If you sell products on Amazon, you’ve probably asked yourself this question: Should you focus your advertising budget on your best-selling products or the products that offer the highest profit margins?
At first glance, the answer might seem obvious. Advertise your best sellers because they already have a proven track record of generating sales. After all, if customers are buying these products organically, putting advertising behind them should help you sell even more.
But there’s another side to the equation. What if your best-selling products have razor-thin margins, while some of your less popular products offer significantly more profit on every sale?
The truth is that neither best sellers nor high-margin products should automatically receive all your advertising dollars. The best Amazon advertising strategy considers demand, profitability, conversion rates, and the role each product plays in your overall business.
Let’s look at how to make that decision.
Why Advertising Your Best Sellers Makes Sense
Your best-selling products have already demonstrated something important: customers want them.
These products typically have established sales histories, customer reviews, and conversion data. That information can give you a useful starting point when deciding where to invest your advertising budget.
There are several advantages to advertising best sellers.
First, they have demonstrated market demand. You aren’t guessing whether customers want the product. Its existing sales history provides evidence that people are willing to buy it.
Second, established listings may convert more efficiently. Products with strong reviews, competitive pricing, compelling images, and well-optimized listings can turn advertising clicks into orders more consistently than products that haven’t yet gained traction.
Third, advertising can help you defend market share. If competitors are advertising against your best-selling products, failing to participate may give them an opportunity to capture customers who would otherwise have purchased from you.
However, there’s an important distinction to remember: a product that generates lots of sales isn’t necessarily a product that generates lots of profit.
If your best seller has a low profit margin, you may be paying for advertising that increases revenue without contributing much to your bottom line.
That’s why sales volume alone shouldn’t determine your advertising strategy.
Why High-Margin Products Deserve Your Attention
Now let’s consider your highest-margin products.
Imagine you sell two products on Amazon. Product A sells for $30 and generates $5 in profit before advertising. Product B sells for $40 and generates $15 in profit before advertising.
Product A might sell twice as many units as Product B, but Product B gives you considerably more room to absorb advertising costs and still make money.
That additional margin can create opportunities to bid more competitively, acquire new customers, and scale advertising without sacrificing profitability as quickly.
Higher-margin products can be particularly attractive when:
- They have strong conversion rates.
- There is enough search demand to generate meaningful sales volume.
- Competitors are not completely dominating the advertising landscape.
- The product has sufficient inventory to support growth.
- Advertising costs leave an acceptable profit after all relevant expenses.
But don’t make the mistake of assuming a high margin automatically makes a product a good advertising candidate.
A product can have excellent margins and still perform poorly if customers aren’t searching for it, the listing doesn’t convert, or the cost of acquiring a sale is too high.
Profit margin creates opportunity, but customer demand and advertising performance determine whether you can capitalize on it.
How to Evaluate Products Before Advertising Them
Rather than choosing between best sellers and high-margin products, evaluate each product using a combination of profitability and performance metrics.
- Calculate Your Break-Even ACoS
Advertising Cost of Sales (ACoS) measures advertising spend as a percentage of attributed advertising sales.
The formula is:
ACoS = Advertising Spend ÷ Attributed Advertising Sales × 100
Your break-even ACoS is the advertising cost percentage at which the sale generates no profit after advertising, assuming your margin calculation includes all relevant costs before advertising.
For example, if a product sells for $40 and generates $12 in contribution profit before advertising, its break-even ACoS is 30%.
That means you can spend up to $12 in advertising to generate that $40 sale before the contribution profit from the sale reaches zero.
In practice, you should generally target an ACoS below break-even if you want advertising to contribute to your profit.
Remember that the calculation needs to account for product costs, Amazon fees, fulfillment expenses, and other variable costs. If you overlook those expenses, your break-even point may be much higher than it should be.
- Look Beyond ACoS
ACoS is useful, but it doesn’t tell you everything about your business’s performance.
Total Advertising Cost of Sales (TACoS) compares advertising spend with total sales, including both advertising-attributed and organic sales.
TACoS can help you evaluate how advertising relates to your overall business performance. For example, if advertising spend increases but total sales grow faster, your TACoS may improve.
You should also monitor total sales, contribution profit, organic sales trends, conversion rates, and inventory levels.
The goal isn’t simply to achieve the lowest possible ACoS. It’s to find advertising opportunities that contribute to sustainable business growth.
- Consider the Role of Each Product
Some products are valuable because they generate immediate profit. Others may help attract customers, build sales momentum, or support purchases across your catalog.
A best seller might be worth advertising even at a relatively modest margin if the campaign remains economically sound and helps defend an important source of revenue.
Likewise, a high-margin product may deserve more investment if it converts well and can absorb additional advertising costs profitably.
Evaluate products based on their contribution to your business, rather than treating every SKU as if it serves exactly the same purpose.
The Best Strategy: Test Both
So, should you advertise your best sellers or your highest-margin products?
In many cases, the smartest approach is to advertise both, but allocate your budget according to performance and profitability.
Start with a group of proven best sellers. Evaluate whether advertising them generates incremental sales and acceptable profit after advertising costs.
Next, identify high-margin products with promising demand and competitive listings. Test advertising campaigns to determine whether they can generate profitable sales at a sustainable acquisition cost.
