Many Amazon sellers struggle to control ad spend, especially when clicks cost more than actual sales. Sellers who don’t understand Amazon ACoS often waste money on Sponsored Products that never convert well or build long-term profit.
Amazon ACoS shows how much ad spend you need to earn one dollar in sales. It’s a key performance metric in Amazon Advertising. This process helps Amazon sellers, advertisers, and brand owners lower ACoS and improve return on ad spend.
From this blog, you’ll learn what ACoS means, how to calculate it, and why it matters for Sponsored Products. It also covers ideal benchmarks, smart optimization tactics, tools inside Seller Central, and real case studies. Everything is practical and clear.
What Is Amazon ACoS? (Formula and Use Case)
Amazon ACoS stands for Advertising Cost of Sales. It tells you how much ad spend earns each dollar of sales. Sellers use Amazon ACoS to track how well their Sponsored Products convert paid traffic into actual revenue.
This metric helps you measure ad efficiency. A low ACoS means your ads cost less than what they bring in. A high ACoS shows your ad spend eats too much of your sales. That can signal poor targeting or expensive keywords.
The ACoS formula is:
ACoS = (Ad Spend ÷ Ad Sales) × 100
Let’s say you spend $20 to make $100 in ad sales. Your ACoS would be 20 percent. That means you spent 20 cents to make each dollar in revenue from ads.
Sellers view ACoS inside Seller Central under Campaign Manager. It appears beside CPC, ROAS, and other performance numbers. You’ll see it under Sponsored Products once a campaign starts collecting ad data.
How to Calculate ACoS with Real Campaign Examples
Amazon sellers often struggle to know if ads bring profit or waste money. That’s where ACoS calculation helps.
Let’s recap the formula again:
Formula: ACoS = (Ad Spend ÷ Ad Sales) × 100
The ACoS formula is simple. Divide your ad spend by your total ad sales, then multiply the result by 100.
Let’s see with an example of a Profitable Campaign and an Unprofitable Campaign:
For a Profitable Campaign,
You spent $25 and earned $200 from Sponsored Products.
ACoS = ($25 ÷ $200) × 100 = 12.5%
This ACoS means your ads are profitable because you spent little compared to what you earned.
For an Unprofitable Campaign,
You spent $60 but only made $100 in ad sales.
ACoS = ($60 ÷ $100) × 100 = 60%
That ACoS is too high. It shows your ad spend takes too much of your sales value.
Amazon ACoS Calculator
Conversion Rate Impact and ACoS Tracking
A lower conversion rate usually leads to a higher ACoS. When fewer shoppers buy after clicking your ad, your cost per sale increases.
That means you’re spending more to earn each dollar. Improving product listings and choosing better keywords often helps raise your conversion rate and lower ACoS.
You can track this inside Seller Central. Open Campaign Manager to view your ACoS data. It appears next to CPC, ROAS, and ad spend under the Sponsored Products performance metrics. This section helps sellers spot trends and adjust their campaigns with real numbers.
What Is a Good Amazon ACoS? Target Ranges and Profit Benchmarks
A good ACoS is the one that matches your goal. For profit, a good ACoS is low. For growth or visibility, a good ACoS may be higher. There’s no single perfect number. It depends on your product, price, and strategy.
Sellers aiming for high profit want a lower ACoS. You want to spend less and keep more margin. Most profitable campaigns stay under 20% ACoS, depending on the product and cost per click.
For product launches, sellers often accept a higher ACoS. The goal shifts to ranking and gaining reviews. An ACoS between 30% and 40% is common when visibility matters more than immediate returns.
Your break-even ACoS is where ad cost equals product profit. It depends on your margin. If your margin is 25%, then 25% ACoS is your break-even point. Anything above that means you lose money.
Let’s look at some average ACoS benchmarks by product category:
| Product Category | Average ACoS Range |
|---|---|
|
Beauty & Personal Care |
18% – 50% |
|
Electronics |
10% – 25% |
|
Toys & Games |
11% – 26% |
|
Appliances |
12% – 17% |
|
Home & Kitchen |
18% – 35% |
ACoS vs ROAS vs TACoS: Understanding the Differences
Amazon sellers often confuse ACoS, ROAS, and TACoS. Each metric shows something different about your ad performance.
ACoS stands for Advertising Cost of Sales. It shows how much you spend to make one dollar in sales.
ROAS means Return on Ad Spend. It tells you how much revenue you earn for every dollar spent on ads.
TACoS means Total Advertising Cost of Sales. It includes both ad sales and organic sales to show long-term growth.
