What Is a Good ACOS on Amazon (Tips & Insights)

Understanding your ACOS (Advertising Cost of Sale) is crucial for making informed decisions. But what exactly is a good ACOS on Amazon? Let’s dive in and explore some tips and insights to help you navigate this important metric.

ACOS is a measure of how much it costs you to advertise your products on Amazon. It is calculated by dividing your advertising spend by gross sales volume.

A lower ACOS indicates that you are spending less on advertising relative to your profit, while a higher ACOS suggests higher advertising costs compared to your sales.

So, what is considered a good ACOS? On average, Amazon sellers have an ACOS of around 30%. However, a good ACOS is generally considered to be around 15-20%.

Keep in mind that the ideal ACOS may vary depending on factors such as product price, cost of goods sold, shipping costs, returns, and marketing expenses.

In the following sections, we’ll explore how to calculate ACOS, tips for lowering your ACOS, and the differences between ACOS and other important metrics like RoAS and TACoS.

We’ll also provide insights on what is considered a good ACOS for Amazon sellers and how to monitor and leverage your ACOS data to improve your advertising performance.

Key Takeaways:

• A good ACOS on Amazon is typically around 15-20%.
• ACOS is calculated by dividing your advertising spend by your gross sales volume.
• Your breakeven ACOS is the point at which your advertising costs are covered by your sales revenue.
• Factors such as product price, cost of goods sold, shipping costs, returns, and marketing expenses influence what is considered a good ACOS.
• Understanding and monitoring your ACOS can help you make data-driven decisions to optimize your advertising campaigns.

What is Amazon ACoS?

Amazon Advertising Cost of Sale (ACoS) is a vital metric for sellers to understand the cost of advertising their products on Amazon.

ACoS provides insights into the effectiveness and profitability of your advertising campaigns, helping you make informed decisions to optimize your marketing strategies.

To calculate ACoS, divide your total advertising spend by the gross sales volume generated from those ads. The resulting percentage reveals how much you are spending on advertising compared to the revenue you are generating.

Similarly, a higher ACoS percentage indicates that you are investing more in advertising relative to your profit.

Understanding your ACoS can help you evaluate the efficiency of your advertising efforts on Amazon.

By tracking and analyzing this metric, you can identify opportunities for improvement and refine your advertising strategies to maximize profitability.

Benefits of Monitoring ACoS:

• Measure the financial performance of your advertising campaigns.
• Optimize your ad spend to focus on profitable campaigns.
• Identify areas for cost reduction and revenue growth.

By closely monitoring and managing your ACoS, you can make data-driven decisions and achieve a healthy balance between your advertising costs and sales revenue on Amazon.

Advantages	Disadvantages
Helps evaluate the effectiveness of ad campaigns	Higher ACoS may indicate inefficient spending
Enables identification of profitable campaigns	Does not consider other marketing channels
Allows for optimization of budget allocation	Does not account for organic sales

How to Calculate ACoS on Amazon

To measure the performance and profitability of your advertising campaigns on Amazon, it’s essential to calculate the Advertising Cost of Sale (ACoS).

Determining your ACoS helps you understand how effectively you’re spending your ad budget and how it impacts your overall sales. Calculating ACoS on Amazon is simple and requires only a basic formula.

The ACoS Formula:

The ACoS formula is straightforward: divide your Ad Spend by your Ad Sales. The resulting value is typically expressed as a percentage. Here’s the formula in action:

ACoS = Ad Spend ÷ Ad Sales

Using this formula, you can easily calculate your ACoS on Amazon. It provides a clear perspective on the advertising investment and its impact on sales.

An Example:

Let’s say you spent $500 on ads for a specific product, and those ads resulted in $2,500 in sales. Applying the ACoS formula:

ACoS = $500 ÷ $2,500 = 0.20 = 20%

In this example, your ACoS is 20%, indicating that for every dollar spent on advertising, you generate $5 in sales.

Calculating ACoS allows you to evaluate the effectiveness of your advertising campaigns on Amazon and make data-driven decisions to optimize your performance.

Having a clear understanding of your ACoS helps you allocate your budget wisely, refine your ad strategies, and drive profitability.

What is a Good ACoS?

A good ACoS, or Advertising Cost of Sale, is a crucial metric for measuring the effectiveness of your advertising campaigns on Amazon.

It helps you determine how much it costs you to advertise your products relative to your sales. A lower ACoS indicates higher profitability, as you are spending less on advertising compared to your profits.

The general benchmark for a good ACoS is around 15-20%. However, it’s important to note that the ideal ACoS can vary depending on your business goals, product type, and other factors.

