The key to success with Amazon ads is to get them close to or below the break-even point, if possible. Many brands or sellers use ads to help them get more visibility on their products or improve their best sellers rank. It’s not just about profitability.

ACoS is crucial to your business because you can track all your costs and figure out how much profit you will make. You want to know how much you can afford to spend on Amazon ads. Your ACoS will help you set your campaign up for success.

When a brand starts selling on Amazon,ads are a perfect way to facilitate visibility by acing the search results. Effectiveness of ads is measured by ACoS. For a new brand, the ACoS will be high. Getting to a Product Market Fit (PMF) is very important to reduce ACoS.

Typically, you want your product cost to be higher than your ad spend to maximise profit. This is the best way to obtain revenue for your business.

It’s important that you find a balance. You don’t want to spend too little to advertise your products and not get enough exposure. On the other hand, you don’t want to spend too much and narrow your profit margin.

Your ACoS is as unique as your business. As you carefully scout out your competition, you see that even though you may be selling similar products, the value may be different. You bank on the differences to set your business apart from the crowd.

When figuring out a good ACoS, you need to consider the competition again. This time look at the category in which you are selling, pricing, and other factors related to your unique product listing and competition.

From there, look at your profitability. This helps to figure out how much you can afford to spend on advertising. Don’t forget to account for your shipping costs, Amazon fees, and product costs. By looking through all of your expenses and finding your potential profit, you can find a good, and comfortable, ACoS for your business and product listings.

It’s almost impossible to fixate on a magic ACoS number that works for all brands. Your ideal ACoS depends on your campaign goal, product type and the niche you are selling in. Sellers strive for a low ACoS unless they are working on a specific launch, awareness, or sell-out campaign strategy.