Why is your Amazon Advertising ACOS so high?

763305893@qq.com
6 min readSep 7, 2022

“It exploded, it really exploded! ACOS directly exploded…” The backstage of the store opened early in the morning, but the sales did not usher in a surge, but ACOS almost made his blood pressure soar. Presumably this is what many sellers have experienced. Case.

Among our seller classmates, the two most frequently asked questions are:

How can I lower my ad ACOS? Why is my ad ACOS so high?

In daily operations, sellers also pay attention to the level of ACOS, because ACOS is not only one of the important indicators to measure the success of Amazon advertising, but also one of the factors that directly affect the seller’s product profit.

Why is your Amazon Advertising ACOS so high?

What is ACOS? Why is it getting higher and higher?

The quality of the advertising effect often determines the success or failure of a product. And the most direct indicator that can reflect the effect of advertising is what sellers often call ACOS.

ACOS is the ratio of advertising spend to sales generated by advertising.

(ACOS=Advertising Investment/Advertising Sales*100%)

As an example, if your ad spend is $20 and the sales generated by this ad is $100, then the ACOS for this ad is 20%.

When ACOS equals product profit margins, advertising is breaking even. When ACOS > profit rate, it means advertising losses; on the contrary, ACOS < profit rate means advertising profits.

Therefore, when the ACOS is lower, the profit of the product becomes more and more considerable. It is worth mentioning that different types of products have different ACOS due to the degree of competition, advertising purpose and product cost, and there is no uniform standard to determine the ACOS of advertising.

When launching a new product, it is not uncommon for the ACOS of the advertisement to be much higher than that of the old product. The ACOS of the high-value product is also much lower than that of the low-value product.

However, for general categories, if ACOS can be maintained below 30%, it is a good ACSO indicator, and there is room for profit.

Since last year, many sellers have felt that ACOS is getting higher and higher. The reason why ACOS is getting higher and higher is mainly directly related to the increasing number of sellers on the platform, and it is also the most important factor. In the past two years, a large number of sellers have been pouring into the platform every day, and the involution is serious. I am lower than you, and he can sell at a lower price than me or even at a loss. It is becoming more and more common.

This has led to the continuous increase in the advertising costs of sellers. For the platform, the position is limited, and sellers want to occupy it. If you add a little, he will add a little, and the competition will naturally increase.

Even some local tycoon-level sellers do not hesitate to invest and occupy the advertising space at any cost, which makes it even more difficult to operate small and medium-sized sales. Because when other factors of the Listing link are similar, the comparison is the advertising bid.

Is there no way out for small and medium-sized sellers? of course not!

In the process of our training, we learned that many sellers are unable to control ACOS, do not know how to control ACOS, and do not know what are the relevant factors that affect it. ACOS broke the table and made a loss-making business.

Why is your Amazon Advertising ACOS so high?

How to Lower Your ACOS

As we mentioned earlier, ACOS = advertising investment / advertising sales * 100%. According to the formula, if you want to reduce ACOS, the most straightforward way is to reduce advertising expenditure and increase advertising sales. What should be done then?

We know that advertising investment = clicks * CPC, advertising sales = customer unit price * clicks * conversion rate.

According to the above formula, we can launch ACOS=CPC/customer unit price*conversion rate. Here we can also see that, when other factors remain unchanged, the lower the unit price of the product, the higher the ACOS will be. Therefore, blindly low-price competition will have a greater impact on ACOS.

Therefore, through the calculation formula, if you want to reduce ACOS, there are probably the following ideas.

1. Lower the bid

The reason why many sellers have poor advertising performance and high ACOS on the site is that the conversion is low and the bidding is high. Although high competition can make the ad position higher, but without conversion, ACOS is also prone to frequent explosions. Then the seller must diagnose the Listing and analyze its own advertising bid.

In addition, when the link order gradually increases and the organic ranking of keywords continues to rise, the seller can choose to gradually reduce the advertising bid to reduce the ACOS.

In addition, sellers should regularly analyze the advertising reports in the background. For some keywords in the advertisements that have low or no conversions, but have been consuming budget, they should promptly discard them. This can not only reduce ACOS, but also reduce waste of advertising costs. There are also keywords that continue to be observed, and the bid can be appropriately lowered to reduce ACOS.

2. Increase the conversion rate

Amazon itself is a platform that focuses on conversion, and the level of ACOS is closely related to the conversion rate.

Factors related to conversion rate:

1. Product: quality, appearance, function, brand, added value, etc.;

2. Listing: title, picture, video, A+, five-point description, QA, etc.;

3. Price;

4. Reveiw: star, quantity;

5. User experience: punctual logistics and responsive customer service.

For listings with low conversion rates, sellers can make adjustments from these aspects.

For example, the creation of pictures and videos of listings, go to see how excellent listings are done, analyze buyers’ consumption needs more, and make more attractive display pages. For example, adding some small gifts with auxiliary value to the product and solving the buyer’s problem in time will greatly help to improve the conversion rate.

3. Increase the unit price

As we mentioned above, blindly low-price competition will have a greater impact on ACOS. Therefore, sellers can choose to increase the unit price to reduce ACOS.

How to do it? Here are a few tips:

1. Can build a brand and use brand influence to create premium space;

2. Bundle some products that can be sold in combination to increase the price of a single product, or you can enjoy discounts by purchasing multiple pieces;

3. Continuously iterate products, differentiate from competing products, and use differentiation to find more suitable price audiences.

All sellers can also share their own marketing tips.

4. Precise placement of keywords, increase exposure, and increase click-through rate

The reason why many advertisements do not perform well is because the keywords researched by sellers are not relevant to the product, or the advertisements only use those few big words. This will easily lead to the lack of exposure of the product. Even if more advertisements are put in, the clicks and conversions will not make waves, and the ACOS will naturally not be low.

Just like a mistake our students were prone to make in the past, the copywriting of Listing began to make FBA orders before it reached the “two standards and three more” levels, resulting in inaccurate keyword information and less vocabulary in the follow-up Amazon capture. , A large number of irrelevant keywords are also generated when advertising, which not only wastes a lot of advertising costs, but also ACOS is extremely high.

Therefore, before the product is launched, it is necessary to ensure that the copywriting of the Listing meets the standards, including, title, bullet points, A+, review, QA, pictures, etc., and try to be as extreme as possible.

If your product is still undergoing a major overhaul after listing, then you can judge that this product will not succeed in all likelihood.

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