Amazon PPC is a great opportunity for eCommerce sellers, but it can reduce profits quickly if your Amazon ACoS (Advertising Cost of Sales) gets too high. When your ad spending keeps going up but your profit margin shrinks, youโre not the only one facing this challenge. Amazon's global ad spend reached new highs in 2024, so making sure every dollar is effective matters more than ever.
This guide covers what causes high Amazon advertising cost of sales and how to fix it with practical, proven strategies. Youโll find out what top eCommerce brands do to lower Amazon ACoS and grow profits. Whether you need Amazon campaign management, want better Amazon PPC optimization, or just want to get more out of your Amazon ad spend, youโll find clear solutions here. If you'd rather have experts manage it for you, SalesDuo offers a team of ex-Amazon specialists and advanced AI tools to handle everything.
Letโs get started so your Amazon PPC can truly drive growth for your business.
What is Amazon ACoS? Definition & Why It Matters
Amazon ACoS, or Advertising Cost of Sales, shows the percentage of your ad spend compared to the sales from those ads. For example, if you spend $100 on ads and make $500 in sales, your ACoS is 20%. This metric is key because it tells you how effectively your Amazon PPC campaigns convert ad spend into revenue.
A high ACoS means every sale costs you more, and your Amazon profit margin drops. A low ACoS means your ads are cost-effective, letting you make more profit and grow your store. Keeping your Amazon ACoS under control is central to smart Amazon campaign management and long-term business growth.
Want to know if your ACoS is on track? Read on for benchmarks and step-by-step ways to lower your numbers.
How to Calculate ACoS on Amazon (with Examples)
Calculating Amazon ACoS is straightforward. Use the formula: ACoS = (Ad Spend รท Ad Revenue) x 100. If you spend $200 on ads and bring in $1,000 in sales, your ACoS is 20%. That means every advertising dollar brings you five dollars in sales.
Lower Amazon ACoS means your ads are working well. Higher ACoS is a sign you may be paying too much for each sale. This calculation is a must-have for Amazon PPC optimization so you know when to scale or adjust your campaigns. To learn more, check Amazonโs official ACoS guide.
Curious where you stand against others? The next section has those comparisons.
ACoS vs. ROAS: Understanding the Key Differences
Amazon ACoS (Advertising Cost of Sales) and ROAS (Return on Ad Spend) are different ways to measure your ad results. ACoS shows what percentage of your sales go toward ad costs. ROAS tells you how much you earn for every dollar spent. The formulas are simple: ACoS = (Ad Spend รท Ad Revenue) x 100 and ROAS = Ad Revenue รท Ad Spend.
A lower Amazon ACoS means your ads are efficient. A higher Amazon ROAS means you are getting more return from every dollar invested. For example, a 20% ACoS equals a 5x ROAS. Both are essential for Amazon PPC optimization and informed campaign planning. Dive deeper with Amazonโs marketing ROI guide.
Setting ACoS Goals: Whatโs a Good Amazon ACoS?
Industry Benchmarks: Average ACoS by Category
There isnโt one โgoodโ Amazon ACoSโyour ideal percentage depends on your products, the competition, and your goals. For example, electronics and supplements tend to have a higher ACoS, while more niche items usually see lower costs.
Compare your ACoS to industry standards and factor in your own profit margin. Not sure how to start? A professional Amazon PPC Audit can help you spot areas to improve. Next, youโll learn how to find your break-even and target ACoS.
Target & Break-even ACoS: How to Find Your Numbers
To know your target ACoS, first work out your break-even ACoS. This is where your ad costs are the same as your profit margin. Use the formula: Break-even ACoS = (Profit Margin รท Sales Price) x 100. For instance, if you make $10 profit on a $50 product, your break-even ACoS is 20%.
Aim for a target ACoS thatโs a little below your break-even point so you always stay profitable. For more help, see this guide to calculating break-even and target ACoS. This approach helps reduce ACoS Amazon campaigns and maximize your profit.
Using the ACoS Calculator: Tools & Formulas
While you can calculate ACoS by hand, ACoS calculators make things quick and more accurate. Just enter your ad spend and sales to get instant numbers for ACoS, break-even, and targets. Many Amazon PPC management tools come with these dashboards to help you keep on track.
For an easier way to track your numbers, try an AI dashboard like SalesDuoโs for faster Amazon PPC reporting and smarter choices.
Product Offer, Pricing & Market Positioning
Your productโs price and how it stands out make a big difference in your Amazon ACoS. If your price is not aligned with the competition, your conversion rates slump and your ACoS climbs. The average advertising cost of sales (ACoS) on Amazon is 28.97%, but this depends a lot on your price and conversions.
To lower Amazon ACoS, review your pricing regularly, make your offer attractive, and match your Amazon campaign management to your margin goals. Need more ideas? Check out our Amazon account management strategies.
Visual Assets & Social Proof: Images and Reviews
Clear images and excellent reviews can help your Amazon PPC performance a lot. Listings with top-notch photos and great reviews can boost sales by up to 20%. Customers trust what they can see and what others say, so focus on Amazon reviews optimization and lifestyle photos to boost conversions and lower ACoS.
Aim to gather more high-quality reviews and use images that show real product use. For more on this, visit our Amazon Listing Optimization page.
