5 Easy Ways To Reduce ACoS On Amazon Increase ROI Sunken Stone

What Is A Good ACoS On Amazon? 7 Tips To Maximize ROI

By Published On: August 15th, 2021Categories: Amazon ACoS

What Is A Good Acos On Amazon?

The average ACoS is around 30 percent. This will change based on your strategies and goals. As a general rule of thumb, you’ll want to aim for an ACoS around 15-20 percent. Typically, you want your product cost to be higher than your ad spend to maximize profit.

ACoS is one of the major metrics that CPG brands selling on Amazon must monitor regularly. Many Amazon brands rely on this metric to measure the ROI from their PPC ads.  Without ACoS, brands would have no way of quantifying the impact ad spend has on advertising revenue. Fundamentally, ACoS on Amazon helps brands monitor their ad spend and determine the amount of revenue they’ll make from pay-per-click ads. 

Let’s dig into Amazon ACoS in detail and outline practical tips for maximizing ROI. 

What Is Amazon ACoS?

If you’re new to Amazon PPC, you may be wondering what ACoS means. In this blog post, we’ll explain what ACoS means, the ideal Amazon ACoS for CPG brands selling on Amazon, why it’s an important metric for Amazon brands, and how to reduce ACoS.  


Let’s get into it.

What Does ACoS Mean?

Amazon ACoS, which stands for an advertising cost of sales is a metric that measures the ratio of ad spending to sales revenue (in %). In other words, ACoS measures the amount of money spent on advertising versus the sales revenue generated from that spend. 

This parameter helps Amazon brands to determine if advertising campaigns are working or not.

Amazon ACoS is an important metric that CPG brands on Amazon should keep a close eye on for success. Knowing your advertising cost of sales will help you make smart decisions that will optimize this metric and improve your profit margin.

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Many Amazon brands overlook this key metric and end up wasting money on advertising campaigns that do not drive valuable results. 

Keeping a close eye on Amazon ACoS can mean the difference between burning your advertising budget and optimizing return on ad spend (ROAS).

Now that you understand what Amazon ACoS means, let’s look at how to calculate ACoS. 


How Do You Calculate Amazon ACoS? 

Amazon ACoS is calculated by diving total ad to spend by total sales times 100. 

ACoS = {Ad Spending/Total Sales} x 100

Let’s say you’ve spent $100 on advertising and generated $500 of advertising sales. Your ACoS would be $100 divided by $500 times 100. 

ACoS = {$100/$500}X 100= 20%

In this example, it means that you’re spending $0.20 for every $1 you make or $20 for every $100 you make. 

If your advertising cost of sales is 20% and your profit margin is 25%, it means you’re losing money. Your ACoS should be lower than your profit margin to remain profitable. 

In a case where advertising costs of sales and profit margin balance each other, we have what is known as break-even ACoS. This means there’s zero profit and zero loss.

So what does a high Amazon ACoS mean?

A high Amazon ACoS means low profitability because your ratio of total ads spend to sales revenue is high and vice versa.   

Generally, Amazon brands should work towards a low ACoS and a high sales revenue figure to remain profitable. 

However, a high ACoS is not always a bad thing because it can help brands get more visibility and earn more profit in the long run. Sometimes, a high ACoS can be a good strategy, depending on what you want to achieve. 

Check out this video and learn more on how to reduce ACoS and maximize PPC campaign ROAS.

What’s A Good ACoS On Amazon?

There’s no perfect ACoS that Amazon brands should aim to reach. A good Amazon ACoS varies depending on the goal, product, niche, competition, campaign type, and so on.   

CPG brands whose main goal is to maximize sales will aim for an ACoS above 40%, while those looking to maximize profits will aim for an ACoS below 25%. 

But the average ACoS for Amazon brands is 15%-30%. 

A low advertising cost of sales is ideal for brands looking to make as much profit as possible and those selling low-converting products. 

However, keep in mind that a low ad spend may compromise the visibility of a product. So it’s best to find a balance and ensure you get enough exposure without narrowing your profit margin. 

A high ACoS can be a good strategy for Amazon brands looking to achieve high product visibility and dominate their niches. It can also be a good strategy if you’re trying to get rid of low-selling products.

Again, you don’t want to spend too much on advertising and lower your profit margin. Be sure to find a balance based on your goals and work towards your target.

If your goal is to gain decent visibility while remaining profitable, it’s best to aim for an ACoS ranging from 15% to 30%. 

What Should My ACoS Be On Amazon?

