Discover what is ACoS Amazon, how to calculate ACos, what is ACoS, ACoS amazon meaning and how is it relevant for your Amazon business.
ACoS is the term Amazon uses to measure the performance of Amazon sponsored product campaigns. It’s a key metric that helps you understand if your sponsored products are driving valuable results and helping your business earn a profit.
ACoS Amazon meaning is the measure of the performance on paid Amazon campaigns.
How to calculate ACoS?
ACoS focuses on the ratio of ad spend compared to target sales. ACoS is the total ad spend divided by the total sales times 100 to get the percentage.
ACoS = 100 X (Total Ad Spend / Total Sales)
Looking at this formula, it may seem confusing. Let’s use an example to help break down how to calculate ACoS.
You spend $20 to advertise your products. This $20 results in you making a sale of $60. So your ACoS would be 20 divided by 60 times 100.
In this example, your ACoS is 33 percent. This means that you are spending $0.33 for every $1 you make.
If you had a profit margin of 30 percent, you would lose money. To remain profitable, you want your ACoS to be lower than your project profit margin.
Let’s say that, instead of spending $30 on ads, you spend $5. If you plug it into the formula, you would divide 5 by 60 and multiply that number by 100.