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What Does ACoS Mean on Amazon?

Advertising is essential for every online business. When you’re selling on Amazon, there are some important metrics you need to know. For example, advertising cost of sales or ACoS is a key metric on Amazon. In this article, we will explore ACoS, Amazon advertising, and how to advertise on Amazon.

What Does ACoS Mean?

Advertising cost of sales or ACoS is how Amazon measures the performance of Amazon-sponsored product campaigns. It’s a metric to help you understand if your sponsored products are driving valuable results and helping your business earn a profit. 

ACoS is the ratio of ad spend compared to target sales. The equation for calculating ACoS is: ACoS = 100 x (ad spend/total sales).

amazon advertising

Advertising on Amazon

Amazon advertising is similar to pay-per-click ads (PPC) on Google. In both cases, the seller only pays for the ad when a shopper clicks on it. There are many different types of Amazon ads you can take advantage of. These include sponsored ads, headline search ads, native ads, video ads, and Amazon stores.

Amazon Sponsored Ads

Amazon Sponsored Product Ads are pay-per-click keyword targeted display ads. These ads for individual products appear in the search results and product details page. When choosing what keywords you would like to appear for, you can choose from broad keywords, phrase keywords, and exact keywords.

Broad keywords come before and after the target keyword. If you’re selling hand mixers, you may search for “white hand mixers.” Targeting these keywords will expose your ads to the greatest amount of traffic.

Phrase keywords focus on the sequence of your search terms. The order of the search terms changes the context of your query. For instance, if you search, “stainless steel hand mixers,” this indicates you sell hand mixers. Searching “hand stainless steel mixer” indicates you sell stainless steel mixers, not necessarily stainless steel hand mixers.

Exact keywords are the most constraining keyword because the search query must include the exact keyword for your ad to show up. No words can come before or after that keyword. For example, you can target an ad for “hand mixer.” However, if you search “electric hand mixers” your ad will not show up in the results.

acos on amazon

Amazon Sponsored Brand Campaigns

Sponsored Brand Campaigns allow you to promote keyword-targeted ads of multiple products above, below, and alongside search results. You can feature up to three unique products in your ads, customize your ad’s image, headline, and landing page. You also have an option to test these elements. Amazon uses a pay-per-click, auction-based model to determine how much you pay for Sponsored Brand Campaigns. You’ll never pay more than you bid per click. 

Sponsored Brand Campaigns can target three types of keywords, which are branded product keywords, complimentary product keywords, and sponsored products automatic targeting. Branded product keywords are a combination of your brand name and a product you sell. Meanwhile, complimentary product keywords are a bundle of two individual products that influence the demand for each other and can be sold together, such as salt and pepper. Finally, sponsored products automatic targeting keywords are search queries that you’ve already experienced success with while running automatic targeted sponsored product campaigns.

With Amazon’s reporting features, you can see how your Sponsored Brand Campaigns are performing. These reports display your ads’ clicks, spend, sales, estimated win rate for keywords, and ACoS.

Amazon Product Display Ads

Product Display Ads are PPC ads that appear on product detail pages, customer review pages, on top of the offer listing page, and below search results. The objective of using these ads is to cross-sell or upsell your customers. You can also display these ads on abandoned cart emails, follow-up emails, and recommendation emails.

Display ads have two different types of campaign targeting – product targeting and interest targeting. Product targeting is a contextual form of targeting, so can target specific products and related categories. Interest targeting is a behavioral form of targeting, so you can target shopper interest and reach a larger audience.

Product display ads allow you to choose which in-category detail pages you want to advertise on. You also have access to reporting tools such as ACoS, clicks, sales, spend, and more.

what does acos mean

Amazon Native Ads

Amazon Native Ads are ads that can be placed on your brand’s website. There are three types of native ads.

Recommendation ads are dynamic ads that show your most relevant product recommendation based on your webpage’s content and visitors. Search ads populate on your website based on keywords that your customers search for on Amazon or on your website.  Finally, custom ads allow you to select an assortment of products you’d like to promote and place them on your product article posts. 