As we’ve already highlighted, a good ACoS on Amazon depends on your goal. If your goal is to maximize profit or sell a low-converting product, you can set a low ACoS of around 15%-30%.

But if your goal is to achieve high visibility in your niche and increase brand awareness, a high ACoS of above 40% would be ideal.  

A good advertising cost of sales for Amazon brands will depend on a range of factors, so there’s no one-size-fits-all ACoS that every brand should aim for.   

Overall, when setting your ACoS for Amazon ads, you should think about sales, profit margins, and efficiency.  

How Do I Find My ACoS On Amazon?

To find your ACoS on Amazon, log in to your Amazon Seller Central and go Advertising and then click on Campaign Manager. You’ll be able to see your ACoS under the Campaigns tab. ACoS is on the right-hand column. 


What Is A Good ACoS For Amazon FBA?

When you’re new to Amazon FBA, you may wonder what a good ACoS for Amazon FBA is. The truth is it depends on what you want to achieve. 

Although most CPG brands selling on Amazon focus on setting a low ACoS, a high ACoS can be a good strategy in certain circumstances. 

For instance, an ACoS of 40 and above can be a good strategy if you’re trying to run a sell-out of a product or get rid of a low-selling product. It can also be a good strategy if you want to dominate a niche and make more profit in the long term. 

On the other hand, lowering your ACoS can be a good strategy if your goal is to achieve high profitability. 

A low ACoS for Amazon FBA ranges from around 15% to 30% while a high ACoS for Amazon FBA is around 40% and above. 

Amazon brands should set an ACoS that helps them achieve their goals.


How To Reduce ACoS On Amazon [7 EASY Tips]

As we’ve already highlighted, a low ACoS means high profitability. If your goal is to make as much profit as possible, you’ll need to find ways to lower your Amazon ACoS. Here are seven practical tips to lower ACoS on Amazon. 

Tip #1 To Reduce ACoS On Amazon: Choose The Right Keywords

It’s important to use the right keywords in your Amazon listing to improve discoverability and drive high-quality traffic to your listing. 

The keywords you use in your listing can mean the difference between attracting more leads and wasting your ad spend on an ad that is not converting.

An Amazon product listing that makes good use of the right keywords will attract dozens of leads and improve profitability, while a listing with irrelevant keywords may never show up in shopper’s search results.  

If your keywords are too broad or irrelevant, you’ll spend more money on advertising, and you may not attract relevant leads. 

Be sure to use the right keywords in the product title, bullet points, and product description to help you reach your target audience base. 

Do not overuse the keywords, as it could attract unqualified traffic to your product pages.

It’s also a good idea to add negative keywords in your Amazon Seller Central to optimize ad spend. These keywords prevent your ad from showing up in search results if they are included in a customer’s search query.    

So, how do you find the right keywords to use?

Simply use keyword research tools to get in-depth information on each keyword. The best keyword research tools to consider include Helium 10, MerchantWords, Google Keyword Planner, Sonar, and Ahrefs Site Explorer

The right keywords will attract more leads through your ads and bring in high-quality traffic. This will increase your conversion rate, and you’ll spend less money to attract leads. 

Check out this tutorial on how to optimize product titles to enhance visibility in searches. 


Tip #2 To Reduce ACoS On Amazon: Use Amazon PPC Tools 

Amazon PPC tools can help you reduce your ACoS on Amazon. These tools not only automate bidding to boost operational efficiency but also help users to discover top-converting keywords for their campaigns.

Amazon PPC tools also help users determine what’s working and what’s not to make the necessary adjustments and optimize PPC ad spend.  These tools come with advanced analytics that helps users to visualize campaign performance. 

Some of the best Amazon PPC tools include Seller Labs, Sellics, SellerApp, PPC Entourage, and many more. 

These tools help Amazon CPG brands to save time, make smart decisions with dependable data, and get the most out of their PPC ad spend.

By automating bidding, tracking sponsored ads performance, and optimizing bids for profit, CPG brands on Amazon can lower their ACoS. 


Tip #3 To Reduce ACoS On Amazon: Set The Right Bid Amount

Bidding is one of the factors that will determine your success with Amazon advertising efforts. This is another area where many Amazon brands make mistakes.

Most brands either bid too low or too high. If you bid too low, you could miss out on valuable placements. On the other hand, bidding too high could attract too much traffic and deplete your ad spending too fast. 

It’s a good idea to find a balance so that you lower your Amazon ACoS and get the most out of your ad spend. 

So, how do you set the right bid amount? 

