Understanding Acos: Key Indicators of Amazon Advertising Profit and Loss

In Amazon advertising, Acos (advertising sales expense ratio) is the core data that many sellers pay attention to. This indicator reflects the profitability of the advertising project to a large extent. Many novice sellers may be confused about Acos: What exactly is Acos? Its full English name is “Advertising Cost of Sales”, which represents the percentage between the seller’s advertising expenses and the sales obtained through advertising.

For example, if a seller spends $10 on advertising and achieves $100 in sales through this advertisement, his ACos is calculated as 10%. In the current fiercely competitive market environment, reaching an Acos value of 10% is already very challenging for many sellers.

Novice sellers usually think that the ideal Acos value should be as low as possible. However, in reality, the lower the Acos, the better. If a seller only pursues a low value of Acos, it may affect the advertising effect in some cases. For example, the promotion of new products requires higher exposure rates and clicks. If advertising expenditures are reduced for this purpose, various bids are too low. Although the Acos value may not be high, it will lead to a corresponding reduction in exposure and clicks, which is detrimental to The market performance of new products is extremely unfavorable.

The rapid decrease in Acos value is often accompanied by a decrease in keyword bids. Although Acos seems good, this “win at low cost” strategy is actually sacrificing ad exposure and click-through rate, which is not cost-effective.

To evaluate Acos, sellers should look for a comprehensive metric, especially understanding their break-even point. For example, if a profit margin of 20% is set, if the Acos value in an ad group reaches 20%, the advertising campaign can only achieve breakeven status, and when the Acos value is lower than 20%, the advertising campaign is profitable. On the other hand, if the Acos value exceeds 20%, it represents a potential loss. Therefore, sellers need to set marketing goals reasonably based on their own promotion stages and purposes, so as to develop a balanced and effective advertising strategy.