You sell on Amazon India and you run Sponsored Products. Every month the ads console shows clicks, spend and sales. One number on that screen decides whether the ads are earning you money or costing you money: ACoS.
This guide explains it in plain words, with the arithmetic shown, so you can work out your own number tonight.
ACoS kya hai? The one-line answer
ACoS stands for Advertising Cost of Sales. It is the share of your ad-attributed sales that went to pay for the ads.
ACoS = ad spend ÷ ad sales × 100
An example, with made-up figures. You spend ₹5,000 on Sponsored Products in a month. Amazon attributes ₹25,000 of sales to those ads.
5,000 ÷ 25,000 × 100 = 20%
In words: for every ₹100 of sales your ads brought, you paid ₹20 to Amazon for the ads. That is the sentence to hold on to. 20% ACoS means ₹20 of ads for every ₹100 of sales.
Where to read it
In the Amazon Ads console, open Campaign Manager and set a date range of at least 14 days. ACoS is a column on the campaign table, the ad-group table, the keyword table and the search-term report. The same formula runs at every level: a keyword's ACoS is that keyword's spend divided by that keyword's attributed sales.
Two things the console does not tell you:
- Attribution has a window. Amazon counts a sale against an ad if the order came within 7 days of the click (for Sponsored Products). Yesterday's ACoS is not final: orders will keep arriving for a week. Judge a keyword on a window that ended at least two days ago.
- A ratio on one order is not a measurement. 1 order on 54 clicks gives you an ACoS to three decimals and no confidence at all. Read the clicks and orders beside the ratio before you act on it.
What is a good ACoS? Only your own margin can say
There is no number that is good for everyone. A 30% ACoS is a disaster for a product with a 20% margin and comfortable for one with a 45% margin. The only yardstick that matters is your own break-even point.
Break-even ACoS is the ACoS at which an ad sale makes you exactly nothing. Above it, every ad sale loses money. It equals your margin before advertising:
Break-even ACoS = (selling price − all costs except ads) ÷ selling price × 100
Work it out for one product. Use your own invoices; the figures below are an example.
| Item | Example |
|---|---|
| Selling price on Amazon | ₹699 |
| Amazon referral fee | ₹84 |
| Fulfilment or shipping | ₹65 |
| Cost of the product | ₹180 |
| GST you remit on the sale | ₹45 |
| Left before advertising | ₹325 |
| Break-even ACoS | 325 ÷ 699 = 46% |
At 46% ACoS this product makes nothing from an ad sale. If you want to keep, say, ₹100 of profit per unit, your target ACoS is (325 − 100) ÷ 699, about 32%.
Apna break-even ACoS pehle nikalo. Baaki sab uske baad.
Set the target once, write it down, and judge every keyword against it. A target you have not written down is a target you will move every time a number looks bad.
Three mistakes that keep ACoS high
Reading the account ACoS and stopping there. An account at 22% can hold a keyword at 110% and another at 9%. The account figure is an average that hides both. Open the keyword table and the search-term report; that is where the money is actually being spent.
Never adding negative keywords. Your ad can show for a search that will never buy from you: a different size, a different material, a word like "free" or "repair". Each click costs money and brings no order. The search-term report lists exactly these searches, with their clicks and orders beside them. A search with many clicks and no order over a long window is a negative keyword waiting to be added.
Leaving the automatic campaign to run alone. Automatic targeting is how you discover which searches convert. The searches that do convert belong in a manual campaign with an exact match and a bid you set; left in the automatic campaign, you keep paying Amazon's price for a search you already know is yours.
What to do this week, with the console alone
- Pick your three best-selling products. Work out the break-even ACoS for each, as above. Write the targets down.
- Download the search-term report for the last 60 days. Sort by spend. For every search with no order and a meaningful number of clicks, add a negative exact-match keyword in the ad group where it spent.
- In the same report, find the searches with several orders and an ACoS under your target. Add each as an exact-match keyword in a manual campaign, and as a negative in the automatic campaign that found it.
- In your manual campaigns, lower the bid on any keyword whose ACoS has sat well above your target for a full attribution window. Lower it, do not remove it: a keyword that still converts at a lower bid is still earning.
- Put a reminder in your calendar for the same day next week. The report changes every week; a review done once is a review not done.
Where SellerSaarthi fits
Step 2 to step 4 are the same reading of the same report, every week, for every product. SellerSaarthi does that reading every night: it checks each search and each bid against the target you set, writes what it finds as a card with its numbers (clicks, orders, the window), and waits. Nothing changes on Amazon until you approve the card, and any bid change can be undone from your activity log.
The next guide takes the number one step further: TACoS, the share of all your sales, not only the ad sales, that went to ads.