Here’s a formula for calculating the optimal bid amount. 

Optimal Bid Amount = {Average Order Value x Conversion Rate} / {1/Target ACoS}

This formula will help you choose the right bid amount that will drive the best results for your campaign and lower the advertising cost of sales.  

Tip #4 To Reduce ACoS On Amazon: Prioritize Best SKUs

This is an effective way to reduce your ACoS if you’re selling a product with many variations. Choose the best-selling SKUs and prioritize them in your advertising campaigns.     

Tip #5 To Reduce ACoS On Amazon: Advertise At The Right Times

Although Amazon doesn’t provide information regarding the best times to advertise, data shows that the best days to run Amazon ads are Sunday to Wednesday.

The best month to advertise is April, and the best times of the day to run ads are 8-10 a.m., 2-4 p.m., and 6-10 p.m. 

Tip #6 To Reduce ACoS On Amazon: Scale Profitable Campaigns 

For ads that are performing well, it’s a good idea to increase your budget and attract more leads through your ads. This is one area that many CPG brands on Amazon fail to leverage to stay ahead of their competitors. 

If some ads are doing well, do not be afraid to increase your budget so that you increase the click-through rate and conversion rate.    

Tip #7 To Reduce ACoS On Amazon: Effective Bid Management

Your bid management strategy will also determine your campaign’s performance. You need to know when it’s ideal to bid down on keywords and when to increase the bid to drive quality traffic to your product page. 

That’s why it’s important for brands on Amazon to be proactive when it comes to bidding management. 

Be sure to keep your pricing competitive and optimize your content to improve discoverability.   

If the click-through rate is low, you may want to optimize product images and titles to improve the click-through rate. 

It’s also a good idea to use Amazon PPC tools to automate bidding and make the process easier for you. 

Let The Sunken Stone Team Reduce Your Amazon ACoS

If you’re struggling to get the most out of your advertising spend, you’re at the right place. Our PPC management team at Sunken Stone has what it takes to run an effective Amazon PPC campaign and reduce your Amazon ACoS. 

We have a team of knowledgeable and experienced PPC experts who can launch and manage every aspect of your ad campaigns and bring out the best outcome. 

Perhaps your ads are not converting, or you can’t make up your mind on what PPC tactics to use. Our PPC management team has helped countless Amazon brands to lower their ACoS, so you can trust us to maximize your return on ad spend. 

We’ll not only advise you on the most profitable PPC campaigns to run, but we will also handle the technical PPC configurations for your brand and showcase your brand in a positive way. 

Our PPC experts will understand your advertising needs, conduct a thorough competitor analysis, and design a compelling ad copy that will showcase your CPG brand in a positive way. 

We will provide you with comprehensive monthly reports showing how your PPC ad campaigns are performing so that you can make informed decisions. 

If you need help with PPC management, do not hesitate to contact our PPC management team today.  

Check out this testimonial to get an idea of what our previous clients are saying about our PPC management services. 

Amazon PPC Management Services From Sunken

Sunken Stone offers trusted Amazon PPC management services that CPG brands on Amazon can rely on. If you need help with setting up Amazon PPC ads from scratch or improving your existing campaigns, our PPC experts are here to help.

Our PPC management team is always updated on the latest trends in Amazon PPC. So we understand the kind of strategies that can attract more leads and drive sales 24/7. 

If technical PPC configuration is giving you a hard time, give us a call today, and let us handle everything as you focus on growing your brand.   

Visit our website to learn more about our services and contact us if you need help. 

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Frequently Asked Questions

What Is A Good ACoS Amazon FBA?

A good ACoS for Amazon FBA will depend on what you want to achieve. If your goal is to improve profitability, a low ACoS ranging from 15%-30% would be ideal. But if you’re aiming at dominating your niche and maximizing visibility for your products, a high ACoS of around 40% can be a good ACoS.  

How Do I Improve My ACoS On Amazon?

There are several strategies you can implement to improve your ACoS on Amazon. Some of the best strategies include using Amazon PPC tools, choosing the right keywords, setting the right bid amount, effective bid management, and advertising at the best times. 

Should ACoS Be High Or Low?

Ideally, ACoS should be low as it shows high profitability. After all, most brands on Amazon aim at maximizing profits. So it’s best to aim for an ACoS of 15% – 30% if your goal is to maximize profit.    

What Are ACoS In Amazon?

ACoS (advertising cost of sales) is the ratio of total ad spend to sales revenue generated from that spend (in %). 

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