Let’s break down the difference between ACoS, ROAS, and TACoS:
| Metric | Formula | Focus | Includes Organic Sales? |
|---|---|---|---|
|
ACoS |
(Ad Spend ÷ Ad Sales) × 100 |
Campaign performance |
No |
|
ROAS |
Ad Sales ÷ Ad Spend |
Revenue return |
No |
|
TACoS |
(Ad Spend ÷ Total Sales) × 100 |
Overall growth
|
Yes |
When to Use Each Metric
Each metric helps with a different decision. Choose based on what you want to measure or improve.
- Use ACoS to measure how each Sponsored Products campaign performs in real time.
- Use ROAS when you want to see how much revenue your ads actually return.
- Use TACoS to check how ads boost organic sales and improve long-term brand growth.
6 Key Factors That Influence ACoS Performance
Many Amazon sellers wonder why their ACoS stays high even after launching ads. The truth is, your ad performance depends on more than just budget. Several behind-the-scenes factors decide how efficiently your campaign works.
Things like keyword targeting, listing strength, and bidding methods can raise or lower your costs fast.
Let’s look at six important elements that directly impact ACoS and explain how to improve each one.
1. Keyword Match Types
Your match type decides who sees your ad. Broad matches bring high traffic but lower accuracy. Phrase and exact match types target buyers more precisely. Tighter targeting means better clicks and a lower ACoS.
Sellers often waste spend when a broad match shows ads to the wrong audience. The right match type cuts wasted impressions and boosts your conversion rate.
2. Product Listing Quality
A strong product listing makes your ad spend more effective. If your images or bullet points look weak, people won’t buy. High-quality titles, images, and A+ Content improve conversion rate.
That means more sales from fewer clicks. Low conversion leads to high ACoS. You should always optimize the listing before increasing your ad budget.
3. Bidding Strategy
Your bid controls ad visibility. High bids increase impressions but can also waste your budget quickly. A smart bidding strategy should balance cost with expected return. You get more control through manual bids.
Dynamic bids adjust automatically, but not always in your favor. Poor bid choices raise costs fast. A tested approach keeps ACoS within your target profit range.
4. Conversion Rate
Conversion rate shows how many people buy after clicking your ad. A low rate drives up your ACoS. That’s because you pay for traffic without sales.
Improve your offer, listing quality, and reviews to increase conversions. Even small gains help drop ACoS fast. Every extra sale from the same clicks improves efficiency.
5. Ad Placement
Where your ad shows up affects clicks and cost. Top-of-search placements usually convert better than lower positions. But they also cost more per click.
If the listing is weak, top placement won’t help. Good ads deserve good spots. Bad placements lower traffic and increase the cost per sale.
6. Campaign Type (Manual vs Automatic)
Manual campaigns give control. You pick keywords, bids, and match types. Automatic campaigns let Amazon decide placements and terms. Start with auto campaigns to discover search terms that work.
Then shift performing keywords into manual targeting. Smart sellers use both types together. Auto-only setups often lead to poor targeting and a higher ACoS.
How to Reduce ACoS: 10 Proven Optimization Techniques
Many sellers struggle with high ACoS because they focus on spend instead of campaign efficiency. The best strategy is not to spend less, but to make every dollar work harder.
These 10 techniques help lower ACoS and improve results without hurting your sales.
- Add Negative Keywords: Irrelevant clicks waste money fast. Add negative keywords to block search terms that don’t lead to sales.
- Adjust Bids by Performance: Lower bids on poor performers that burn your budget. Raise bids where sales and conversions stay strong.
- Use Exact Match for Converting Terms: Broad targeting brings volume but not quality. Use exact match for keywords with consistent conversions.
- Separate Products by Performance: Avoid combining bestsellers with low performers. Break campaigns by SKU or ASIN to control spend better.
- Improve Product Listing Quality: Buyers skip weak listings. Use high-resolution images, strong bullet points, and verified reviews to raise conversions.
- Boost Your Conversion Rate: Low conversion leads to wasted spend. Raise it by improving your offer, pricing, and trust signals on the page.
- Use Placement Adjustments Wisely: Top-of-search placements often cost more. Increase bids only when those spots return profitable conversions.
- Track Search Term Reports Weekly: Check what terms trigger your ads. Remove any keywords that cost money without returning actual revenue.
- Use Both Manual and Auto Campaigns: Start with auto to discover search terms. Move winners to manual for better targeting and budget control.
- Run a Daily Campaign Check: Check your ACoS, spend, and conversions every day. Small updates each morning protect long-term results.
Advanced ACoS Optimization for Experienced Sellers
Once your ads perform well, it’s time to go beyond basic targeting. Advanced strategies give more control and help cut waste without reducing results. These next-level techniques work best when you already track ACoS, bids, and conversions closely.
Start with dayparting. Some hours bring fewer clicks and almost no sales. Letting ads run during those times increases ACoS. Use tools like Atomic or Perpetua to run ads only during high-converting hours. This keeps spending tight and results consistent.
