when making changes to your costs.

How Should I Format My Profit and Loss Dashboard?

When creating your Profit and Loss dashboard, structure it like this for maximum clarity.

Start with the topmost column showcasing your total revenue. You’ll then divide this into units sold, with a sub-column for PPC-driven sales and those sold organically.

As you delve deeper, you’ll want to examine the average selling price, as it will impact your strategy to promote your product.

Next, move on to the ad spend section, allocating spending across different campaign types, like Sponsored Products, Sponsored Brands, and Sponsored Display.

After that, review your FBA fees. This is helpful when pinpointing cost increases and areas for improvement. You can also analyze your warehouse fees to identify areas of cost increase.

At the bottom of the dashboard, display the TACOS by dividing total ad spend by revenue. Additionally, assess the profit margin and the overall profit amount.

By organizing your Profit and Loss dashboard this way, you’ll have a clear and comprehensive view of your Amazon advertising performance.

Ad Badger

Amazon PPC Software
Made by Amazon PPC-ers.
Made for Amazon PPC-ers.

Book a call now.

How Often Should I Adjust My Profit and Loss Dashboard?

The secret to finding a suitable timeframe to make changes to your Profit and Loss Dashboard on Amazon is allowing your account enough time to absorb them.

Depending on your account type, the advice for when to edit your Profit and Loss Dashboard differs.

When Most Accounts Should Edit Their Profit and Loss Dashboard

Making changes too soon doesn’t allow you to assess their impact on the account. On the other hand, making changes too infrequently makes it challenging to keep up with the ever-changing Amazon PPC landscape.

Ideally, you want to operate on a weekly basis. A seven-day timeframe is sufficient to observe the effects of any changes you make to the account.

When Cyclical Accounts Should Edit Their Profit and Loss Dashboard

Another factor to consider before making changes is the nature of the account. Some accounts may follow a yearly cycle, focusing on changes from month to month rather than weekly.

For these cyclical accounts, a deep dive once a month is necessary to identify areas that require adjustments.

When All Other Amazon Accounts Should Edit Their Profit and Loss Dashboard

If you have an account in a chaotic phase, such as during high-sales periods like Q4, daily monitoring is essential.

Your niche can also influence how frequently you make changes. Some niches respond differently to various timeframes. For example, you might discover that your niche experiences the highest sales on weekends. In this case, you can create a strategy around that. For instance, on a Friday night, you can increase bids by 30%-40% and restore the original bids on Monday morning.

Ultimately, knowing when to edit your Profita nd Loss Dashboard depends on your Amazon account needs.

How Do I Analyze Insights From The Profit and Loss Report?

When analyzing insights from the Profit and Loss report, Alfredo recommends beginning with TACOS before examining revenue. TACOS is a measure of how effective your ad spend in driving sales. You calculate it by dividing your ad spend by your sales revenue and then multiplying it by 100. A higher TACOS means you’re spending more to get sales.

For the revenue analysis, you’ll need to calculate your ROAS to determine the revenue you’re generating with your ad spend.

To begin, look at the TACOS trend over the past 10-20 weeks. Has it remained stable or have there been any significant jumps? A deviation within a 5% point difference is generally okay. However, if it exceeds a 10%-15% difference, that should set off your alarm bells, indicating that something is happening with the account.

Next, you want to examine the revenue. Is it stagnant or showing growth? If it’s growing, by how much? Determine the rate of growth. Then establish a relationship between the revenue and TACOS figures.

For example, if you raise your TACOS, your revenue should increase as well, and vice versa. If the revenue doesn’t increase when you raise your TACOS, you’d have to check if you’re getting organic sales. If not, you’d need to optimize for SEO, including more relevant keywords in the titles, backend keywords, etc.

By following these steps in your Profit and Loss Dashboard, you can gain valuable insights into the effectiveness of your ad spend, revenue trends, and potential areas for improvement such as optimizing for SEO.

Unexpected Insights From The Profit and Loss Dashboard

A Profit and Loss Dashboard for Amazon Advertising is not just about profits and losses; it goes way beyond that.

It reveals the repeat customer purchase rate, shapes your ACOS strategy, and uncovers hidden seasonality opportunities. Prepare for a whole new level of insights!

Repeat Customer Purchase Rate

The Profit and Loss dashboard isn’t just about revenue and costs; it can uncover some seriously game-changing insights. One of these gems is the repeat purchase customer rate.

Picture this: your customers keep coming back for more of your amazing product, especially if it’s something they consume regularly. And the exciting part is that even if your advertising costs (ACOS) seem high, you can tolerate it because those repeat purchases are boosting your bottom line.

When looking at the Profit and Loss Dashboard, you can observe this over a longer timeframe, such as a year, and determine whether there’s exponential revenue growth. That’s when you can witness the magic of exponential revenue growth unfolding before your eyes. It’s like watching your business thrive and soar to new heights.

Seasonality Analytics in Profit and Loss Dashboard

The Profit and Loss Dashboard also proves helpful in revealing the popularity of your products at different times of the year. For example, products like sunscreen sales skyrocket in the scorching summer heat, but take a nosedive when winter rolls around. You might even notice a correlation between the general temperature of an area and the repeat purchases for some products. That’s supply and demand.

The same applies to emergency products. When there’s a major scare of impending extreme weather, you may observe a spike in sales for specific products. These insights allow you to tailor your campaign strategy to accommodate high-sale seasons and navigate the slower ones.

Maximize ROI With a Profit and Loss Dashboard

In Amazon advertising, the Profit and Loss Dashboard is your secret weapon. Harnessing the power of the Profit and Loss dashboard gives you a comprehensive understanding of your campaign performance.

Each adjustment, optimization, and refined campaign strategy supported by the insights from the Profit and Loss report will bring you closer to mastering the art of Amazon PPC. So, buckle up, and let your Amazon PPC prowess shine like never before!