How do I Reduce My ACoS Without Losing Sales?
TL;DR
If you ask me, ACoS is one of the most—no, scratch that—the most important metric in PPC ads. It’s the one that keeps you profitable.
Because if your ACoS is consistently above a set threshold, it doesn’t matter how many PPC sales you’re pulling in. High ACoS can chew up all that revenue you’re working so hard to build.
Every seller wants a lower ACoS, but reducing it isn’t just about slashing ad spend or bidding lower. There’s real strategy involved. A lower ACoS can sometimes lead to fewer sales if you’re not optimizing the right way. But done carefully? You can bring that percentage down and keep the sales rolling.
This isn’t a one-size-fits-all fix. We’ll look at practical, smart ways to trim your ACoS—without losing the momentum you’ve built.
Quick guide
But first, let understand how to calculate ACoS
Amazon ACoS, or "Advertising Cost of Sales," is a metric that measures the profitability of your Amazon advertising campaigns.?
Simply put, it’s the percentage of ad spend in relation to the revenue generated from those ads. ACoS tells you how much you’re spending on ads for every dollar you earn in sales from those ads—a number that’s essential for tracking the efficiency of your campaigns.
ACoS = 100 x ( [total ad spend] ÷ [total sales] )
Why is a lower ACoS better?
Aiming for a lower ACoS isn’t just about squeezing more out of your ad spend—it’s about getting smarter with each dollar.?
When your ad costs are down, your profits go up, which means a little more wiggle room to make those competitive moves and keep your products front and center.?
Here’s why a low ACoS is worth it:
What is considered a good ACoS
When it comes to ACoS, you’re probably thinking, “What’s the ‘perfect’ ACoS I should aim for?” Well, the truth is, it depends on what you’re trying to achieve.?
A low ACoS (say, under 25%) sounds great, right? It’s a sign you’re spending less on ads to make sales, which means your campaigns are efficient. But it’s not always about going as low as possible. Let’s say your product has a profit margin of 30%. In that case, an ACoS of 20% would mean you’re making a profit on ad sales. Nice! But if you’re aiming to boost brand awareness—especially if you’re launching a new product—being super strict about ACoS might not make sense just yet.
Imagine if Apple had aimed for the lowest possible ACoS when launching a new iPhone. Instead of just cutting ad costs, they probably looked at the bigger picture: visibility, awareness, and eventually organic growth. So sometimes, especially for a product launch, you might see a higher ACoS as part of building initial momentum. An ACoS up to 100% (meaning you’re just breaking even) could be okay for the first push.
So what’s a good ACoS? Our Amazon PPC management experts have listed some general guidelines, but remember: they flex depending on your goals:
Finally, keep in mind your ACoS target isn’t set in stone. You can start with a higher target, say 30%, to get initial traction, then aim to reduce it over time as your product builds visibility and starts ranking organically. It’s all about finding that sweet spot where you’re not overspending on ads but still reaching your ideal audience.
Remember, the goal isn’t just a low ACoS—it’s a smart ACoS that aligns with your overall strategy. And as always, tweak and track as you go!
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Tips to set realistic ACoS targets
Know your margins first: Before setting any ACoS goal, understand your profit margin. Let’s say your profit margin is 30%. If you set an ACoS of 25%, you’ll still make some profit. But if your ACoS is over 30%, you’re likely losing money on those ad sales.?
Start high, then work your way down: It’s totally fine to start with a slightly higher ACoS target (like 30-40%) when launching a new product or if you’re in a competitive niche. Once your product has some traction, gradually reduce your target to a level that aligns better with your margin.
Think about your campaign’s purpose: Ask yourself why you’re running this campaign. If it’s a brand awareness push, you might accept a higher ACoS, knowing it’s about exposure. But if it’s purely to drive profit, stick to a tighter ACoS target—like 15-20%—especially if your product has a steady stream of sales already.
Benchmark against your category: Some categories are naturally more competitive, meaning they’ll require higher ACoS targets to stay visible. Check industry averages or, if possible, track the ACoS benchmarks of competitors in your category. For example, tech products might have higher average ACoS than, say, household items. Adjust your targets accordingly.
Use a gradual reduction approach: Once you reach your initial ACoS target, try reducing it in small increments. Say you’re at 30% now, but your profit margin is 25%. Start by reducing it by 1-2% at a time until you get closer to your ideal level. Going slow helps maintain sales volume without shocking your campaign performance.
How to lower ACoS (tips from Amazon advertising specialists)
Pick keywords that pull their weight
Not all keywords are worth their cost. Find keywords that convert without draining your budget, and let go of the ones that don’t. Long-tail keywords (those specific phrases) can sometimes hit the sweet spot: they cost less, have less competition, and often bring in high-intent shoppers.
Optimize your product page like it’s your job
The ad might bring them to your page, but it’s your listing that seals the deal. Use high-quality images, clear and enticing titles, and relevant, concise descriptions. Make sure every detail is optimized so visitors are more likely to convert. Higher conversions = lower ACoS.
Experiment with “Down Only” bidding
Amazon’s “up and down” bidding can be pricey since it increases bids in competitive spots. Try switching to “down only” bidding to keep costs lower on high ACoS campaigns. It can limit your reach a bit but help manage your ad spend effectively.
Use negative keywords to filter out wasted spend
If your ad keeps showing up for irrelevant searches, it’s time to add some negative keywords. Identify terms that don’t convert, and make sure Amazon knows not to show your ads for those searches. This way, you’re spending on the audience that actually matters.
Get your bids right (and keep testing)
Bids that are too high lead to overspending, while bids too low can bury your ads. Find a middle ground by calculating the ideal bid for each campaign based on your target ACoS, then test and adjust until you’re seeing consistent results.
Leverage dayparting
With access to hourly performance data, you can see when your ads perform best. Adjust bids or pause ads during low-performing hours to save money while keeping your ACoS on target.
Prioritize best-selling variations
Got multiple versions of a product? Focus ad spend on the one that sells best. By doing this, you can boost conversion rates and reduce ACoS since high-performing products generally require less ad spend to convert.
Think beyond ACoS alone
A low ACoS is great, but don’t get tunnel vision. Ads with a slightly higher ACoS might drive valuable organic traffic and build your brand. Remember, customer lifetime value can often outshine the immediate gains of a low ACoS, especially if you’re expanding into new audiences.
Keep your ACoS lean and mean
Getting your ACoS down is a game of smart moves, not wild guesses.?
Cutting ACoS means knowing your numbers, targeting the right keywords, and polishing those listings so they’re as irresistible as possible. And hey, it’s not just about hitting that perfect number—it’s about hitting the right number that keeps your sales up and your costs in check.
Tweak, test, track—make your ACoS strategy one that works with your goals, not against them. And if you ever feel like ACoS is getting too tricky to tackle on your own, reach out to the Amazon experts at eStore Factory. They can help you find that sweet spot and make every ad dollar count.