ACoS stands for Advertising Cost of Sales and is a metric found in Amazon's advertising campaigns and it's about profitability.
ACoS = Total advertising costs / Total sales through advertising * 100
Example, data from the last 30 days:
- Total advertising spend: $ 2,000
- Total sales through advertising: $ 10,000
- ACoS% (30 days): $ 2,000 / $ 10,000 = 20%
In other words, every $ 1 spent on advertising generated $ 5 in sales.
What is a good ACOS for Amazon PPC?
A good value is to have an ACOS below the break-even ACOS, the threshold on which we do not get any profit from the single unit sold.
To calculate the ACOS breakeven for a single product:
- Selling price ($)
- - Selling on Amazon Fees
- - Fulfillment Cost
- - Cost of goods (Production + import + Packing)
- = Profit
Break-even ACOS (%) = Profit / Sale price * 100
This is the maximum threshold beyond which the individual units are sold in losses. In general it is common for the early days to have an ACOS just above the break-even point and with time to improve.
ACoS is also a metric that can be misleading. If you sponsor the best selling products, on keywords you are certain of you will make sales (e.g. long tail or which contain your brand) it is easy to have low ACOS because you are spending to bring users who would buy your product anyway, even if they are not they would see in advertising. Therefore it is important to activate advertising campaigns on wider targeting and not limit yourself to easier keywords.