Give each product enough data to make a meaningful evaluation, while keeping an eye on spending and avoiding premature conclusions from small samples.
As results come in, shift budget toward the products and campaigns that produce the strongest overall business results.
You may discover that one best seller deserves a larger budget, while another performs better with limited advertising support. You may also uncover a high-margin product that becomes a major growth opportunity once you begin promoting it.
The key is to let the data guide your decisions.
Don’t Forget Listing Optimization
Even the best product can struggle with advertising if its listing isn’t designed to convert.
Before increasing ad spend, review your product title, images, bullet points, pricing, reviews, and overall value proposition.
Ask yourself whether customers can quickly understand what makes the product worthwhile and why they should choose it over competing offers.
Sending more traffic to a listing that fails to convert is rarely a good solution. Improving the listing can sometimes deliver better results than simply increasing bids or budgets.
Also, make sure you have enough inventory to support additional sales. Advertising a product that is running low on stock can limit growth and create avoidable operational problems.
Final Thoughts: Focus on Profit, Not Just Sales
When deciding which products to advertise on Amazon, don’t automatically choose your best sellers or your highest-margin products.
Your best sellers offer proven demand, while your high-margin products may provide more room to acquire customers profitably. Both can be valuable parts of a well-managed advertising strategy.
The real question is which products can generate the best results for your business after accounting for advertising costs and other expenses.
Evaluate your margins, calculate your break-even ACoS, monitor TACoS, optimize your listings, and test your opportunities. Then allocate your budget based on the results.
Remember, the objective of Amazon advertising isn’t simply to generate more sales. It’s to generate profitable sales that help your business grow sustainably.
Make each click count by investing in the products that offer the strongest combination of demand, conversion potential, and profitability.
Frequently Asked Questions About Advertising Products on Amazon
- Should I advertise my best-selling products on Amazon?
Yes, advertising your best-selling products can be an effective strategy because they have demonstrated customer demand and may have strong conversion rates. However, you should evaluate their profit margins and advertising costs before increasing your budget. A best seller is worth advertising when it can generate profitable sales or support a clear strategic objective for your business.
- Is it better to advertise high-margin products on Amazon?
High-margin products can be excellent advertising candidates because they provide more room to absorb advertising costs while maintaining profitability. However, a high profit margin alone doesn’t guarantee advertising success. You should also consider customer demand, conversion rates, competition, and the cost of acquiring each sale before committing a significant advertising budget.
- What is a good ACoS for Amazon advertising?
A good Advertising Cost of Sales (ACoS) depends on your product’s profit margin, business objectives, and advertising strategy. A product with a 30% break-even ACoS generally needs an ACoS below 30% to generate a positive contribution after advertising, assuming all relevant costs are included in the calculation. Rather than pursuing a universal target, calculate your break-even ACoS and establish a target that supports your profitability goals.
- How do I calculate my break-even ACoS on Amazon?
To calculate your break-even ACoS, divide your contribution profit before advertising by your selling price and multiply by 100. For example, if a product sells for $40 and generates $12 in contribution profit before advertising, its break-even ACoS is 30%. At that advertising cost percentage, the contribution profit from the sale is fully consumed by advertising expenses.
- What is the difference between ACoS and TACoS?
ACoS measures advertising spend as a percentage of sales attributed to advertising. TACoS, or Total Advertising Cost of Sales, measures advertising spend as a percentage of total sales, including both advertising-attributed and organic sales. ACoS helps evaluate advertising campaign efficiency, while TACoS provides a broader view of how advertising spend relates to your overall Amazon business performance.
- How should I allocate my Amazon advertising budget across different products?
Start by identifying products with proven demand, healthy margins, strong conversion rates, and sufficient inventory. Test advertising for both best sellers and promising high-margin products, then evaluate their performance using ACoS, TACoS, conversion rates, and contribution profit. Gradually shift your budget toward the products and campaigns that deliver the strongest overall business results rather than allocating spending based on sales volume alone.
- Should I advertise a product on Amazon if it has a low profit margin?
You can advertise a low-margin product, but you need to understand the financial implications before investing heavily. Calculate its break-even ACoS and determine whether advertising can generate sales at a sustainable cost. A low-margin product may still justify advertising to defend market share or support broader business goals, but you should monitor its contribution to overall profitability carefully and avoid spending more than the business can reasonably support.
Need Help with Amazon Ads? If you’re looking to maximize your Amazon ad returns, sometimes you need an expert who’s been there, done that. I’m Andy Splichal, author of Make Each Click Count and host of the Make Each Click Count podcast. Amazon’s PPC landscape can be overwhelming, but with the right guidance, you can make every dollar count, I’m here to help. Let’s make those clicks count!
ABOUT THE AUTHOR
Andy Splichal is the founder and managing partner of True Online Presence, author of the Make Each Click Count book series, host of the Make Each Click Count podcast, founder of Make Each Click Count University and certified online marketing strategist with twenty plus years of experience helping companies increase their online presence and profitable revenues.
He was named to Best of Los Angeles Awards’ Most Fascinating 100 List in both 2020 and 2021. To find more information on Andy Splichal, visit trueonlinepresence.com or read The Full Story on his website or his blog, blog.trueonlinepresence.com.
