ACoS, or Advertising Cost of Sales, is a metric used to measure the effectiveness of Amazon Sponsored Product campaigns. It is calculated by dividing the total advertising cost by the total sales generated from the advertising.
Target ACoS Considerations #
To choose an ACoS for your campaign, you will need to consider several factors, including:
- Profit Margin: The higher your profit margin, the higher ACoS you can afford.
- Campaign Goals: If your goal is to increase brand awareness, you may be willing to accept a higher ACoS. If your goal is to generate sales, you will need to keep your ACoS lower.
- Competitor Activity: Keep an eye on your competitors and adjust your ACoS accordingly.
- Seasonality: During peak seasons you may have to adjust your ACoS to remain profitable.
- Product Life Cycle: For new books, you may have to accept a higher ACoS while they gain traction in the market.
The best target ACoS for books on Amazon will depend on the several factors listed, however, as a general rule of thumb, most sellers aim for an ACoS of 20-30% for their book campaigns.
Additionally, it’s important to keep in mind that the competition in the books category on Amazon can be quite high, which may require a lower ACoS to remain competitive.
Ultimately, the best target ACoS for your book will depend on your specific business goals and market conditions.
Calculating your Target ACoS #
The calculation for selecting a target ACoS (Advertising Cost of Sales) involves considering several factors, including your profit margin, campaign goals, competitor activity, seasonality, and product life cycle. Once you have considered these factors, you can use the following formula to calculate a target ACoS:
Target ACoS = (Advertising Cost / Sales) x 100
For example, let’s say you have a profit margin of 40% and you want to generate sales, your target ACoS could be around 20-30%.
To achieve an ACoS of 30% you would need to spend no more than 30% of your total revenue on advertising costs. You can also calculate this by:
Target ACoS = (Profit Margin / (1 – (Profit Margin / Sales))) x 100