The campaign waterfall structure gives better control over keyword groups. Set up three separate campaigns based on performance levels. One should hold your best keywords, another for steady terms, and a third for testing. Each group gets the right bid and budget.
Reallocating the budget based on performance helps protect your margins. If a campaign stays under your ACoS target and brings sales, shift more budget there. Pull back from ad groups that burn spend without conversions. This keeps your full account profitable.
Strong creative helps reduce wasted clicks. If your images or headlines don’t grab buyers, your ads won’t convert. Use Amazon Experiments to run A/B tests for different versions. The better version usually improves click-through rate and lowers ACoS fast.
Rule-based automation keeps things running without daily edits. You can set triggers like pause ads if ACoS hits 40%, or raise bids when conversions grow. Tools like Pacvue or Perpetua make this easy. These rules help cut spending and lock in results.
Best Tools to Track and Manage ACoS Efficiently
Sellers need tools that give real-time data and track ACoS with total accuracy. These tools reveal what works, protect ad budgets, and fix low-converting campaigns before waste builds up.
| Tool Name | Purpose | Key Reports to Monitor |
|---|---|---|
|
Seller Central |
Built-in Amazon dashboard that tracks ACoS, CPC, spend, and conversions for Sponsored Products. |
Search Term Report, Targeting Report, Placement Report |
|
JungleScout |
Shows ad spend with organic rank data. Helps sellers improve ACoS across listings and campaigns. |
Search Term Report, Keyword Trends |
|
Trellis |
Uses AI to optimize bidding and keyword clusters. Great for large catalogs and automated control. |
Campaign Summary, Performance Insights |
|
Perpetua |
Offers dayparting, rule-based actions, and real-time dashboards for scaling or cutting ad spend. |
Hourly ACoS Trends, ROAS Insights |
|
Eva.guru
|
Combines ACoS tracking with price optimization. Helps sellers keep ads profitable at every stage. |
Ad Efficiency Report, Cost Alerts |
How to Set the Right Target ACoS for Your Business Goals?
To reach substantial profit, your ACoS target must align with your product cost and margin goals. Use the steps below to reverse-engineer your ideal number based on your actual business model.
- First, calculate your profit margin after fees, shipping, and COGS. That shows how much you can spend.
- If your product sells for $50 and costs $25, your profit margin is 50 percent before ad spend.
- Your break-even ACoS equals that margin. If your margin is 40 percent, 40 percent ACoS is the max you can spend.
- Any ACoS lower than your margin will protect profit. Higher ACoS will cut into earnings fast.
- Add other data like average order value, repeat customer rate, and lifetime value to improve targeting.
- If a buyer returns often, you can accept a higher ACoS and still grow your total revenue over time.
- Decide on your goal. If you want profit, pick a low ACoS. If you want to scale, aim higher for reach.
- Launch campaigns may accept ACoS near the break-even point to win ranking and first-page placements.
- Use this worksheet: Target ACoS = Margin – Buffer (growth, testing, or launch cost). Adjust it per product.
- Recalculate your target anytime your cost, price, or customer behavior changes in a major way.
Frequently Asked Questions(FAQs)
Many sellers have specific questions about how ACoS works in real-world campaigns. Here are five common questions with straightforward answers to help you make smarter advertising decisions.
The ideal ACoS depends on your business goal and profit margin. Most sellers aim for 15 to 25 percent profit. If you’re launching a product, a higher ACoS of around 30 to 40 percent may work temporarily.
A high ACoS means you are spending too much on ads to make each sale. It usually signals poor targeting, weak listings, or low conversion. If not adjusted, it can reduce your overall profitability over time.
A 50 percent ACoS might work for launches or ranking goals. However, if your profit margin is under 50 percent, you are likely losing money. Long-term campaigns should keep ACoS below your actual profit margin.
Check ACoS every day if you run active campaigns. Review performance reports weekly before making changes. Waiting at least seven days gives you more accurate data for adjusting bids, keywords, or budget strategies.
Yes. Sellers sometimes accept a high ACoS when building rank or visibility. If your TACoS improves while ACoS stays high, it means your ads are lifting organic sales, which supports growth even if short-term profit drops.
Confused by ACoS? Brand’s Bro Brings Clarity
Many ad campaigns lose money because they lack clear targeting and strong budget control. Sellers often spend more and get fewer results when ads don’t support profit goals or match product margins.
Brand’s Bro helps experienced Amazon sellers fix underperforming ads, reduce unnecessary spend, and reach the right audience. We build data-backed strategies that match your business goals and margins. From bid structure to daily reporting, we take care of what slows your growth.
Our team can help you take control of your ACoS and scale with confidence starting today.
