How Do I Control My ACoS on Amazon?

How to Control Your ACoS on Amazon: Expert Tips for Profitable Advertising

As an Amazon seller, you’ve probably come across the term ACoS – Advertising Cost of Sale. Simply put, ACoS is the metric that helps you keep track of the profitability of your ad campaigns on Amazon. However, controlling your ACoS can be a challenge even for experienced sellers. Fortunately, I’m here with actionable, expert advice to help you control your ACoS, optimize your ad campaigns, and boost your profits.

Understanding ACoS: The Foundation to Success

Before diving into the practical side of controlling ACoS, it’s crucial to understand what it is and how it’s calculated. Calculating ACoS is quite simple:

ACoS = (Ad Spend ÷ Sales) × 100

For example, if you’ve spent $100 on advertising and earned $500 in sales, your ACoS would be 20% (100 ÷ 500 × 100). The goal is to maintain a low ACoS, which indicates a more profitable ad campaign.

Remember, ACoS should be evaluated according to your profit margins and desired return on ad spend (ROAS). This means that what could be a “good” ACoS varies for different sellers and products. A general rule of thumb is to keep ACoS below your profit margin percentage to ensure profitability.

Now that we have a clear understanding of ACoS, let’s focus on how to control it and optimize your advertising efforts.

Step 1: Set a Target ACoS Based on Your Goals

To control your ACoS, you need to understand what your target ACoS should be in the first place. This involves setting your advertising goals and calculating your break-even ACoS. Follow these simple steps:

  1. Determine your product’s profit margin by subtracting your costs (product, shipping, Amazon fees, etc.) from the selling price.
  2. Figure out your desirable return on ad spend (ROAS). For example, if you want to make $3 profit on every $1 spent on advertising, your ROAS should be 3.
  3. Use the following formula to calculate your break-even ACoS:
Break-even ACoS = (1 - Profit Margin ÷ ROAS) × 100

This will provide you with the maximum ACoS you can afford before your ad campaign becomes unprofitable. Ideally, aim for an ACoS below your break-even point.

Step 2: Conduct Comprehensive Keyword Research

Effective keyword research is critical for optimizing your ACoS. Finding the right keywords to target can help increase the visibility and conversion rate of your ads, leading to a lower ACoS. Here are some valuable tips for Amazon keyword research:

  1. Use Amazon’s auto-suggest function to find keyword ideas.
  2. Utilize Amazon advertising tools like auto-targeting campaigns, keyword bid suggestions, and search term reports.
  3. Take advantage of third-party keyword research tools such as Helium 10, Jungle Scout, or Sellics to identify high-performing and low-competition keywords.
  4. Monitor your competitors’ top-selling products, analyze their listings, and find what keywords they’re targeting.

Don’t forget to differentiate between short-tail (e.g., “running shoes”) and long-tail keywords (e.g., “men’s waterproof trail running shoes”). Long-tail keywords are usually less competitive and have higher conversion rates.

Step 3: Optimize Your Listings for Maximum Conversions

An optimized Amazon listing is essential in controlling your ACoS. If your listing isn’t compelling enough, even the best keywords won’t help you achieve a lower ACoS. Here’s what you need to optimize:

  1. Title: Include your primary keyword(s) and make sure it’s catchy and informative.
  2. Bullet Points: Highlight the key features and benefits of your product using the right keywords.
  3. Product Description: Use this space to elaborate on your product’s unique selling points and answer common customer questions.
  4. Images: Invest in high-quality, professional product images that can showcase your product effectively.
  5. Price: Price your product competitively while considering your target profit margin and ACoS.
  6. Reviews: Aim to have at least 15-20 reviews, with a majority of them being positive.

Step 4: Leverage Both Automatic and Manual Campaigns

Amazon offers two types of advertisement campaigns: Automatic and Manual. To control your ACoS effectively, leverage both campaign types:

  1. Automatic Campaigns: Let Amazon do the heavy lifting by automatically targeting keywords based on your product listing. This helps you identify high-performing keywords, and gather valuable data, especially if you’re new to Amazon advertising.
  2. Manual Campaigns: Manually choose the keywords you want to target, and set individual bids for each keyword. This helps you take control of your ad spend and further optimize your ACoS.

Running both campaigns simultaneously and consistently analyzing the performance data can help optimize your targeting, ensuring a lower ACoS.

Step 5: Adjust Bids and Monitor Performance Regularly

To effectively control your ACoS, you need to monitor and adjust your bids on a regular basis. Here are some best practices for bid adjustments:

  1. Increase bids: If your ACoS is below your target and you’re experiencing low impressions or clicks, consider increasing your bids to boost visibility.
  2. Decrease bids: If your ACoS is above your target, consider decreasing your bids on low-performing or high-cost keywords.
  3. Test bid changes: Adjust bids incrementally and give them some time (about a week) to observe the impact on your ACoS.

Keep track of your ad performance through Amazon’s Advertising Console and use the data to guide your bid adjustments.

Key Takeaways

To control your ACoS on Amazon, follow these expert tips:

  1. Calculate your target ACoS based on your profit margin and desired ROAS.
  2. Perform comprehensive keyword research to identify cost-effective, high-performing keywords.
  3. Optimize your product listings to maximize conversions.
  4. Leverage both automatic and manual ad campaigns for optimal targeting.
  5. Continuously monitor performance and adjust bids as needed.

By following these practical steps, you’ll be well on your way to controlling your ACoS, optimizing your ad campaigns, and ultimately, boosting your profitability on Amazon.