High ACoS: A Sign of Trouble or a Strategic Move?

Amazon PPC campaigns often highlight Advertising Cost of Sales (ACoS) as a critical performance metric. However, a high ACoS doesn’t always equate to failure. In fact, when managed strategically, a higher ACoS can be a powerful tool for achieving broader business objectives. Therefore, the key lies in understanding when to adjust a strategy and when to increase advertising spend. At Market Rocket, the agency helps brands navigate these decisions. This ensures that advertising efforts drive both immediate results and sustainable growth.

What Does High ACoS Really Mean?

ACoS, or Advertising Cost of Sales, indicates the percentage of advertising expenses in relation to sales generated by those ads. Therefore, whether a high ACoS is an issue or a planned element of a business’s expansion strategy depends on its specific goals.

Key Scenarios:

High ACoS with Gains: If your goal is to boost organic sales or acquire new customers, a higher ACoS might be acceptable as part of a calculated investment.

High ACoS with Losses: If high ACoS eats into your margins without tangible benefits like improved rankings or customer acquisition, it’s time for a strategic shift.

Pro Tip: Evaluate ACoS alongside Total Advertising Cost of Sales (TACoS). A declining TACoS indicates that your ads are driving overall revenue growth, suggesting that your advertising strategy is effective.

When to Adjust Your Ads

1. Profit Margins Are Under Pressure

If ad costs are reducing profitability, recalibrate your campaigns:

• Target High-Converting Keywords: Focus on keywords with proven conversion rates to maximise returns.

• Pause Underperforming Campaigns: Reallocate budget from ads that fail to deliver results.

• Lower Bids on Costly Keywords: Optimise for better ROI without sacrificing visibility.

2. Organic Growth Isn’t Following

If your organic sales remain stagnant despite ad spend, you may need to:

• Reassess Keyword Alignment: Ensure paid campaigns complement your SEO efforts.

• Optimise Product Listings: Strengthen titles, bullet points, and A+ Content to convert traffic more effectively.

When to Double Down on Ads

1. Launching a New Product

During a launch, higher ACoS is often justified as you drive visibility in competitive categories and generate initial reviews.

2. Acquiring New Customers

Investing in customer acquisition through ads can pay off in the long term by increasing Lifetime Value (LTV).

3. Seasonal Peaks

Seasonal events such as Black Friday or Christmas offer significant opportunities for capturing market share. A higher ACoS during these times can be part of a profitable seasonal strategy.

4. Expanding Categories

Entering new subcategories may require an upfront investment to establish a foothold and attract new customers.

Why Market Rocket?

At Market Rocket, we don’t view ACoS in isolation. Instead, we align advertising strategies with your unique business objectives. Whether you’re launching a new product, navigating seasonal peaks, or refining your ad performance, we craft data-driven campaigns that deliver measurable results.

Our Expertise:

• Goal-Driven Frameworks: Campaigns designed with clear objectives, from awareness to conversion.

• Advanced Metrics Analysis: We use metrics like CTR, CPA, and TACoS to assess performance and refine strategies.

• Continuous Optimisation: From keyword harvesting to bid management, we ensure your campaigns are always improving.

Make ACoS Work for You

High ACoS doesn’t have to mean wasted budget. With the right strategy, it can drive growth, enhance visibility, and support long-term profitability. If you’re ready to optimise your Amazon advertising strategies, we’re here to help.

Want to see your Amazon performance skyrocket?  Book a call with our team or email us at amazon@marketrocket.co.uk to take your brand to the next level.