Amazon ACoS (Advertising Cost of Sales) measures performance of an Amazon Sponsored Products campaign. Measure profitability, reduce your ACoS
ACoS is an important and popular metric that measures the performance and success of your Amazon Sponsored Products campaign. Get to know your ACoS percentage and make smart calculated bids on your search terms.
You can find this metric by going to Advertising > Campaign Manager for an overview of your ad campaigns.
This is a term used by Amazon for its sponsored ads. ACoS stands for “Advertising Cost of Sale”
The ACoS Amazon formula metric shows you the ratio of ad spending to targeted sales:
Essentially, this equation works out the percentage of your sales that have paid for your advertising:
The ACoS definition is simple. It is how much of each dollar earned is going toward the ad campaign.
Let’s say that an ad campaign generates $300 in sales, and the ad campaign costs $30 to run. Use the ACoS equation as follows:
The Advertising Cost of Sales is 10%.
The Amazon PPC ACoS measurement will help you determine the profitability and success of your ad campaign.
First, evaluate the profit margin of your product, the amount you take home from your sales after the costs associated with making and selling the product.
The cost structure of a product will include shipping, Amazon fees, production fees, and others. After considering these costs, you will be left with your profit margin.
Let’s say that shipping accounts for 15% of your profit, Amazon fees take up 30%, and product cost accounts for 35%. The resulting profit margin is 20%.
Determining your ACoS requires a thorough understanding of your products. Use your ACoS to determine how much to spend on ad campaigns.
As long as your ACoS is lower than your profit margin, you will not lose money on advertising.
If your ACoS and profit margin are equal percentages, you have what is called a “break-even ACoS”. Here, you’re spending the entire profit margin on advertising, resulting in zero profit and zero loss.
A good ACoS Amazon depends on your marketing strategy and will generally range between 15-20%. The average ACoS is around 30%.
Basically, your ACoS can keep varying depending on many factors including competition, product prices, and such.
Take your product selling plan into consideration and your Amazon ACoS strategy should match your intentions:
Low ACoS = High Profitability
High ACoS = High Visibility
You can watch a video about how to decrease ACoS on Amazon here.
It’s in your best interest to get familiar with ACoS Amazon Advertising if you want to create efficient PPC campaigns that can drive significant profits. We recommend using a good Amazon PPC tool to make your life much easier.