For some sellers, a higher ACoS may be acceptable if they are focused on brand awareness or customer acquisition, while others may aim for a lower ACoS to maximize profitability.

In order to determine what constitutes a good ACoS for your specific business, you need to analyze your profit margins, advertising goals, and other key performance indicators.

It’s essential to have a clear understanding of your breakeven ACoS, which is the ACoS at which your advertising spend equals your total sales.

By knowing your breakeven ACoS, you can make more informed decisions about your marketing investments and optimize your advertising campaigns to achieve better results.

To illustrate the importance of achieving a good ACoS, let’s take a look at a table showcasing the impact of different ACoS percentages on profitability:

ACoS Percentage	Profit Margin	Profitability
10%	30%	High
20%	25%	Good
30%	20%	Moderate
40%	15%	Low

This table represents different ACoS percentages and their corresponding profit margins. As you can see, achieving a lower ACoS can significantly impact your profitability. Aim to find the balance between maximizing sales and minimizing advertising costs to achieve a good ACoS for your business.

How to Lower ACoS on Amazon

To improve your advertising cost of sale (ACoS) on Amazon and maximize your profits, you need to analyze your ACoS performance and make data-driven adjustments. Here are some strategies to help you lower your ACoS:

1. Use Amazon Analytics Tools

Utilize Amazon analytics tools to gain insights into your advertising performance and understand your breakeven ACoS.

These tools can provide valuable data and metrics that can inform your budgeting decisions and help you optimize your campaigns.

2. Track ACoS Over Time

Keep a close eye on your ACoS over time. Monitor any changes or trends, and set realistic goals for improvement.

By tracking your ACoS, you can identify areas that need adjustment and measure the effectiveness of your optimization efforts.

3. Optimize Your Ads

Identify areas of opportunity within your campaigns, such as underperforming keywords or low conversion rates, and make the necessary adjustments.

This includes refining your ad targeting, adjusting bid strategies, and optimizing your budgets to allocate resources effectively.

4. Refine Your Product Listing

Improve your product listing copy and images to enhance the overall appeal and increase conversions. Refining your listing can help you attract the right audience and improve your click-through and conversion rates.

Note: Remember that lowering your ACoS should not compromise your sales or profitability. It’s essential to find the right balance between reducing costs and maximizing revenue.

By following these strategies, you can lower your ACoS on Amazon and optimize your advertising campaigns to achieve better results.

Benefits of Lower ACoS	Tactics to Lower ACoS
Increased profit margins	Optimizing keywords
Improved return on investment	Adjusting bids and budgets
Higher visibility for your products	Refining ad targeting
Better allocation of advertising budget	Testing different ad formats

Understanding ACoS vs RoAS

When it comes to measuring the success of your advertising campaigns on Amazon, two important metrics to consider are ACoS (Advertising Cost of Sale) and RoAS (Return on Ad Spend).

While both metrics provide valuable insights into your advertising performance, they focus on different aspects of your business.

ACoS, as we discussed earlier, measures the cost of advertising for each sale. It helps you understand how much you are spending on ads relative to the revenue generated from those ads.

A lower ACoS indicates higher profitability, as you are spending less on advertising for each sale.

On the other hand, RoAS measures the revenue generated for each dollar spent on ads. It tells you how effective your advertising efforts are in terms of generating revenue.

A higher RoAS suggests that your ads are bringing in more revenue for every dollar spent, indicating a higher return on investment.

Both ACoS and RoAS are important metrics for evaluating your advertising campaign performance, but they focus on different aspects.

ACoS is more sales-focused, highlighting the cost of advertising, while RoAS is more ROI-focused, emphasizing the revenue generated. The choice of metric depends on your goals and objectives.

Here is a comparison of ACoS and RoAS:

ACoS	RoAS
Measures the cost of advertising for each sale	Measures revenue generated for each dollar spent on ads
Focuses on sales	Focuses on return on investment
Lower ACoS indicates higher profitability	Higher RoAS indicates higher return on investment

Understanding the differences between ACoS and RoAS can help you make more informed decisions about your advertising strategies and budget allocations.

By tracking both metrics and analyzing their trends, you can optimize your campaigns for maximum profitability and ROI.

ACoS vs TACoS: Key Differences

When it comes to measuring the effectiveness of your Amazon advertising campaigns, two important metrics to consider are ACoS (Advertising Cost of Sale) and TACoS (Total Advertising Cost of Sale).

ACoS specifically measures the cost of sales generated through your advertising efforts. It calculates the ratio of your advertising spend to the revenue generated from the ads.

A lower ACoS indicates that you are spending less on advertising compared to the sales it generates.

