eCommerce & Digital Solutions
eCommerce & Digital Solutions
What ACoS measures, how to work out the right target from your own product margins, and when a high ACoS is worth accepting.
If you have recently started running Sponsored Products campaigns, ACoS is the number you will end up staring at most. It also attracts the most confident bad advice, usually a single figure you are told to aim for.
There is no such figure. The right ACoS depends on your margins and on what you are trying to achieve this month, and working out your own takes about ten minutes with a calculator.
ACoS stands for Advertising Cost of Sales. The formula is:
ACoS = ad spend ÷ ad revenue × 100
As an illustration, if a campaign spends £200 and Amazon attributes £800 of sales to it, the ACoS is 25% — you paid 25p of advertising for every pound of advertised sales. That is an example to show the arithmetic, not a benchmark.
Two things are worth knowing before you act on it. It counts only the sales Amazon attributes to an ad click inside the attribution window, so organic sales are excluded even when the ad helped cause them. And it says nothing about profit on its own, because it compares spend with revenue rather than with margin. That is why the question "what is a good ACoS" cannot be answered by anyone who does not know what is left on each sale after costs.
The right target is a function of your product's margin, and margins differ enormously between categories and often between products in one catalogue.
The idea that makes this concrete is break-even ACoS: the point at which an advertised sale leaves you neither better nor worse off. If your pre-advertising margin is 30%, an ACoS of 30% means advertising has consumed exactly the profit on that sale. Above it, each advertised sale costs you money. Below it, you keep the difference.
An ACoS of 35% is therefore good for a product carrying a 50% margin and poor for one carrying 20%. When another seller quotes their ACoS, the useful follow-up is: compared with what margin? It also means your target should vary by product, so a catalogue holding thin-margin accessories alongside higher-margin bundles should not be run to one blanket goal.
You need one figure: the percentage of the selling price that survives as profit before advertising. Work through it in order.
Whatever remains, as a percentage of the selling price, is your pre-advertising margin — and that percentage is your break-even ACoS.
As an illustration only: a product sells for £30 and £21 goes on goods, fees and fulfilment. The £9 left is 30% of the price, so break-even ACoS is 30%. Use your own figures rather than these.
Do this for your best sellers rather than the whole catalogue. A handful of products usually accounts for most of the spend.
Running above break-even is a decision rather than a failure, as long as it is deliberate and has an end date.
Product launches. A new listing has no sales history and no ranking. Early advertised sales bring reviews and signal to Amazon that the page converts, which supports organic position later. Plenty of sellers accept a loss-making ACoS through a launch window as a cost of acquisition.
Testing new keywords. You cannot know which search terms convert until they have data behind them. A testing phase looks expensive and buys information.
Clearing stock. Ageing inventory costs storage fees and ties up cash. Moving it at a thin margin often beats holding it.
Defending a branded term. Bidding on your own brand name is usually inexpensive, and leaving it undefended invites competitors above your listing.
This is also where TACoS earns its place. Total Advertising Cost of Sales measures ad spend against total sales, organic and paid together. If ACoS is high but TACoS is falling, advertising is lifting organic sales and the account is moving the right way. If both climb together, you are buying revenue rather than building it.
A very low ACoS looks like good news and frequently is not. It usually means bids are conservative enough that you are winning only the cheapest impressions — often the ones you would have won organically anyway.
The symptoms are easy to recognise: impressions well below what the category can support, budgets that never run out, a large share of impressions lost to bid, and flat sales volume alongside a comfortable-looking ratio.
If break-even is 30% and you are running at 8%, you have room. Raising bids on terms that already convert usually buys more volume at an ACoS still safely inside your margin. Profit is an amount of money, not a percentage, and protecting the ratio at the expense of volume is a common mistake.
When you genuinely need to lower your ACoS, the work is unglamorous and repetitive.
Read the search term report. It shows the queries that actually triggered your ads, rather than the keywords you bid on. Wasted spend is visible here and almost nowhere else.
Add negative keywords every week. Any search term with meaningful clicks and no sales is a candidate. This is the most reliable lever, and it compounds.
Adjust bids on evidence. Lower bids on terms above target with enough clicks to judge; raise them on terms comfortably below it. Small, regular changes beat occasional large ones.
Restructure so winners are controllable. Move converting search terms into their own exact-match campaigns, where their bid is not competing with dozens of others in one ad group.
Fix the listing. The step most often skipped. ACoS is a function of conversion rate: if two sellers pay the same per click and one converts twice as often, their ACoS is half. Images, title, bullets, price, reviews and A+ content all decide what a click is worth, which is why ad performance depends on the listing as much as the campaign. Our guide to optimising an Amazon listing works through the page section by section.
Give changes time. Attribution lags by days. Judging a bid change after twenty-four hours leads to reversing decisions that were working.
What is ACoS? ACoS, or Advertising Cost of Sales, is your ad spend divided by the revenue Amazon attributes to those ads, shown as a percentage. It tells you what you paid in advertising for every pound of advertised sales. Because the denominator counts only sales traced to an ad click, organic sales sit outside it entirely.
What is a good ACoS on Amazon? A good ACoS is one below your break-even figure — the percentage of the selling price left as profit before any advertising. That makes the answer specific to each product rather than a number anyone can quote at you. The same figure can be comfortable for a high-margin product and loss-making for a thin-margin one.
What is a good ACoS for Amazon ads? It depends on what the campaign is there to do. For campaigns meant to be profitable today, aim below the break-even figure for that product. For a launch, a keyword test, clearing stock or defending your own brand name, running above break-even can be the right call, provided it is deliberate and has an end date.
How do I lower my ACoS? Start with the search term report and add negative keywords for anything spending without selling, then adjust bids on evidence rather than instinct. Moving converting search terms into their own exact-match campaigns makes their bids controllable. And look at the listing, because ACoS is a function of conversion rate: a page that converts better lowers ACoS without any change to a bid.
Work out your break-even ACoS product by product, set a target above or below it depending on whether you are launching or harvesting, and judge the account on profit rather than on the ratio.
If you would rather not do the weekly search term and bid work yourself, our Amazon PPC management service covers campaign structure, keyword research, negatives, bids and plain-English reporting for UK and US sellers. It starts with a free audit of your current campaigns, so you can see where the spend is going before you decide anything.
