What does ACoS mean?

The ACoS formula

ACoS = ad spend / attributed sales x 100

$100 ad spend / $500 attributed sales = 0.20, or 20% ACoS

An older version of this page printed 25% for that same example. It's 20%, and it's fixed now.

Amazon's own guide to its ad products puts it the same way, ad spend divided by attributed sales. A real campaign just has bigger numbers. Say one got 1,000 clicks last month at an average of $1.35 each, so $1,350 in spend, and Amazon credited it with 120 orders worth $4,500.

$1,350 ad spend / $4,500 attributed sales = 30% ACoS

Which sales ACoS counts

Only the ones Amazon attributes to your ads. Amazon uses a last-touch attribution model, so a purchase gets credited to the ad the shopper interacted with before buying. Orders that came in organically, from someone who found your listing in search and never clicked an ad, aren't in the number at all.

Timing matters too. A sale can land days after the click and still get credited back to it, so the last few days of any date range keep filling in after you first look. Amazon's own advice when ACOS spikes is to check 7 to 14 days of attribution before you change anything. If yesterday's ACoS looks awful, it may just be early.

Reading the number

ACoS tells you what each dollar of ad sales cost to get. 20% is twenty cents, 30% is thirty, 50% is half the sale. On its own it doesn't tell you whether the ads made money, because that depends on how much of the sale price you keep before ad spend. If a product keeps 35% after Amazon fees and cost of goods, an ACoS under 35% leaves profit on each ad sale and anything over it loses money on each one. That margin is your breakeven ACoS, and turning it into a target per product is what our guide to a good ACoS on Amazon covers.

A low ACoS isn't automatically good news either. It can mean you're only bidding where a sale was already likely, searches for your own brand name being the usual case, and leaving the traffic that grows the product alone.

ACoS, ROAS and TACoS

ROAS is the same division flipped, attributed sales divided by ad spend, so the $100 and $500 from the top read as a 5.0 ROAS. Amazon's ACOS guide calls ROAS the inverse of ACOS. To go from one to the other, divide 1 by the figure, or let the ACoS to ROAS calculator do it in either direction. Our ROAS guide covers when each one is the easier number to think in.

TACoS, total advertising cost of sales, keeps ad spend on top and puts every sale underneath, organic included. If that same $100 month brought in $1,250 in total sales, TACoS is 8%.

$100 ad spend / $1,250 total sales = 8% TACoS

Amazon describes TACOS as showing whether your total sales, paid and organic, are growing in relation to your ad spend, which ACoS can't see because organic orders never enter it. We cover how TACoS works and what its trend means separately.

What moves ACoS

Break the formula apart and there are only a few things inside it. Spend is clicks times cost per click. Attributed sales are clicks times conversion rate times average order value. The clicks cancel out.

ACoS = cost per click / (conversion rate x average order value)

The 30% campaign above fits. It paid $1.35 a click, 12% of clicks turned into orders (120 of 1,000), and the average order was $37.50, so each click brought in $4.50 of sales on average and cost $1.35 to buy. Lift conversion to 15% with a better main image or more reviews, and the same click brings in about $5.63, an ACoS of 24% without touching the bid. Let cost per click creep to $1.60 with nothing else changing and ACoS climbs to 35.6%.

So when ACoS moves, one of those moved, and it's worth knowing which before you reach for the bid. The bid side runs backward from a target. At a 25% target, that campaign can afford about $1.13 a click ($4.50 x 0.25), and the target CPC calculator does that math from your own conversion rate and order value.

Quick answers

What does ACoS stand for? Advertising cost of sales. It's ad spend divided by ad-attributed sales, shown as a percentage.

Is ACoS the same as profit margin? No, though both are a share of the sale price, which is why they compare so neatly. ACoS is only what the ads cost. A 20% ACoS on a product with a 15% margin loses money on every ad sale.

What if a keyword has spend but no sales? Then it has no ACoS, since there's nothing to divide by. Judge those rows on spend and clicks instead, and remember a late sale can still show up.

How do I calculate ACoS in a spreadsheet? Put spend in one column and attributed sales in the next, divide spend by sales, and format the cell as a percentage. Pull both from the same date range, and leave off the last few days if you want numbers that won't keep moving.

Try it on one campaign

Take last month's spend and attributed sales for one campaign and divide. Then split it into cost per click, conversion rate and order value, and you'll know which of the three is setting the number.

In Merch Jar, a Segment can keep a standing list of every keyword whose last 30 days run above its target ACoS. What you change on them is still your call.