When a seller starts using Amazon Ads, they usually focus first on metrics like clicks, cost per click, or the number of impressions. That’s normal: these are the most visible numbers in the dashboard and the first ones that seem to indicate whether a campaign is “working.” However, on Amazon there is one metric of major importance that, when properly understood, tells you whether you’re scaling in a controlled way: ACoS (Advertising Cost of Sales).

ACoS does not measure traffic or brand awareness. It measures something far more direct—and at times more uncomfortable: how much it costs you to sell. That’s why it is such a strong benchmark for evaluating whether your investment in Amazon Ads is supporting your business or silently eroding your margins.

What Exactly Is ACoS on Amazon?

ACoS, which stands for Advertising Cost of Sales, is an official Amazon Ads metric that shows the percentage of ad-generated sales spent on advertising. Amazon defines it as the relationship between ad spend and the sales directly attributed to those ads.

Put simply, ACoS answers a very specific question: what portion of every dollar I generate through ads is being spent on advertising?

If you invest €20 in Amazon Ads and those campaigns generate €200 in sales, your ACoS is 10%. That means that for every €100 in revenue driven by advertising, you’ve invested €10 in ads.

This simplicity is precisely what makes ACoS so powerful. It requires no complex interpretation: it directly connects spend and revenue.

Why ACoS Is Such an Important Metric in Amazon Ads

Amazon is not a traffic channel—it is a purchase channel. Users searching on Amazon are not researching; they are comparing options to buy now or in the near future. That’s why metrics like CTR or CPC, while important in other channels, carry relative weight in the marketplace.

You can have campaigns with a low cost per click and still lose money if those clicks don’t convert. At the same time, you can pay high CPCs and achieve an excellent ACoS if your product converts well. On Amazon, conversion is what ultimately matters, and ACoS is the metric that best reflects that reality.

From a business perspective, ACoS tells you whether your advertising investment is sustainable.

How ACoS Is Calculated—and Why It’s Easy to Misinterpret

The ACoS formula is simple: ad spend divided by attributed sales, multiplied by 100. Amazon calculates this metric automatically and displays it in the campaign manager and downloadable reports.

The challenge is not the calculation, but the interpretation. Many sellers look at ACoS as an isolated number, without context, and make rushed decisions. To understand whether an ACoS is good or bad, it must be evaluated against product margins and campaign objectives.

This is where a key concept comes in: break-even ACoS.

Break-Even ACoS: The Point Where You Stop Making Money

Break-even ACoS is the maximum percentage you can afford to spend on advertising without losing money on an ad-attributed sale. It is directly tied to your gross margin.

If you sell a product for €40 and, after deducting product costs, logistics, and Amazon fees, you are left with €12, your gross margin is 30%. In that case, a 30% ACoS would be your break-even point: you neither gain nor lose money on that ad-driven sale.

Above that percentage, each sale generated by Ads reduces your margin. Below it, advertising is profitable on a direct attribution basis.

This calculation is essential. Without it, ACoS is just a number—either “good” or “bad”—but not a real decision-making tool.

What Is Considered a Good ACoS on Amazon?

Once break-even is understood, the next concept is target ACoS. In practice, most sellers do not operate at the edge of their margin. Instead, they set a lower target ACoS to protect the business.

That extra buffer helps absorb returns, cost fluctuations, promotions, and—most importantly—the indirect effect of advertising on organic sales. Many sales that happen after a click are not directly attributed to the campaign, but they were influenced by it.

That’s why a “good” ACoS depends on the product stage and strategy. During launches, it’s common to accept higher ACoS levels to gain visibility and collect data. For established products, the goal is usually to maintain a lower, stable ACoS focused on profitability.

Understanding ACoS Beyond the Average

One of the most common mistakes is focusing only on the average ACoS of the account or a campaign. That number can create a false sense of control. In reality, within the same campaign, highly profitable keywords often coexist with others that consume budget without generating sales.

The real optimization work happens when you analyze ACoS at the keyword or search-term level. That’s where you decide what deserves more investment, what needs adjustments, and what should be paused or negated.

ACoS by product also provides valuable insight, helping you identify which ASINs are ready to scale with advertising and which need improvements first—whether in the listing, pricing, or value proposition.

Practical Examples of Using ACoS to Make Better Decisions

Imagine a very specific keyword that is tightly aligned with your product, generates consistent sales, and maintains a low ACoS. That is a clear candidate for scaling: it deserves a dedicated campaign, its own budget, and protection from broader campaigns.

On the other end, a generic keyword may generate many clicks but few or no sales. Even if it has a low CPC, its ACoS will be high—or infinite. In that case, the logical decision is not to “give it more time,” but to recognize the mismatch in intent and stop the spend.

It’s also important to understand that a high CPC does not necessarily mean a bad ACoS. If the keyword converts very well, the cost per sale can remain low and perfectly profitable.

Why ACoS Tends to Spike—and How to Address It

When ACoS remains high over time, there is almost always a disconnect between the search, the ad, and the product. Sometimes the issue lies with the keyword, which does not reflect clear purchase intent. Other times, the problem is the listing, which fails to meet user expectations.

ACoS can also spike due to poor campaign structure—where exploratory and high-performing keywords compete with each other—or because of the absence of negative keywords to filter out irrelevant searches.

Reducing ACoS is not about automatically lowering bids. It’s about improving the coherence of the entire system—from search to conversion.

Conclusion: ACoS as Your Business Compass

ACoS is not just another metric in the Amazon Ads dashboard. It is the compass that tells you whether your growth is healthy or risky. Understanding it allows you to make informed decisions, scale when it makes sense, and pull back when profitability is at risk.

Sellers who truly master ACoS are not those who spend the least on advertising, but those who understand why they spend, where they spend, and what real return they generate. That’s when Amazon Ads stops being a cost and becomes a lever for sustainable growth.

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