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Advertising cost of sale

Advertising cost of sale

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.

Formula to calculate advertising cost of sale

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%.

How to calculate the final margin using ACOS

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.

Tips for lowering your ACoS

  • Choose the right keywords- By simply choosing the right keywords, you’ll attract leads to your AD that are interested in your products which will save your money on advertising. For this, you’ll need to carry out amazon keyword research using tools like Sonar. The final step is to integrate them into your product listing.
  • Optimize page content- When visitors land on your page through the ADs, they are looking for relevant content. Make sure that the product information is relevant that encourages the leads to convert.
  • Set the right bid amount- If you want to lower your ACoS and get the best value out of your money, then you need to bid the right amount for your ads.

Formula to calculate estimated bid amount: Average order value X Conversion rate/(1/Target ACOS)

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