Let’s cut straight to the chase: ACOS (Advertising Cost of Sales) is one of the most crucial numbers you’ll monitor when advertising on Amazon. It’s simple math: ad spend divided by sales, multiplied by 100. But figuring out what’s acceptable ACOS For Amazon Ads? Well, that’s where things get interesting. What’s a good ACOS? Is lower always better? Not necessarily. Let’s break it down.
ACOS: It Depends on Your Goals
Before we label any ACOS “good” or “bad,” you’ve got to answer one big question:
What are you trying to achieve?
- Profit Margin Matters: If you’re focused on profitability, your ACOS should stay below your profit margin. If you have a 30% margin, an ACOS under 30% means you’re keeping the lights on and the profits flowing.
- Growth Over Profit: If your goal is growth—snagging market share, collecting reviews, or launching a new product—you can live with a higher ACOS, maybe even one that eats into your margin.
- Brand Awareness: Want to make sure shoppers know your product exists? You might let your ACOS run high to get those extra eyeballs.
Think of ACOS like a budget: how you use it depends on what you’re trying to achieve.
Industry Benchmarks: What’s “Normal”?
While there’s no universal answer, most Amazon sellers see an average ACOS between 20-30%. But benchmarks can vary depending on your category and goals:
- Low-Margin Products: These need a tight ACOS to avoid slipping into the red.
- High-Margin Products: These can handle a little more flexibility because there’s cushion to absorb the costs.
- Seasonal Products: During peak times like holidays or Prime Day, you might let ACOS climb higher to capitalize on demand.
Don’t just shoot for a number because it looks good. The right ACOS for you comes down to your specific business strategy.
When a High ACOS is Okay (Yes, Really)
Sometimes, a high ACOS isn’t the villain it seems. Here are a few scenarios where spending more makes sense:
- Product Launches: New products often need higher ad spend to gain visibility and reviews.
- Seasonal Campaigns: Major shopping events like Black Friday or Cyber Monday justify a higher ACOS if they drive volume.
- Competitive Niches: If you’re in a crowded category, higher ACOS might be the price of entry to build awareness and secure sales.
It’s like overpaying for front-row seats at a concert. You spend more now, but the view is worth it.
How to Bring ACOS Down Without Losing Steam If your ACOS is creeping into scary territory, here’s how to rein it in:
- Refine Keywords: Regularly optimize your keyword list. Dump the ones costing too much and delivering too little.
- Test Ad Types: Sponsored Product Ads often have a lower ACOS compared to Sponsored Brands or Display Ads. Focus where you get the best bang for your buck.
- Adjust Bids: Start small and scale your bids strategically based on performance.
- Optimize Listings: Make sure your product page converts. Strong images, clear bullet points, and a compelling description can make all the difference.
- Monitor Regularly: Amazon PPC isn’t “set it and forget it.” Keep an eye on campaign performance and adjust as needed.
Beyond ACOS: Look at the Bigger Picture
While ACOS is a key metric, don’t forget about TACOS (Total Advertising Cost of Sales), which factors in both organic and ad-driven sales. For example:
- High ACOS but growing organic sales: You’re building a sustainable sales funnel.
- Low ACOS but stagnant organic sales: Time to ask if your ads are really driving long-term results.
Final Thoughts
There’s no magic number for ACOS—it’s all about context. The “right” ACOS depends on your profit margins, goals, and how much you’re willing to invest to grow. Remember: ACOS is a tool, not a target.
Questions You Might Be Asking
- What is TACOS, and why does it matter? TACOS (Total Advertising Cost of Sales) accounts for organic sales alongside ad-driven sales. It shows how ads impact your overall revenue.
- How often should I check my ACOS? Weekly is a good cadence. Adjust frequency based on campaign spend and scale.
- Should I always aim for a low ACOS? Not necessarily. Focus on aligning ACOS with your business goals.
- How can I reduce my ACOS quickly? Pause underperforming keywords, refine bids, and improve listing quality.
- Are Sponsored Product Ads better for ACOS? Generally, yes. Sponsored Product Ads often deliver lower ACOS than other ad types.
- Does a high ACOS mean my ads aren’t working? Not always. Consider the bigger picture, including TACOS and conversion rates.
- What tools help optimize ACOS? Try Helium 10, Jungle Scout, or Amazon’s own Campaign Manager.
Got insights on ACOS or tips to optimize Amazon ads? Share them in the comments! Or, if this post helped you, save it for later or share it with a fellow seller. 🛒💡
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 www.trueonlinepresence.com or read The Full Story on his website or his blog, blog.trueonlinepresence.com.