Amazon ACoS (or Advertising Cost of Sale) is an important measurement that assists Amazon sellers to determine the price of advertising as well as the financial viability of their campaigns.
In the midst of a highly competitive eCommerce market one of the fastest ways to increase sales is to advertise.
However, to earn a profit through the profits of an Amazon PPC campaign, you need to understand the price of advertising.
It is also important to determine at an early stage whether your campaign is generating a profit or not. This is where knowing and tracking ACoS on Amazon is crucial.
What is Amazon ACoS?
ACoS is an Amazon-exclusive measure that shows the amount you pay per dollar of revenue you generate.
Amazon ACoS is expressed as percent, and it’s vital to help you determine whether your ads are successful or not.
What is the Importance of ACoS?
We’ve already touched on it and it’s not the only thing to consider. ACoS on Amazon is essential to determine your campaign’s success or insufficient.
The outcomes you obtain by analyzing ACoS will be helpful when you are rethinking your ad plan to ensure that you are profitable.
What is the Difference Between Amazon ROAS and ACoS?
Return on Ad Spend (ROAS) can be described as the reverse of ACoS. ROAS is also more prevalent in the world of pay-per-click (PPC).
ROAS is the amount of revenue you can earn for every dollar you invest in advertising. In contrast, ACoS on Amazon shows the amount you pay for every dollar you earn.
Both metrics are vital in helping you assess the effectiveness of an Amazon PPC campaign’s effectiveness.
ROAS will be more focused with the efficiency of your advertising campaign, while ACoS is focused on measuring profit.
However, in order to have the full picture of your Amazon marketing strategy you must track both of the metrics.
What is a Good ACoS?
There isn’t an universally accepted standard which can tell you if an ACoS is excellent or poor ACoS. A great Amazon ACoS will vary by industry, product, the type of ad, as well as campaign.
Thus, an ACoS that can be beneficial for one business may not be suitable for one. To understand the full image of the Amazon ACoS, you’ll need to evaluate it in the appropriate context.
If you’re looking to make money make sure you maintain an ACoS that is lower. The desired ACoS in this instance needs to be lower than the margin of profit which means you still make profits after spending money on advertisements.
This strategy should be employed in order to earn as much profit as is possible. This method is also a good option for products that don’t require any publicity to be sold.
Calculate target ACoS
The goal ACoS is the percentage at which you reach your desired profit margin. This means that the goal ACoS guarantees that the amount you invest in advertising generates revenues and also generates a profit.
The goal ACoS determines if your campaigns are generating profit.
To determine the amount of ACoS first, you must determine your margin of profit following advertising.
The margin you choose to set is your choice and will be less than the margin of profit that you had before advertising.
Although it’s simple to calculate manually the desired ACoS however, doing this for multiple campaigns that cover more than a dozen products is bound to cause you to spin your wheels.
Luckily, you can automate the final ACoS calculation by using Amazon ACoS calculator.
How to Reduce ACoS?
If you are experiencing high ACoS, be aware of this in your mind: the reduction of ACoS in Amazon is a matter of managing your profit margin as well as your ad spending and bidding strategies.
If you’re looking to decrease the amount of ACoS you use, you have to choose the appropriate keywords. The most crucial thing to remember is to use the most current information available when you are harvesting keywords.
It is also important to keep making tweaks to your campaigns so that you can spot an overinflated ACoS before it gets too late and then make the appropriate adjustments.
Additionally, you should focus on fewer campaigns so that you don’t get spread too thin. It’s more difficult to manage and improve the performance of your Amazon ACoS if you have more campaigns than you’re able to manage simultaneously.
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