A Beginner Guide to Learn about ACoS like a PRO!

Advertising products on Amazon is a strategic task. Moreover, it requires the right planning when it comes to research, keywords, and so on. If you get your ACoS strategy accurately on your products then you can attract huge visibility, customers, and profit. 

In this article, you will learn all about ACoS and its related important concepts that you must know for your Amazon Business. Let’s get started. 

What is ACoS?

The ACoS aka Advertising Cost of a Sale is a metric seller invented by Amazon. It determines how much expenditure is spent on advertising per dollar of revenue you generate. Further, it measures by dividing the sum of advertising cost by the number of sales (that an ad generated). 

For example, suppose you spend 60 dollars on advertising and sold 600 dollars worth of goods then the result of your ACoS is 10 percent. 

ACoS is a beneficial metric for PPC marketers to evaluate the profitability of advertising campaigns. 

How ACoS is calculated?

If put in a simplified manner, ACoS is calculated as the following method:

ACoS = [Total Ad Spend] ÷ [Total Sales]

For example, if you spend 50 dollars on ads. And, it resulted in a sale of 100 dollars then the ACoS is 50%.

The reason why ACoS is Important?

To check the profitability of ad campaigns, ACoS is a tool that would help you to check and determine the ad campaign success status on Amazon. It helps sellers to know how much money is required to be on the safer side. 

To implement it, the seller needs to set an ideal target for ACoS. It is a criterion that would define how much profit the seller is generating. Also, sellers need to keep a closer eye on the cost (and break-even points) of products.

Having an expert team—Asinwiser— on your side will help you to navigate in the right direction. Asinwiser.com is a perfect solution for Amazon sellers that will guide your business with expert tools to target your potential audience with its all-in-one features such as profitability calculator, product research, competitor research, and so on. 

How is Amazon ACoS different from Amazon ROAS?

Advertising Cost of Sales (ACoS) represents the amount of money spent on the advertisement to gain a dollar from attributed sales. Whereas, Return on Ad Spend(ROAS) determines the amount of money earned for every dollar that was spent on ads. 

Interestingly, it is important to know that ACoS is the opposite of RoAS. To put in a clear mathematical equation check below:

ACoS = Ad Spend/Ad Revenue

RoAS = Ad Revenue/Ad Spend

In simple words, we can say that ACoS is a tactical metric and ROAS is a strategic metric. As ACoS focal point is on cost and RoAS’s focal point is on return. 

What are the related terms?

Low ACoS: Basically, Amazon sellers aim to achieve lower ACoS as it means high profit. And, it entirely depends on the strategy applied by sellers for selling a product and profit margin. If you want to decide to aim for a low ACoS then go for 15-25 percent. Furthermore, aiming for lower ACoS is a better strategy for products that do not need high visibility, making more profit, and trading a low-converting product. 

Average ACoS: Since 2019, the average sponsored product Ad’s ACoS per usage per day has been 34.42 percent for ad badger. It comes as a better reference in the middle of low and high ACoS. It is an accurate benchmark. 

High ACoS: A high ACoS determines the high visibility of products and higher profitability. Nevertheless, visibility could dominate other factors and could lead businesses to profit. If sellers who want high ACoS should remove low-selling products, niche domination, increase brand awareness, and more. 

Conclusion

With neck-cutting competition on Amazon, sellers need to know all the aspects that could enhance their business. From ACoS, PPC metrics, algorithm game, one should need focus on all indicators that could impact your sales. With the right advertising strategies, you could effectively shape your business on Amazon and gain more profits. 

We hope this article will help you to learn all about ACoS strategies that will work best for your business. To make your business a huge success, get in touch with the Asinwiser team today!