Amazon PPC and ACoS: Understanding Your Advertising Performance
Learn what ACoS and TACoS mean, how to benchmark them, and how to optimise your Amazon advertising.
What is ACoS?
ACoS (Advertising Cost of Sale) = Ad spend ÷ Ad-attributed revenue × 100
Example: if you spend £500 on ads and generate £2,000 in ad-attributed sales, your ACoS is 25%.
ACoS measures the efficiency of your advertising spend relative to the revenue it directly drives. A lower ACoS means more efficient advertising.
Your break-even ACoS is: (1 − COGS% − fulfilment cost%) × 100. If your product costs 40% of its selling price in COGS and FBA takes 20%, your break-even ACoS is 40%. Above 40% means ads are losing money on this product.
What is TACoS?
TACoS (Total Advertising Cost of Sale) = Ad spend ÷ Total revenue (organic + ad-attributed) × 100
TACoS is the more important metric for scaling decisions because it captures the halo effect: PPC drives BSR improvements which drive organic sales.
Example:
- Monthly ad spend: £2,000
- Ad-attributed revenue: £8,000 (ACoS 25%)
- Organic revenue: £12,000
- Total revenue: £20,000
- TACoS = £2,000 ÷ £20,000 = 10%
A declining TACoS with stable or growing total revenue means your ads are building organic rank — you're on the right trajectory.
ACoS benchmarks by category
Acceptable ACoS varies significantly by product margin and business goal:
| Goal | Target ACoS |
|------|-------------|
| Maintain profitability | Below break-even ACoS |
| Launch / rank building | Break-even to 2× break-even |
| Aggressive market share | Up to 3× break-even |
By category (rough industry benchmarks):
- Home & Kitchen: 25–35%
- Health & Personal Care: 20–30%
- Electronics: 10–20%
- Clothing: 30–50%
- Toys & Games: 20–35%
Never use industry benchmarks as your target — use your own product's break-even ACoS.
Campaign types and when to use them
Sponsored Products: promote individual ASINs in search results and product pages. The most direct driver of sales. Start here if new to Amazon PPC.
Sponsored Brands: display your brand logo and multiple products. Better for brand awareness and protecting branded search terms. Available to Brand Registered sellers.
Sponsored Display: retargeting ads shown on and off Amazon. Best for re-engaging customers who viewed your product. Typically higher ACoS but drives awareness.
For most sellers: 70% budget on Sponsored Products, 20% on Sponsored Brands, 10% on Sponsored Display.
Keyword strategy
Broad match: captures wide range of search queries. Good for discovery but can waste budget on irrelevant searches. Use for research campaigns.
Phrase match: triggers for searches containing your keyword phrase. Good balance of reach and relevance.
Exact match: only triggers for the exact keyword. Most efficient for proven keywords. Use for your top-converting search terms.
Negative keywords: critical for profitability. Add irrelevant search terms as negatives regularly. Common negatives: competitor brand names (unless you want to compete directly), unrelated use cases, very long-tail terms with no conversions.
In AskBiz, go to Amazon → Advertising → Search Terms to see which search terms are driving sales vs wasting budget.
ROAS vs ACoS — which should you use?
ACoS and ROAS are mathematical inverses of each other:
ROAS = Revenue ÷ Ad spend = 1 ÷ ACoS × 100
An ACoS of 25% = ROAS of 4.0 (£4 revenue per £1 spent).
ACoS is the standard metric in Amazon advertising. ROAS is more common in Google and Meta advertising. If you run both Amazon PPC and Meta/Google ads, use ROAS in AskBiz's cross-channel view (Analytics → Channels → ROAS Comparison) to compare efficiency across platforms on a like-for-like basis.