1. Laser-Focus on Relevant Keywords & Negative Keywords
Targeting only the most relevant keywords and actively using negative keywords is crucial for Amazon PPC. This approach saves your budget and improves your targeting. Applying negative keywords can cut wasted ad spend and improve targeting, which leads to lower Amazon ACoS and better Amazon ROAS.
Check your search term reports often and weed out any terms that donโt convert. This is vital for Amazon keyword optimization and for controlling your Amazon advertising cost of sales. Need more tips? Read our Bidding Strategies guide.
2. Optimize Listing Content for Higher Conversions
Well-optimized listings using target keywords, appealing copy, and clear images can lift your conversion rates. Applying Amazon SEO principles improves keyword search rankings, conversion rates, and drives more sales. Every detailโfrom bullets to descriptionsโmatters.
Keep your content concise, clear, and relevant for Amazon keyword optimization. Looking for help? Check our Amazon SEO Services.
3. Improve Product Titles for Better Click-Through Rates
Your product title is often the first thing a shopper notices. Using best practices, start with the top keywords, keep titles easy to understand, and include important info to improve your listingโs CTR and overall performance.
A clear and well-structured title supports your Amazon PPC campaigns by pulling in the right audience. For more ideas, visit our Amazon Listing Optimization service.
4. Refine Bidding Strategies to Cut Wasted Spend
Adjusting your bids is key to reducing wasted ad spend and achieving a lower Amazon ACoS. Brands that shift bids based on results often get better efficiency. Moving budget toward the best keywords and experimenting with different tactics can balance visibility with cost efficiency and maximize return on ad spend.
Ready to go deeper? See our Bidding Strategies guide.
5. Harness Amazon Automation & AI Tools
AI and automation can make your Amazon PPC campaigns more efficient. Automating tasks like bid adjustments helps you react quickly to changes and spend your time on growth. Brands using automation often achieve better performance, as shown in Jungle Scoutโs guide to Amazon PPC software.
Interested in automating your campaigns? Learn more with Automating Amazon PPC Campaigns using SalesDuoโs AI tools.
6. Set Clear Campaign Goals and Segments
Start every campaign with a clear goalโwhether that's more sales, better exposure, or improved profitability. Structure your Amazon PPC into segments to closely watch specific products or audience groups. This segmentation helps optimize your approach and reduce ACoS more efficiently.
Need a partner in Amazon campaign management? Work with an Amazon PPC Management Agency like SalesDuo.
7. Monitor Performance with Reporting Dashboards
Using automated reporting dashboards keeps you updated on your Amazon PPC campaigns. These platforms reduce manual work, speed up decision-making, and help you catch issues early. Monitoring your ad spend, ACoS, and sales in real time lets you adjust quickly and spot trends before they affect your profits.
For deeper insights, try SalesDuoโs AI dashboard for Amazon PPC reporting and analytics.
8. Leverage Search Intent and Long-Tail Keywords
Focusing on long-tail keywords and the actual phrases buyers use can lower your Amazon ACoS and boost conversions. These specific keywords usually have less competition and lead to more qualified traffic. Matching ads to search intent helps you increase Amazon ROAS and reduce wasted budget.
Explore smart keyword strategies with our Amazon SEO Services.
9. Integrate Video Ads for Enhanced Engagement
Video ads help increase engagement and conversions on Amazon. Brands that use both video and display ads see a 2.2x higher lift in brand awareness, while including Prime Video ads in a campaign led to a 1.7x higher conversion rate for those who watched the video.
Add Amazon video ads to your PPC mix for more attention, better clicks, and a lower Amazon ACoS.
10. Continuous Testing & Iterative Optimization
Successful Amazon sellers keep testing and improving. Run A/B tests for your ads, keywords, and listings to see what delivers the best results. Making small, ongoing changes is key to steadily lowering ACoS and growing your Amazon profit margin over time.
Let technology make this process easierโuse AI-driven sales reporting and automation to stay ahead.
Advanced Tips: When to Accept Higher ACoS
Launching Products vs. Maximizing Long-Term Profits
Sometimes, accepting a higher ACoSโthe percent of sales spent on adsโis the right move during product launches. Spending more early on can win you visibility, initial reviews, and a foothold in your market. Once your product is established, you can shift your focus to lowering ACoS and strengthening profits.
Balance your Amazon ad spend against your growth priorities. Investing more up front can pay off later with better long-term results.
Scaling Aggressively: Brand Awareness & Seasonal Strategies
Ad costs grow during busy times like Black Friday and the holidays. Overall ad spending rose nearly 30% in 2024 compared to the previous year. During these periods, investing extra in brand awareness and premium placements might push ACoS higher, but can help you win loyal customers long-term.
Allowing a higher Amazon ACoS during key seasons is sometimes the best way to build market share and support future growth.
Conclusion
Achieving success on Amazon is about more than getting seen. Itโs about real performance. At SalesDuo, we combine data, smart strategy, creative thinking, and custom AI to move your brand forward. With 85% of our team having Amazon experience and a unique AI dashboard, weโve helped over 250 global eCommerce brands make Amazon their top sales channel. Ready to take the next step? Book your 1:1 growth call today!
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About the Author
Meet Nandita Nair, an Associate Content Writer at SalesDuo, passionate about creating impactful content that helps Amazon businesses grow and thrive. When sheโs not writing, she finds joy in listening to music, exploring art, and getting lost in the world of novels.
