8d • Amazon Ads
The 3 reasons why ACOS (Advertising Cost of Sale) is the most dangerous metric for Amazon ads.
A low ACOS means your ads are super productive, right?
The strong connection between ad sales and organic sales makes the Amazon platform different from Google or Meta ads.
You’re missing half of the equation if you’re only tracking Amazon sales from ads.
Here are the 3 reasons why we don’t use ACOS to make decisions:
#1. ACOS is easily manipulated: Would you have a stronger business if you slashed 90% of your sales to get to a 10% ACOS? Anyone can lower ACOS by sacrificing sales
#2. Limits brand strategy: You can have an ACOS over 100% and still be very profitable. Don’t believe me. Look at supplement companies.
#3 Fighting one-handed: Making decisions based on ACOS is like building your brand on Amazon with only one hand. Use everything you can to help your brand win on Amazon!
Bonus reason: Your brand name is your most valuable long-term asset. If you have a strong brand then your ACOS should be very low for branded keywords.
Instead of ACOS to make decisions, we look at TACOS (Total Advertised Cost of Sale). This takes into account both ad sales and organic sales on Amazon.
TACOS gives me a much clearer picture of the total sales that our ads are generating to make smarter decisions.
P.S. ROAS (Return on Ad Spend) on Amazon suffers from the same problems for decision-making as ACOS.
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The 3 reasons why ACOS (Advertising Cost of Sale) is the most dangerous metric for Amazon ads.
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