On Amazon, the ACoS (Advertising Cost of Sale) is a metric that is used to measure the performance of your PPC, or Sponsored Products, campaigns.
WHAT IS ACOS AND WHAT IS THE BEST ACOS FOR MY AMAZON PPC CAMPAIGN?
How is ACoS Calculated?
This metric indicates the ratio of ad spend to targeted sales and is calculated like this :
ACoS = Ad Spend ÷ Sales
The easiest way to consider ACoS is once you have your percentage profit margin, you then deduct the ACoS percentage to get your final margin.
For Example:
If a campaign has generated $254 in sales with an expenditure of $63 over a certain period of time, then the ACoS = 63 / 254 = 25%. i.e, you have spent a quarter on ads to make one dollar of sales.
Using ACoS To Measure Profitability
ACoS may be used as an indicator of the success of an ad campaign. However, this requires you to define a target value for your ACoS ( ACoS alone doesn’t say anything about how profitable a campaign is) and in order to determine whether a certain ACoS is good or bad, you should take the entire cost structure of your product into account.
How is the Break-Even Acos Calculated in the PPC Manager?
The calculation is :
Profit (without PPC costs) in past 90 days / Gross revenue within past 90 days
You won’t incur a loss on PPC campaigns as long as you spend less than your profit margin on sponsored ads. The profit margin is the amount you make after all costs (production, shipping, employee salaries, storage costs, etc.) and fees (Amazon fees) are subtracted from the selling price.
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