Amazon Video Ads

Amazon Video ads can be placed on Amazon-owned sites like Amazon.com, IMDb, Amazon devices, and various properties across the web. You can buy Amazon video ads regardless of if you are an Amazon seller or not. With these ads, you can link and set landing pages to your website or other web pages on the internet. You can also work with Amazon video consultants but must spend a minimum of $35,000 to do so. 

Amazon Stores

Amazon users can also promote their brand and products for free via their own multi-page Amazon Store. Using drag-and-drop titles, you can showcase your brand, products, and portfolio. Amazon Stores have an Amazon URL so that you can track sales, traffic sources, and ad campaigns. 

Selling on Amazon is a good marketing strategy and great for e-commerce brands. Since people are shopping online, Amazon advertising will greatly help your online sales.

How to Advertise on Amazon

Now that we’ve looked at advertising cost of sales (ACoS) and the different types of Amazon ads, let’s conclude with some tips for advertising on Amazon advertising tips. 

advertising on amazon

Opt For Manual, but Test With Automatic Targeting

Having control over your campaigns is important. However, automatic features can come in handy. It is helpful for keyword research. Creating automatic targeting campaigns will help you find out what keywords are being searched by people to find products like yours. 

Use Match Types

Similar to Google Ads, Amazon uses broad, phrase, exact, and negative match types to refine targeting. Using a combination of these match type options will help you get a more targeted audience and reach buyers with purchasing intent.

Ensure Your Target Keywords Are in Your Product Listings

Organic and paid platforms all want to provide the best user experience possible. Platforms provide relevant results for any user search and avoid showing irrelevant ads related to their respective landing pages. To avoid ads not showing, include your target keywords in the copy of your product listings. 

Organize Your Campaigns

In order to run cost-effective, successful campaigns, you must have an organized campaign structure. If you have a messy campaign, you risk losing money to unqualified clicks or losing more money than you invested. There are many ways to organize campaign structures. However, grouping products with related keywords, by product categories, brand, or top sellers will help you have an organized campaign.

Restrict Your Ads From Showing for Irrelevant Searches

Amazon advertising gives you the option to “block” ads from showing for specific searches through using negative keywords. Negative keywords can help you save money and increase conversions by displaying your ads to more qualified users. You can build your negative keyword list over time. Be sure to check your report to find other keywords that should be excluded.

how to advertise on amazon

Set Different Bids According to Performance and Value

Since not all your products have the same profit margin, you cannot bid the same amount for all keywords. Choose keywords that have the potential of bringing the most value and bid higher on them. A new campaign requires that you set higher bids to gain search history. Otherwise, Amazon gives preference to other more senior competitors’ campaigns that have proven to generate sales. Once you gain search history and sales, you can set your bids back to normal. 

Find New Opportunities by Bidding on the Best Performing Keywords of Your Competitors

In order to find insight into your competitors’ performance and keywords, you can use an online tool or do it manually. A manual approach can be tedious, especially if you’re working with multiple campaigns. Select keywords with the most potential and implement them in your campaigns. 

Get Ultra-Targeted With Long-Tail Keywords

Long-tail keywords are more specific and longer in length. They usually consist of three or more keywords put together. Long-tail keywords will show for more relevant searches, which often result in more conversions. 

Give It Time and Optimize

Campaigns take time. Use advertising settings to allow you to stay within a specific budget to prevent overspending. You should look for impressions and keyword bids. Identify your most beneficial optimizations and test your changes by changing one variable at a time.

Amazon Advertising Is Essential

Amazon advertising is essential for e-commerce retailers if they want to see a lot of sales. It takes time but you can leverage your customers through Amazon advertising and gain exposure to your Amazon store with insight gained from your ACoS.

FAQ: 

  • What does ACoS mean?
  • What equation finds ACoS?
  • How do you advertise on Amazon?
  • What are the types of ads on Amazon?
  • Why is ACoS an important metric?

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