TACoS, on the other hand, provides a broader perspective by considering both your ad sales and organic sales.

It measures the total cost of sales generated from your advertising efforts, including the revenue from both paid ads and organic searches.

TACoS takes into account all forms of marketing spend in order to give you a more comprehensive view of your overall advertising performance.

While ACoS is easier to calculate and provides a straightforward measure of your advertising efficiency, it may not provide a holistic view of your marketing performance.

TACoS, although more complex to calculate, offers a more inclusive analysis by considering all sales generated through various marketing channels.

It’s important to note that both ACoS and TACoS are valuable metrics and serve different purposes.

ACoS helps you evaluate the profitability and efficiency of your advertising campaigns, while TACoS gives you a broader understanding of your overall marketing performance.

Understanding the differences between ACoS and TACoS allows you to optimize your advertising strategies and make data-driven decisions that align with your business goals and objectives.

What Is a Good ACoS for Amazon?

A good ACoS for Amazon depends on various factors such as your product category, profit margins, and advertising goals.

While a low ACoS is generally desirable, what constitutes “low” can vary based on individual strategies and objectives. To provide some benchmarks, here are three ACoS ranges commonly used:

• Low: Under 25%
• Average: 25-40%
• High: Above 40%

These ranges reflect different levels of advertising effectiveness and profitability. A low ACoS suggests that your advertising spend is relatively low compared to your sales revenue, indicating a successful advertising campaign.

However, it’s important to evaluate your ACoS in conjunction with your business goals and other metrics to determine the appropriate target range for your specific situation.

Key factors to consider when determining a good ACoS:

• Product category: ACoS benchmarks can differ depending on the type of products you sell. Some categories have higher advertising costs, while others have lower competition, resulting in more favorable ACoS ranges.
• Profit margins: Products with higher profit margins can tolerate higher advertising costs, allowing for a higher ACoS range.
• Advertising goals: Different marketing strategies may require different ACoS targets. For example, if your main objective is to increase brand awareness, you may be willing to accept a higher ACoS in exchange for reaching a larger audience.

By considering these factors and monitoring your ACoS performance over time, you can determine what constitutes a good ACoS for your Amazon business, helping you make more informed decisions about your advertising campaigns.

How Do I Diagnose Causes of Amazon ACoS Spikes?

Diagnosing the causes of ACoS spikes requires a thorough examination of various factors such as keyword performance, competition, budget, and campaign settings.

By evaluating these elements, you can pinpoint the root causes of ACoS fluctuations and take appropriate action to optimize your advertising campaigns.

1. Check Keyword Bids and Performance

Start by reviewing your keyword bids and performance metrics. Identify whether any keywords are driving unusually high ACoS and analyze their conversion rates.

Adjust bids accordingly to optimize your spend on keywords that generate profitable sales.

2. Analyze Competitor Ads

Take a look at your competitors’ ads to gain insights into their strategies. Look for any changes in their ad copy, targeting, or pricing that could have impacted your ACoS.

Adjust your own campaigns accordingly to stay competitive in the market.

3. Evaluate Budget Constraints

Examine your budget constraints and determine if they are contributing to ACoS spikes.

Consider whether allocating more budget to high-performing campaigns or reducing spend on underperforming ones could help optimize your advertising costs and improve ACoS.

4. Review Campaign Settings

Review your campaign settings to ensure they align with your advertising goals.

Check targeting options, bids, ad placements, and ad schedules to ensure they are optimized for reaching your target audience effectively. Making adjustments to these settings can help improve your ACoS performance.

Factors to Analyze	Possible Causes
Keyword Performance	High bid costs, low conversion rates, irrelevant keywords
Competitor Ads	Competitor promotions, pricing changes, better ad copy
Budget Constraints	Insufficient budget allocation, overspending on underperforming campaigns
Campaign Settings	Inaccurate targeting, suboptimal bid adjustments, poor ad placements

By carefully analyzing these factors and taking appropriate actions, you can diagnose the causes of ACoS spikes and optimize your advertising campaigns for better performance and profitability.

How to Monitor ACoS on Seller Central

To effectively measure your Advertising Cost of Sale (ACoS) on Amazon, you can easily monitor it through your Seller Central account.

By following these simple steps, you can gain valuable insights into the performance of your advertising campaigns:

1. Log in to your Seller Central account.
2. Navigate to the Reports tab.
3. Select the Advertising report.
4. Click on the ACoS tab.

This will provide you with a comprehensive breakdown of your ACoS for each advertising campaign you have running.

By regularly monitoring your ACoS on Seller Central, you can stay informed about the effectiveness of your advertising efforts and make data-driven decisions to optimize your campaigns for better results.

