What is Amazon acos? Detailed introduction to Amazon acos calculation method and reasonable range

Amazon acos is an advertising indicator. Sellers who advertise through Amazon should be more or less familiar with it. This article will introduce acos in detail, including what Amazon ACOS is, how acos is calculated, and how to reduce the ACOS value.

What is Amazon acos

ACoS refers to the key indicator used to measure the performance of users’ advertising investment in the Amazon market, which refers to the proportion of advertising expenditures in advertising sales.

Amazon ACOS calculation formula

ACoS = ad spend / sales revenue

ACoS=(unit price per clickclick)/generated sales sales=unit price per customersales quantity

ACoS=(Unit price per clickclick)/(Unit price per customerSales quantity)Sales quantity=Conversion rate*Click traffic

ACoS=(Unit price per clickclick)/(Unit price per customerConversion rate*Click traffic)

ACoS=click unit price/(customer unit priceconversion rate)=CPC/(customer unit priceCR)

Spend is the cost of a single click, and Sales is the unit price and number of customers. The smaller the ACoS value, the better the benefits generated by advertising investment.

For Sponsored Products campaigns, your sales total includes product sales resulting from clicks on your ads during the week. This sales total includes sales for both the promoted SKU and other SKUs in your inventory.

For “Homepage Search Ads,” sales totals include total merchandise sales resulting from ad clicks over a two-week period. This total sales includes both sales of the promoted product and sales of other products from the same brand that were sold as a result of clicks on your ad, whether the product was sold by you or another seller.

Amazon AcoS calculation example

Product A Campaign

· Revenue per unit: $50

· Spend: $10 ÷ Units sold 2 = CPA: $5

· Spend: $10 ÷ Sales Revenue $100 = ACoS: 10%

In other words: you spend $1 in advertising to get $10 in sales

What is the most appropriate ACoS

Depending on the product and the purpose of the seller’s advertising, the ideal ACoS is also different.

Assuming that the purpose of the seller’s advertising is to promote product sales and improve the product’s natural search ranking, then the seller’s ideal ACoS is to ensure its own profit and loss. However, if the seller has a new product release, he may set a higher ACoS for himself. The main purpose of the seller is to catch big fish in the long run. For mature product sales, when sellers set the ACoS of advertising, it is natural to set it as low as possible to ensure that the seller can make a good profit for each sale.

Reasons for Amazon’s high ACOS

Amazon’s high ACOS is mainly affected by these factors: low conversion, lack of diversity, invalid words, and too many keywords.

(1) The waste of expenses caused by big words. For example: the product sun glasses, because together with the big word glasses, a large number of users may enter your store when searching for “glasses”, but after entering, they find that it is sun glasses, and the user will close the page in the next second. , this huge amount means nothing except affecting your data and consuming your funds.

(2) Diversity. A good product should fully understand the needs of users and think of the countless situations in which users search for products, such as: sunglasses – sun protection – UV protection – men – women – color – seniors – adults, etc.

(3) Invalid words. Reduce the budget decisively for words with poor performance in the data, but do not stop advertising directly. There is a weight comparison in the campaign. The longer it is open, the higher the score of this campaign. When competing with other sellers, campaigns with high scores will get the same impression even if they are low-priced.

(4) Too many keywords. The pursuit of diversity is to try to consider the user’s usage scenarios or search habits, but it does not mean that a certain search habit matches too many keywords. At this point, screening becomes very important. We can use multiple products to use different keywords respectively to conduct short-term tests and quickly screen out high-converting keywords.

Ways to Reduce Amazon ACOS

Price increase: Price also has weight. Don’t raise prices blindly in order to lower Acos. You need to comprehensively consider the product price, order quantity, and profit. The price increase should not be too large each time. After about 2-3 weeks, basically you will A profit-maximizing price can be determined.

Optimize ads: Create an effective ad group, pay more attention to the key data of exposure, clicks, and conversion rates in the report, optimize according to specific situations, and find core keywords.

Improve QS: The core of Amazon is the conversion rate. The higher the QS score and the higher the conversion, the higher the advertising weight (even if the single bid you give is not high, you will get a relatively high ranking), high conversion, low cost This is the core of reducing Acos.

A low ACOS value means small advertising investment and high sales, which means the advertising effect is also better.