ACoS is the number every Amazon advertiser watches, but the right target depends entirely on your own margins and goals. Here's how to work it out.
Advertising Cost of Sale, or ACoS, is calculated by dividing ad spend by ad-attributed sales. An ACoS of 25% means you spent £25 on advertising for every £100 of sales the ads generated. It is a useful measure, but on its own it does not tell you whether your advertising is profitable.
Start with your break-even ACoS
Your break-even ACoS is your profit margin before advertising, expressed as a percentage of the selling price. If a product sells for £30 and, after product cost, Amazon fees, shipping and VAT, you keep £9, your pre-advertising margin is 30%. Spending more than 30% of sales on ads means each advertised sale loses money.
Set targets for each goal
- Launch campaigns may run above break-even for a limited time to build sales history and reviews
- Established products usually target well below break-even to protect profit
- Brand defence campaigns often run at a low ACoS because shoppers already know you
Look beyond ACoS
Total ACoS (TACoS) compares ad spend with your total sales, including organic. If TACoS falls while sales grow, your advertising is helping to build organic ranking, which is a healthy sign. Watching both measures gives you a far clearer picture than ACoS alone.
Practical next steps
Calculate break-even ACoS for each product, group campaigns by goal and review search term reports weekly. Add negative keywords for irrelevant terms, and move consistently converting search terms into exact-match campaigns where you can control bids more precisely.
Need a hand with this?
Our team can take care of it for you. Book a free consultation or explore the related services below.
