Amazon Advertising Cost of Sale (ACoS) is the most critical metric for determining if your PPC campaigns are profitable. A high ACoS means you’re spending too much on ads relative to sales—but with the right strategies, you can lower ACoS while maintaining (or even increasing) revenue.
In this actionable guide, you’ll learn:
✅ What ACoS is & how to calculate it
✅ 5 proven strategies to reduce ACoS
✅ Advanced optimization techniques
✅ When a higher ACoS might actually be good
1. What is ACoS? (And Why It Matters)
ACoS Formula:
ACoS = (Total Ad Spend ÷ Total Ad Sales) × 100
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Example: If you spend 20onadstogenerate100 in sales, your ACoS is 20%.
How to Interpret Your ACoS:
🔹 Low ACoS (<20%) – Highly profitable (but may indicate missed scaling opportunities)
🔹 Moderate ACoS (20-30%) – Healthy balance
🔹 High ACoS (>30%) – Risk of losing money
2. 5 Proven Strategies to Reduce ACoS
1. Optimize Keywords (The #1 ACoS Killer)
✅ Keep: High-converting, low-ACoS keywords
❌ Pause/Reduce Bids: High-spend, low-ROAS keywords
🔍 Find new keywords with tools like Helium 10 or Amazon’s Search Term Report
2. Use Negative Keywords
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Block irrelevant searches (e.g., “cheap” if you sell premium products)
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Add competitor brand names if they’re not converting
3. Adjust Bids by Placement
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Top of Search (Highest Conversion) → Increase bids
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Product Pages → Moderate bids
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Rest of Search → Lower bids
4. Improve Your Product Listing
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Better images/videos → Higher conversion rate
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Optimized bullet points → Clearer value proposition
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Strong reviews → More social proof
5. Test Different Match Types
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Exact Match (Lowest ACoS, most precise)
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Phrase Match (Balanced reach/control)
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Broad Match (Highest reach, highest ACoS risk)
3. Advanced ACoS Reduction Tactics
A. Dayparting (Time-Based Bidding)
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Increase bids during peak shopping hours (7-10 PM)
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Lower bids overnight when conversion rates drop
B. Competitor Targeting
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Bid on competitor ASINs only if your product is superior
C. Dynamic Bidding Strategies
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Use “Down Only” bidding for conservative ACoS control
D. Leverage Sponsored Display for Retargeting
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Lower-funnel retargeting often has better ACoS than prospecting
4. When a Higher ACoS Might Be Acceptable
🚀 New product launches (Higher ACoS for initial sales velocity)
📈 Competitive seasons (Prime Day, Black Friday)
🔄 Inventory clearance (Selling through old stock)
5. Key Metrics to Track Alongside ACoS
📊 TACoS (Total Advertising Cost of Sale) – Measures ad impact on total revenue
📊 ROAS (Return on Ad Spend) – Revenue generated per $1 spent
📊 Break-Even ACoS – Your profit margin (never let ACoS exceed this!)
6. Common ACoS Mistakes to Avoid
❌ Only focusing on ACoS (Ignores long-term growth)
❌ Aggressively cutting all “high ACoS” keywords (Might kill profitable sales)
❌ Not testing new keywords (Misses future winners)
