ACOS is an important factor in measuring the success of Amazon CPC advertising. Many operators are also concerned about:

What is the normal range of ACOS?

Is it true that the lower the ACOS, the better?

How to effectively control ACOS?

This article will introduce in detail some of the things that Amazon ACOS sellers must know.

Is the lower the Amazon ACOS, the better?

Take a quick look at the Google search results for Amazon ACoS and you’ll see that the first page is filled with posts focused on lowering your ACoS. There’s so much information out there, but is a lower ACoS always best?

Let’s look at the ACOS formula: ACOS=CPC/(PRICE*CVR).

The two main factors to lower ACOS are to lower CPC or to increase CVR. From the perspective of CPC, lowering CPC mainly affects two aspects:

1. The amount of traffic obtained. Generally speaking, the higher the bid, the more traffic can be obtained. Of course, this does not necessarily mean that the traffic we obtain will be smaller after lowering CPC. In the case of limited budget, as long as the budget can be spent, we can lower CPC and extend the budget consumption time, thereby extending the advertising exposure time.

Second: Ad position. Generally speaking, exposure opportunities are determined by the bottom bid, and exposure position is determined by CPC. If we adjust CPC, it will inevitably affect the ad position. Generally speaking, the click-through rate of the ad position on the top of search will be higher than that of other positions. Most consumers will only look at the products at the front and will not turn back when they find what they want.

So from these two points, we can see that sellers who need to join the seller communication group, please contact customer service V: FLA66668888 If you blindly pursue low ACOS, you will lose traffic and advertising space accumulated by long-term data. Traffic means clicks, which also means sales. Even if ACOS is very low, without volume, advertising will not be stable.

Increasing CVR can also reduce ACOS, but this is more difficult. CVR is generally determined by the product and will be affected by the advertising structure, but this impact is relatively small and can be solved. For example, use negative words at the customer search level, adjust bids or budgets at the delivery and advertising campaign level, change the proportion of ineffective spending, and tilt the budget to effective order-generating activities.

You can see the following example:

CPC 0.8 Click 50 order 5 Sales 100 ACOS 40%

CPC 0.7 Click 40 order 4 Sales 80 ACOS 35%

CPC 0.6 Click 10 order 1 Sales 20 ACOS 30%

If our profit margin is 40%, the income in the first case is 0, the income in the second case is 4, and the income in the third case is 2. Overall, it seems that option 2 is our best choice, but it is not the one with the lowest ACOS. If you only want to increase sales, option 1 is also OK.

The first step in developing an Amazon ACoS strategy requires calculating two important ACoS-based metrics, the break-even ACoS and the target ACoS.

Breakeven ACoS is when your Amazon advertising costs equal your profit margin (calculated after subtracting all fees and costs involved in selling on Amazon).

For example, you can calculate your profit margin once you add in product costs, shipping costs, Amazon costs, etc. If your profit margin is 30%, then this is your break-even ACoS.

After determining the target profit margin, sellers who need to arrange for off-site promotion of celebrity videos should contact customer service V: FLA66668888. Subtract this profit margin from the break-even ACoS, and the remaining is the target ACoS. For example, if you determine a profit margin of 30% and hope to eventually reach a target profit margin of 12%, then the target ACoS is 18%.

What is the appropriate ACOS control level?

Situation 1: Sellers want their ads to generate profits

To ensure advertising profitability, ACOS must be lower than the profit margin. The appropriate ACOS should take into account the total advertising profit, not the lower the better.

1. When ACOS = profit margin, it means that the advertising breaks even, with no profit or loss - then you can control ACoS at around 15% to keep the advertising costs and sales gross profit in balance.

2. When ACOS>profit margin, it means that the advertisement is losing money - then you need to control ACoS below the break-even ACoS, that is, below 15%. By reducing advertising costs or increasing sales gross profit, you can try to optimize the advertising input-output ratio and make advertising a source of profit.

3. When ACOS is less than profit margin, it means that the advertisement is profitable - then you can control ACoS below 15% to ensure a high return on investment for the advertisement.

Situation 2: Advertising is not profitable at present

If our current advertising is not profitable, we need to find out the reasons first. We can start from two aspects:

(1) Product pricing: If the product is low-priced, it is normal that ACOS is difficult to reduce. (2) External environment: Fierce competition or too single advertising operation will lead to high ACOS.

Knowing the reasons, sellers can think about how to find the ACOS range that suits them.

ACOS=CPC click cost/(ad conversion rate*average unit price), which means that by finding the right CPC and conversion rate, you can find the ACOS that suits you.

🔶Appropriate CPC. You can refer to the "Suggested Bid" in the background

🔶Conversion rate. You can refer to the business opportunity detector

Seller Backstage - Growth - Business Opportunity Detector - Search Term - Find the search conversion rate of the corresponding keyword. After finding the appropriate CPC and conversion rate, find the ACOS range that suits you according to the formula.

For example: Product A is priced at $30, the CPC range is $0.3-$0.4, and the conversion rate is 8%, then:

Minimum ACOS = 0.3/8%*30 = 12.5% ​​Maximum ACOS = 0.4/8%*30 = 16.67%

Using the above formula, you can also try to find your own reasonable ACOS range.