What is ACOS on Amazon?
ACOS, short for advertising cost of sales, is a measure of Amazon ad campaigns: ad spend divided by the sales those ads brought in, times 100. Amazon writes it as “ACOS = (ad spend ÷ ad revenue) x 100.”
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1.A worked example
Spend $20 on ads that bring in $100 of sales and your ACOS is 20%. Lower is better: you spent less to make each dollar of ad sales.
ROAS, return on ad spend, is the same two numbers the other way round. Amazon calls it “the inverse of Amazon ACOS.” $100 of sales from $20 of spend is a ROAS of 5.
2.What it leaves out
ACOS counts only ad spend and ad sales. It ignores product cost, Amazon’s fees and returns, so a 20% ACOS can lose money on a product with a 15% margin. Compare ACOS with your margin before you call a campaign good. An ACOS equal to your margin before ads is break-even: below it, each ad sale earns money.