A repository of acronyms, jargon, and useful definitions perfect for eCommerce founders & marketers like yourself.
Advertising cost of sale is a metric used to measure the performance of an amazon sponsored ad. You can use amazon’s sponsored product campaign to reach out to the new audience, but when you invest in running ads, then you need to keep a close check on the advertising cost of the sale. The lower the ACOS, the better it is for your business. It helps you to keep track of all your costs and figure out how much profit you will make.
ACOS= (Total AD spend/Total sales)x100
For example, if you spent $20 on advertising and it resulted in a single sale of $50, then your advertising cost of sale is 40%.
Final margin= product margin- ACOS
You first need to calculate the product margin by subtracting all costs like shipping, storage cost, production cost, etc. from the selling price. After this, you will deduct the ACOS (in percentage) from the product margin (in percentage) to get the final margin.
Formula to calculate estimated bid amount: Average order value X Conversion rate/(1/Target ACOS)