Amazon ACoS or Amazon Advertising Cost of Sale is a key metric to measure the performance and efficiency of your Amazon PPC campaign(s).
It shows the ratio of ad spend to ad revenue in % – how much of every dollar that was earned with advertising was spent on an ad campaign. You can easily calculate your ACoS on Amazon with following formula:
ACoS = Ad Spend / Ad Revenue x 100.
It is in your best interest to know your Amazon ACoS in order to create efficient PPC campaigns, set smart bids on your search terms and drive significant profits over time to grow your business.
We recommend using our Amazon PPC Tool to make your (work) life much easier.
The Ad Optimizer offers easy campaign set-up and management, 24/7 bidding optimization and continious keyword harvesting to ensure your Amazon Advertising campaigns’ success.
What is a “good” ACoS on Amazon and why is it so important?
ACoS varies widely depending on the marketplace, ad type, competition, product price, and many more factors.
There is no perfect ACoS. A “good” ACoS usually depends on your marketing strategy and your goals.
To determine your ideal Amazon ACoS, you would want to find your optimal profit margin and work backwards.
Given this information, you first need to decide on the strategy and objectives (e.g. product launch, brand awareness…) for each campaign. By clearly establishing and setting your goals it will be easier to decide which products to include in your campaigns.
Ideally, you want to get the highest sales revenue possible, combined with the lowest ACoS possible.
Because a low ACoS means high profitability and a high ACoS means low profitability, sellers tend to strive for a low ACoS unless they are working on a specific awareness or sell-out strategy.
Your ACoS can keep varying depending on many factors including company, competition, product offering and prices, and more, which can have an influence on the ideal ACoS. Our Ad Optimizer reaches an average ACoS of 6% for our customers.
Low ACoS = High Profitability
Generally, a low Amazon ACoS implies high profitability, but only if it matches your goals and intentions.
This strategy is typically used in a later stage of a product when it already has good organic rankings.
Setting a low ACoS is also a good strategy for:
- Making as much profit as possible
- Selling a low-converting product
- A product that does not need high visibility
High ACoS = High Visibility
A good approach is to use different TACoS for different types of products to maximize selling potential.
While having a low ACoS is great for profitability, a high ACoS can increase visibility, dominate a niche, and lead to more profit in the long run.
Setting a high ACoS is a good strategy for:
- Increasing brand & product awareness
- Dominating a niche
- Wanting high product visibility
If you want to improve your ACoS, focus on your products’ retail readiness. More conversions will help improve your ACoS.
To get potential customers on your product listing page, you must create a relevant product detail page to encourage them to convert and buy your products.
Do you want to know if your ACoS is matching your goals?
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