If you sell on Amazon or have an interest in selling, you've probably heard the phrase ACoS. Having ACoS targets when selling on Amazon is a very important metric for your performance.
ACoS means “Advertising Cost of Sale” and is used to calculate the profitability of your advertising campaigns.
You can significantly increase your sales by organizing advertising campaigns for your products, but there is a point you should pay attention to here; Increasing your sales does not mean that your profitability will also increase.
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Why is ACoS Important?
ACoS is the metric most used by Amazon sellers to determine whether they are making a profit from the ads they place on their products.
ACoS adds up all your advertising costs and divides it by the number of sales coming from the ads. For example, if you spent $100 on advertising and sold $1,000 worth of products, your ACoS would be 10%.
When advertising on Amazon, you should aim for the product cost and advertising cost to be at par at worst. In other words, you should not sell the product you advertise at a loss.
Yes, sometimes selling the advertised product at a loss for promotional purposes is one of the sales strategies on Amazon, but the optimal ACoS rate should not be below the break-even point.
How Should You Optimize ACoS?
First, you should launch a low-cost advertising strategy, monitor its performance, check your ACoS rate regularly and try to have a low ACoS rate to achieve the highest profitability.
To improve the performance of your advertising campaign on Amazon, determine the right keywords by doing keyword research for your product. Your keywords are the words that users who want to buy your products will use when searching, and by using the right keywords, you can make your advertising campaigns more effective. Remember, the philosophy of “he who pays, gets to call the whistle” does not apply to the success of your advertising campaign. You need to make very good optimization.
Finally, optimize and refactor your ad campaigns regularly. By monitoring the performance of your ads with the ACoS metric, you can determine the right strategies and increase your sales profitably.
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