The most important metric in every PPC campaign is undoubtedly ACoS. It’s the key performance indicator that helps you understand how profitable your campaigns really are. But here’s the thing—ACoS isn’t a one-size-fits-all number.
What’s considered “high” for one seller might be the ideal target for another. Your perfect ACoS depends on factors like your product category, competition, profit margins, and even your business goals. So, how do you figure out what’s right for you?
In this blog, we’ll break it all down and help you find the ACoS target that aligns with your strategy. Let’s get started!
Know your profit margins
Your profit margin is the most important number when setting your ACoS target. Why? Because your ACoS directly affects how much of your profit you’re willing to spend on ads.
If your margin is 30%, an ACoS higher than 30% means your ad spend is eating into your profits.
If your margin is 50%, you can afford to be more aggressive with your ACoS while staying profitable.
Understanding your margins helps you determine the difference between a sustainable ACoS and one that’s too high to handle.
Define your goals
Your ACoS target also depends on what you’re trying to achieve. Ask yourself:
Are you focused on launching a new product and gaining visibility? In that case, you might be okay with a higher ACoS temporarily as you build momentum.
Are you focused on profitability? Then you’ll want an ACoS that’s lower than your margin to ensure you’re making money after ad costs.
Are you aiming to dominate your category? A competitive category might require a higher ACoS to stay visible against established players.
Your goal shapes your strategy, and your strategy shapes your ACoS target.
Consider the product category
Different categories have different levels of competition and customer behaviour, which directly impact ACoS. For instance:
In competitive categories like electronics, ACoS tends to be higher because of aggressive bidding.
In niche categories, ACoS might be lower because there’s less competition.
If you’re selling in a competitive marketplace like Amazon, you may need to adjust your expectations and aim for a higher ACoS initially, especially during peak seasons.
Evaluate campaign performance regularly
Your ACoS target isn’t something you set and forget. It needs to be reviewed and adjusted based on real campaign data. For example:
If your ACoS is too high, check for keywords that are driving traffic but not converting. Pause or tweak those keywords.
If your ACoS is too low and your sales are stagnant, consider bidding more aggressively on high-performing keywords.
Using account management services for Amazon can help you stay on top of these changes. Professionals can analyse your data, tweak your strategy, and ensure your ACoS aligns with your business goals.
Don’t forget lifetime value (LTV)
If your product has a high customer lifetime value—like subscriptions, repeat purchases, or bundled products—you might be able to afford a higher ACoS. Why? Because the value of the customer goes beyond their first purchase.
Think long-term, especially if you’re building a loyal customer base. A high ACoS might look scary initially, but it could be worth it if it brings in customers who’ll keep coming back.
So, what’s the ideal ACoS for you?
The short answer: it depends on you. Start by calculating your profit margins, setting clear goals, and understanding the competition in your category. Remember, there’s no one-size-fits-all ACoS. Your perfect target is the one that aligns with your business objectives and helps you balance visibility and profitability.
If managing ACoS feels overwhelming, consider working with experts who specialise in account management services for Amazon. They can fine-tune your campaigns, identify opportunities, and ensure your ad spend delivers results. Whether you’re running Amazon Ads Australia or campaigns in other marketplaces, finding the right balance is key to long-term success.
With the right approach, you’ll not only hit your ACoS target—you’ll also achieve your sales and growth goals.
