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Advertising on Amazon: What is ACoS?

Melissa Crum
Feb 5, 2018 9:35:14 AM

As more and more sellers head to Amazon to reach larger audiences, the competition is only growing. This is precisely why Amazon introduced Sponsored Products. Amazon now allows sellers to pay for sponsored ad space to help increase customer engagement and overall sales.

Sellers who utilize sponsored Amazon ad space regularly see a high return on investment and consistently move more products. One of the downsides of Amazon sponsored ads, however, is the metrics used to track and monitor ad performance. Amazon uses a metric that’s fairly uncommon in the world of advertising and PPC called ‘ACoS’, or Average Cost of Sale. Here, we’ll look at how to understand ACoS, how to track it, and how to streamline the management of Amazon ads in general.

Understanding ACoS

ACoS is a basic metric that sellers can use to understand the overall success of an Amazon ad campaign. Sellers can calculate ACoS by finding the ratio of ad spend to targeted sales:

ACoS = Ad Spend ÷ Sales

Ideally, sellers should aim for a high sales revenue with a low ACoS. Lower ACoS means spending less of a brand’s revenue on advertising, which equals a higher ROI for ad dollars. Sellers can manage this metric, alongside other Amazon-specific success metrics, in the Amazon Seller Central Dashboard.

Unfortunately, just analyzing the ACoS alone won’t highlight whether or not a campaign is actually successful. It can help to provide data regarding overall return on investment, but without understanding the actual goal of the campaign, sellers are unable to create actionable strategies to move forward. To help understand whether or not a campaign is successful, Amazon recommends looking at:

  • The margins on advertised products.
  • Both the individual campaign budget and the overall advertising budget.
  • The high-level sales goals of the organization.
  • The opportunity to generate demand and increase visibility of products.

With clear metrics assigned to the above data points, sellers can leverage ACoS to make sure campaigns are running smoothly and in the right direction.

Managing Campaigns with SupplyKick

While leveraging sponsored ads on Amazon can help maximize profits for brands of all sizes, the daily logistics associated with managing the campaigns can be a chore for most sellers. Third party sellers, such as SupplyKick, can help create, monitor, and analyze Amazon ad campaigns so sellers like you don’t have to. Having a third party help with Amazon ad campaigns not only eliminates any burden on the shoulders of the seller, but it also can actually optimize the campaign and ensure it’s running at the highest level possible. SupplyKick has a team dedicated to optimizing, tracking, and measuring Amazon ad campaigns so changes can be made quickly wherever necessary.

The SupplyKick team members are experts in making sure every aspect of an Amazon ad campaign runs smoothly, from determining the optimal cost per ad to creating just the right product descriptions and messaging. With so much time spent inside the Amazon platform, our team knows exactly what makes products sell, and what factors make them sit on the shelf a while longer.

Take the Guesswork out of Amazon Ads

If you’re ready to take the guesswork out of Amazon ads and let the ACoS work for you, not against you, it’s time to work with SupplyKick. Get started today.

Photo by rawpixel.com

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