How do I lower my ACOS on Amazon?

01What a high ACOS is actually telling you

A high ACOS almost never means Amazon ads do not work. It means spend is going somewhere it should not, and there is usually more than one leak. Before touching a single campaign, look at the listing, because that is where most ACOS problems really live.

02Why is my ACOS so high?

ACOS is high when you spend too much on ads for each sale they bring in. That usually comes from one of these causes:

• The listing does not convert. Ads bring clicks, but the page does not turn them into orders.
• Paying for keywords that do not sell. Broad or loose keywords bring clicks from shoppers who were never going to buy.
• Advertising too many products. Budget spreads across products that do not sell, instead of the ones that do.
• Bids set too high. You pay more per click than the sale is worth.
• A launch phase. New products often run a high ACOS on purpose while they build rank. That is fine if it is planned and has an end date.

03What is a good ACOS?

There is no single good number. A good ACOS is one below your break even point.

Your break even ACOS equals your profit margin before ads. If you keep 30 percent of the price after product cost and Amazon fees, a 30 percent ACOS means you break even on ad sales. Below that, the ads make money. Above it, they lose money.

So a 35 percent ACOS can be healthy on a high margin product, and a 15 percent ACOS can lose money on a low margin one. Work out your break even first, then judge your ACOS against it.

04Fix the listing before you touch the ads

Your ads only send the traffic. The listing decides whether that traffic buys. A weak main image, an unclear title, a price that is off for the market, a product that is not a real fit, or thin social proof all mean you are paying to send clicks to a page that does not convert.

In a lot of accounts the structure and the spend stay exactly the same, the main image and a few listing details are fixed, conversion jumps and ACOS drops on its own. The ads never changed. The page did.

• Main image: does it win the grid against everything else on the page?
• Title: is the product and its use obvious in the first six words?
• Price: is it defensible against the alternatives a shopper is comparing?
• Fit: are you buying clicks from people who were never going to want this?
• Proof: is review count and rating close enough to the leaders to be considered?

05Focus spend on what already sells

Advertising the whole catalog is the fastest way to a high ACOS. Budget spread evenly across products with unequal potential funds losses at the same rate it funds winners. Put the money behind the products with proven conversion, and give the rest coverage only once the page can hold its own.

06Cut the clicks that never convert

Pull the search term report and look for terms with meaningful clicks and no sales. Those are not tests anymore, they are subscriptions. Add them as negatives and push the freed budget into the terms that already order.

07Split branded and non-branded so you see the truth

Branded terms convert cheaply and flatter every average they sit in. Blended together, a healthy branded ACOS hides an unprofitable acquisition campaign. Separate them, and bid by placement, so each part of the account is judged on its own job.

08Measure TACoS and profit, not ACOS alone

ACOS on its own can be improved by simply spending less, which usually costs sales and rank with them. TACoS shows what advertising costs against total revenue, and profit shows whether any of it was worth doing. Those are the numbers to run the account on.

A cosmetics brand came to us with real ACOS near 28% against thin margins, leaving almost no profit. We rebuilt the listings to convert and restructured the ads across the whole catalog. Real ACOS fell to 4% while the brand scaled from $150,000 to $3 million a month. Lower ACOS did not mean fewer sales — it meant the same growth, far more profitably.

09ACOS or TACoS: which matters more?

ACOS compares ad spend to ad sales only. TACoS compares ad spend to your total sales, including organic sales.

TACoS matters more for the health of the business. If TACoS is falling while sales grow, advertising takes a smaller share of total revenue. Check organic sales and keyword rank to see whether your reliance on ads is also falling. If TACoS keeps rising, advertising is taking a larger share of revenue. Check margins, organic sales and launch spending before deciding whether that increase is unhealthy. In one grill accessories account, TACoS held at 8.5% while sales grew 200% in 90 days. Read the account turnaround.

10This works at any spend level

A brand spending $2,000 a month has the same leaks as one spending $200,000, just smaller. Whether you are early or scaling, the order is the same: make the page convert, close the ad leaks, then measure to profit.