How to Use Amazon ACoS Data to Improve Performance

Using ACoS data effectively is key to improving your performance and maximizing your returns on Amazon. Here are some strategies to help you make the most of your ACoS data:

Identify Areas for Improvement

By analyzing your ACoS data, you can identify which aspects of your advertising campaigns need improvement. Look for keywords with high ACoS and low conversion rates, as these may be opportunities for optimization.

Additionally, examine the performance of different targeting options and ad placements to find areas where adjustments can be made.

Adjust Keyword Bids, Targeting, and Budgets

Once you’ve identified areas for improvement, take action by adjusting your keyword bids, targeting parameters, and budgets.

Lowering bids on underperforming keywords can help you reduce ACoS, while increasing bids on high-converting keywords can drive more sales.

Experiment with different targeting options and audience segments to find the most profitable combinations.

Finally, analyze your budget allocation across campaigns and consider reallocating funds to campaigns with higher potential for success.

Optimize Product Listing Copy and Images

Don’t forget that your product listing plays a crucial role in driving conversions and reducing ACoS.

Optimize your product titles, bullet points, and product descriptions with relevant keywords to improve organic visibility and attract more qualified traffic.

Additionally, ensure that your product images are compelling, high-quality, and accurately showcase the features and benefits of your product.

A visually appealing and informative product listing can significantly improve your conversion rate, leading to a lower ACoS.

Consider the Relationship between ACoS, Breakeven ACoS, and Amazon Customer Lifetime Value (LTV)

When making marketing decisions based on ACoS data, consider both your breakeven ACoS and the Amazon Customer Lifetime Value (LTV) of your customers.

Breakeven ACoS is the ACoS at which your advertising investments are covered by the revenue generated from those ads.

Understanding your breakeven ACoS allows you to optimize your campaigns accordingly.

Additionally, taking into account the LTV of your customers will help you determine the long-term value of acquiring new customers through advertising, allowing you to make smarter and more profitable marketing decisions.

By leveraging your ACoS data and implementing these strategies, you can improve the performance of your Amazon advertising campaigns, increase your sales, and optimize your return on investment.

Step	Action
1	Analyze ACoS data
2	Identify areas for improvement
3	Adjust keyword bids, targeting, and budgets
4	Optimize product listing copy and images
5	Consider ACoS, Breakeven ACoS, and LTV

Frequently Asked Questions

Bet you’ve got a few more questions after checking out our guide on what a good ACOS is on Amazon. Find the answers you’re looking for in this section.

How to calculate ACoS on Amazon?

ACoS is calculated by dividing your advertising spend by your ad sales. The formula is Ad Spend divided by Ad Sales, usually expressed as a percentage.

How to lower ACoS on Amazon?

To lower ACoS on Amazon, you can optimize ads by identifying areas of opportunity, adjusting bids and budgets, refining ad targeting, and optimizing product listing copy and images to improve conversions.

How do I diagnose causes of Amazon ACoS spikes?

To diagnose causes of Amazon ACoS spikes, you should examine keyword performance, competition, budget, and campaign settings. Check keyword bids and performance, competitor ads, budget constraints, and campaign settings to identify the causes.

How to monitor ACoS on Seller Central?

To monitor ACoS on Seller Central, log in to your Seller Central account, navigate to the Reports tab, select the Advertising report, and click on the ACoS tab. This will show a breakdown of ACoS for each advertising campaign.

How to use Amazon ACoS data to improve performance?

To use Amazon ACoS data to improve performance, you can identify areas for improvement, adjust keyword bids, targeting, and budgets based on the ACoS data. Additionally, optimizing campaigns and making data-driven decisions can lead to improved performance and increased sales.

Conclusion

In conclusion, Amazon ACoS is a crucial metric for measuring the effectiveness of your advertising campaigns on the platform.

By understanding and optimizing your ACoS, you can improve the profitability of your products and drive increased sales.

A good ACoS is not a one-size-fits-all number but depends on various factors, such as your individual goals, product margins, and advertising strategies.

It’s important to determine your own target ACoS based on these factors and adjust your campaigns accordingly.

Using ACoS data to make data-driven decisions can lead to improved advertising performance.

By analyzing the data and making necessary optimizations to your campaigns, such as adjusting bids, targeting, and budgets, you can maximize your return on investment and improve your overall advertising effectiveness.

Ultimately, ACoS should be seen as a tool to guide your advertising strategy on Amazon.

By continuously monitoring and optimizing your ACoS, you can drive more targeted and profitable advertising campaigns, ultimately leading to increased sales and success on the platform.