Definition
ACoS is a metric used to measure the performance of an Amazon PPC campaign. It is the ratio of Amazon’s ad spend to the ad revenue generated, and is expressed as a percentage.
The process of optimizing advertising campaigns on Amazon the analysis of ACoS values is essential. With this metric you can effectively track the high advertising expenses in relation to revenue. If the ACoS objective of the campaign has been previously defined with precision, conclusions can be drawn about its profitability.
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How to calculate the ACoS?
The formula for calculating the advertising cost of sale is as follows:
ACoS = ad spend ÷ ad revenue x 100
In short, Amazon ACoS shows how much you spend per click and how much you earn in return. For example, if we generate sales of € 25 with the word “yellow shoes” with an advertising cost of € 0.50, our ACoS is 2%. This means that we have invested 5% of our revenue in advertising:
ACoS = €0.50 advertising expenses ÷ €20 sales x 100 = 2%
The higher Amazon ACoS, the more expensive the ads for this product and the more you should invest in advertising in relation to the sales generated. On the other hand, the lower Amazon ACoS, the lower the advertising costs relative to sales.
Keep in mind that it depends on what the objective of the campaign is. If the goal is to achieve the highest possible visits instead of the highest conversions, it may be good for ACoS to increase.
ACoS break-even point
The ACoS break-even point is very important, since it allows to know if the campaigns are generating profits or losses. Equilibrium ACOS helps make well-informed decisions about supply adjustments and other factors that influence profitability.
The advantages of ACoS
ACoS takes into account all the revenue generated by advertising: If certain advertised products and keywords are very good at generating high revenue after a click (for example, by creating a greater number of purchases or selling additional products), it will optimize your PPC campaigns to invest more in these products and keywords than in others: You will then get higher revenue per conversion/order in total than other combinations of products and keywords.
Frequently asked questions about ACoS (Advertising Cost of Sales)
What does ACoS (Advertising Cost of Sales) mean in digital marketing?
ACoS (Advertising Cost of Sales) refers to the concept described in this glossary entry: Definition ACoS is a metric used to measure the performance of an Amazon PPC campaign. The process of optimizing advertising campaigns on Amazon the analysis of ACoS values is essential. It gives teams a shared vocabulary for analysing digital projects.
When should teams pay attention to ACoS (Advertising Cost of Sales)?
Teams should review ACoS (Advertising Cost of Sales) when it affects acquisition, measurement, user experience, content, automation or campaign performance. The important step is to connect the definition with a real decision.
How is ACoS (Advertising Cost of Sales) used in a digital strategy?
ACoS (Advertising Cost of Sales) is used by translating the concept into practical checks: where it appears in the funnel, which data or channel is involved and whether it needs optimisation, monitoring or documentation.
What is a common mistake when interpreting ACoS (Advertising Cost of Sales)?
A common mistake is using ACoS (Advertising Cost of Sales) too broadly. It is better to verify the context, the tool or the metric involved before making strategic or technical conclusions.