ACoS: the advertising cost of sale

ACoS stands for Advertising Cost of Sale. It is your advertising costs divided by your sales. In other words, the percentage of your sales you want to spend on sponsored products.

The ACoS (also called “Advertising Cost of Sale” – or the advertising cost per sale) is the percentage of attributed sales spent on ads. It is calculated by dividing the total advertising costs by attributed sales. For example, if you spent €4 on ads resulting in sales of €20, your ACoS is 20% (because: €4/ €20 = €0.20). A number of factors are important when determining the ideal ACoS:  

  • Selling price – the price you charge customers.  
  • The margin of your items.  
  • Procurement costs.  
  • Commission to   
  • Various variable costs such as: shipping costs, delivery costs, etc.  

Example: the selling price of a book is €27. The purchase cost is €6 and the commission is €2. For miscellaneous, you pay €8 in shipping costs. Subtracting all costs from the selling price leaves €11 (€27 – (€6 + €2 + €8)= €11).  

This means you can spend up to €11 on advertising costs without making a loss. Suppose you use a 40% profit margin, then you can spend €6.60 (60% of €11) on advertising costs to get a sale and still make your profit margin.  Then, to calculate your ACoS, simply divide the amount (advertising costs) by the selling price (€6.60/ €27.00 = €0.24). This will give you an ACoS of 24%.  

What is (a good) ACoS?

ACoS stands for Advertising Cost of Sale. It is your advertising costs divided by your sales. In other words: the percentage of your turnover you want to spend on sponsored products. Say you spend €100 on sponsored products and this generates €1,000 in sales. Your ACoS is now 10%.  

How good an ACoS is, depends on your own profit margins. Say your profit margin is 20%, this means that your ACoS should at least be lower than 20% to advertise profitably.  

Why do I get a bad ACoS?

There can be several reasons for poor ACoS: 

  • Competition in the category is tough.
  • Bid prices are high. 
  • The article is not generating enough sales.  

What can I do if I get bad ACoS?

  • Exclude keywords or URLs that trigger ads from articles that are not relevant. 
  • The results of your campaign often improve when you advertise with items that have less competition or have a clear advantage over the competition. Think good reviews, special specifications or a competitive price. Therefore, compare your article with your competitors on these 3 points. Do you see that your competitors have a more competitive price, more/higher reviews and/or better specifications? Then see if you can change this. Can’t? Then make sure the articles no longer run in the campaign.  

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An automatic campaign enhances your campaign based on your chosen ACoS. In a manual campaign, you determine the click price at which you bid.

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When creating a campaign, you need to select items. Which items are suitable and what to do if you cannot find an item? Check out the checklist for the most common reasons.

Checklist to get off to a good start

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