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ACOS, or advertising cost of sales, is a metric used in Amazon Ads reporting and optimization that shows the relationship between the cost of advertising on Amazon and its attributed sales revenue. To calculate it, divide the total ad costs by the total revenue attributable to those ads, then multiply by 100. The formula for ACOS is as follows:
(Total Ad Cost / Total Ad Revenue) x 100% = ACOS
ACOS is a useful starting point to gauge the cost effectiveness of your Amazon advertising efforts. A higher ACOS may suggest some inefficiencies in the campaign, while a lower ACOS may indicate a greater return on ad spend. Another way to look at ACOS is as the inverse of return on ad spend (ROAS); as ACOS decreases, ROAS increases, and vice versa.
Even though ACOS does measure the efficiency of ad spend, it doesn’t tell you how profitable those ads are. Therefore, ACOS shouldn’t be relied on as a single indicator of success. Here’s more information on how to measure profit and lower ACOS on Amazon Ads.
To sum up, ACOS serves as one tool to help guide your ad strategy. But if you want help to effectively run Amazon Ads campaigns for your eCommerce business, get in touch with our team.
