What is “ACoS” on Amazon?
The ACoS (Advertising Cost of Sales) is a metric that shows how much money you spent on advertising vs sales you received for a given product on Amazon. The formula for ACoS is 100 ( [total ad spend] ÷ [total sales] ). Check out our video below to learn more.
What is a “Good” vs “Bad” ACoS?
Generally, a low ACoS is a good thing. That being said, what you determine as “low” will vary by product. While you may be willing to make exceptions for certain products, here are some general benchmarks:
A low ACoS is under 25%. You may want to consider raising your bid to increase clicks and overall traffic for that term/product.
An average ACoS is between 25% to 40%.
A high ACoS is above 40%. This might happen when a specific keyword is gaining a lot of traffic, but low conversions, and it’s a good opportunity to rethink the keywords you’re currently bidding on for a product.
How to Calculate ACoS
In its simplest form, ACoS is calculated by the following: ACoS = 100 ( [total ad spend] ÷ [total sales] )
In other words, if you spend $50 on advertising and it resulted in a single sale of $100, your ACoS would be 100 (50/100) = 50%.
One final note about ACoS – we commonly hear from sellers who want to improve both volume (increasing orders / revenue) AND ROI (decreasing ACoS). And fast.
However, what we’ve found is that volume & efficiency can be competing goals, meaning that working towards one can undermine the other.
It’s a little tricky to understand, which is why CPC Strategy created our “Amazon Advertising Triangle” to help explain how we approach our Amazon management process. You can learn more about this concept in our in-depth post detailing how we helped Franklin Sports decrease ACoS.
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