Last Updated on: 7th April 2023, 07:41 pm
ACoS, or advertising cost of sale, is an important metric for Amazon sellers to understand and track. It measures the amount spent on advertising compared to the sales generated from that advertising.
I will tell you what a good ACoS is on Amazon and how sellers can use this metric to optimize their advertising efforts.
ACoS is calculated by dividing the total advertising cost by the total sales generated from that advertising.
The result is expressed as a percentage, and it helps sellers understand the return on investment (ROI) for their advertising efforts.
For example, if a seller spends $100 on advertising and generates $1,000 in sales, their ACoS would be 10%.
See also: How to Avoid Amazon Account Suspension
What is a Good ACoS?
There is no one-size-fits-all answer to what a good ACoS is, as it can vary greatly depending on the product and the target audience.
As a general rule of thumb, a good ACoS is one that generates a positive ROI. In other words, a good ACoS is one that is lower than the profit margin on the product being sold.
For example, if a seller has a product with a 50% profit margin and an ACoS of 40%, they are generating a positive ROI. On the other hand, if the ACoS is higher than the profit margin, the advertising is not generating a positive return on investment.
Factors That Impact ACoS
There are several factors that can impact ACoS, including:
Bid Amount: The bid amount for keywords affects the ACoS, as higher bids will result in higher advertising costs.
Target audience: The target audience for the advertising also affects ACoS, as more competitive target audiences will result in higher advertising costs.
Product price: The price of the product being sold can also impact ACoS, as higher-priced products may have a higher profit margin and a lower ACoS.
Advertising budget: The advertising budget can also impact ACoS, as a larger budget will result in more advertising spend and a higher ACoS.
Sellers can use ACoS to optimize their advertising efforts and improve their ROI. Some strategies to consider include:
Adjusting bids: Sellers can adjust the bid amount for keywords to control advertising costs and lower ACoS.
Targeting the right audience: Sellers can use Amazon’s targeting options to reach the right audience and lower ACoS.
Optimizing product pricing: Sellers can optimize product pricing to increase profit margins and lower ACoS.
Monitoring and adjusting budget: Sellers can monitor and adjust their advertising budget to control costs and lower ACoS.
In conclusion, ACoS is an important metric for Amazon sellers to understand and track. A good ACoS is one that generates a positive ROI and is lower than the profit margin on the product being sold.
There are several factors that can impact ACoS, including bid amount, target audience, product price, and advertising budget. By optimizing ACoS, sellers can improve their advertising efforts and generate a better return on investment.