How to lower ACoS on Amazon (and when TACoS matters more)

To lower ACoS on Amazon, cut the spend that doesn’t sell before you touch the spend that does: negate search terms that take clicks without orders, move proven terms to exact match, and set bids by match type, placement and bidding strategy. Watch TACoS alongside it, because a falling ACoS can hide shrinking total sales, while a rising one can be the cost of growth that shows up in organic sales.

What is ACoS, and what is a good ACoS?

ACoS is advertising cost of sales. Amazon’s formula is “ACOS = (ad spend ÷ ad revenue) x 100”, so a $20 spend that brings $100 of attributed sales is a 20% ACoS. Return on ad spend is the same ratio turned over: Amazon calls ROAS “the inverse of Amazon ACOS”.

What counts as attributed sales depends on the ad type. For Sponsored Products it is the promoted product’s sales, and for Sponsored Brands it is overall brand sales. Compare the two ad types with that in mind.

There is no single good ACoS. The useful line is your break-even point. In Amazon’s words, “Break-even ACOS is directly linked to your profit margin. In order to maintain a profit, your Amazon ACOS needs to be lower than your profit margin.” If a product earns a 30% margin before advertising, a 30% ACoS breaks even and anything above it loses money on the ad-attributed sale.

Give new campaigns room. Amazon notes that “new campaigns tend to have a high ACOS, merely because of their newness” and suggests judging them on other KPIs at first.

What is TACoS, and when does it matter more than ACoS?

TACoS is total advertising cost of sales: ad spend as a share of all your sales, organic and paid. Amazon’s guide for authors defines it as “your ad spend as a percentage of total sales”, and its holiday guide says “TACOS reveals whether your total sales (organic and paid) are growing in relation to your ad spend.”

ACoS only sees the sales an ad gets credit for. TACoS sees the whole business. That makes it the better guide in three situations:

• Launches. Amazon recommends sending traffic to a new product’s detail page to increase visibility and glance views “to help boost organic rankings.” Ad-attributed ACoS will look expensive while organic sales are still catching up.
• Peak events. The same holiday guide warns that “A temporary spike in ACOS doesn’t mean your ads aren’t working.”
• Cutting spend. If ACoS falls after you trim bids but total sales fall faster, TACoS rises, and the cut cost you more than it saved.

Use them together: ACoS tells you whether each campaign earns its keep, and TACoS tells you whether advertising as a whole is growing the business. Amazon Marketing Stream data can help you build “a picture of your organic vs. ad-attributed sales”.

How do you find the search terms that waste spend?

Start with the search term report. Amazon describes it as the place to “Find the shopping terms used by customers shopping on Amazon that resulted in at least one click on your ad.” Sort it by spend and look for terms with clicks and no orders.

Don’t negate too early. Amazon recommends evaluating a keyword “after it has received at least 20 clicks” before you add it as a negative target. When you do, it suggests phrase or exact match for negative keywords, and letting them run for two weeks or more before changing course again.

Then work the other end of the report. Amazon’s own routine is to find the terms with higher sales and conversion rate, “Then increase the bid on those and add them as exact match type to optimize.” Cutting waste lowers ACoS fastest; moving winners to exact match keeps the sales you already have.

Want to see which of your search terms spend without selling? Take the 2-min fit check and we'll send you a $-weighted opportunity map.

Which match types should get the highest bids?

Match types decide how closely a shopper’s search has to match your keyword. With broad match, Amazon says a query can contain your keyword terms “in any order”, along with variations and related terms. Phrase match needs all of the keyword’s words in the same order, and exact match needs the search to match the keyword word for word.

The closer the match, the more you know about the shopper’s intent, so the more you can pay. Amazon recommends “setting the highest bid on the exact match, a lower on the phrase match, and the lowest bid on the broad match.” Broad match then does the discovery work at a lower price, and the terms it finds graduate to exact match through the search term report.

How do placements and bidding strategies change ACoS?

The same click costs different amounts, and converts at different rates, depending on where the ad shows. Amazon lets you add placement bid adjustments “up to 900%” across top of search, rest of search and product pages. Check conversion rate and ACoS by placement before you raise one: a large adjustment on a placement that doesn’t convert raises ACoS instead of sales.

Your bidding strategy then changes the bid at auction time:

Strategy	What Amazon does with your bid
Dynamic bids, down only	Lowers your bid when the ad is less relevant to the search or on a placement that doesn’t perform well
Dynamic bids, up and down	Raises or lowers your bid by up to 100% for all placements based on performance
Fixed bids	Uses your exact bid, which may get more impressions but fewer clicks

With up and down bidding, Amazon says to be prepared to spend up to double the bid you set, so it suits campaigns where sales matter more than efficiency. If ACoS is the goal, Amazon itself points to the other option: “if you are looking to optimize based on return on ad spend (ROAS), then try a dynamic down only strategy.”

Can budget rules keep ACoS in check?

Yes, for Sponsored Products. Performance-based budget rules let you raise a campaign’s budget only when it meets a threshold on metrics such as ACoS. Amazon calculates those metrics from the previous seven days, and the campaign needs a daily budget of at least $10 to use them.

That turns a budget increase into a reward for efficiency instead of a blanket raise. Rule-based bidding works the same way on bids: it adjusts them based on the ROAS guardrails you set.

How does ShelfRadar approach ACoS?

ShelfRadar’s agents run search term and bid-budget experiments on your Sponsored Ads, and the tests create the optimization plan that keeps each campaign’s targeting and budget-bid parameters right. The plan covers the clustering of search terms, keywords, ASINs and match types, and insights on base bids, placement bids and their combinations, to reach the best conversion cost. A person approves every recommendation before anything changes.

If you’d rather check the basics first, our Amazon Ads audit checklist walks through them by hand. And if ACoS jumps on a product that has stopped selling, check the Buy Box: we covered why your Amazon ads stop when you lose it.

Frequently asked questions

What is a good ACoS on Amazon?

There is no universal number. A good ACoS is below your profit margin on the product, because Amazon says break-even ACoS is directly linked to your profit margin. New campaigns usually start higher and should be judged on other KPIs at first.

What is the difference between ACoS and TACoS?

ACoS divides ad spend by the sales your ads are credited with. TACoS divides ad spend by your total sales, organic and paid. ACoS shows whether a campaign is efficient; TACoS shows whether advertising is growing the business as a whole.

How many clicks should a search term get before you negate it?

Amazon recommends waiting until a keyword has received at least 20 clicks before adding it as a negative target, using phrase or exact match for negatives, and letting negatives run for two weeks or more before changing your strategy again.

Does dynamic bidding lower ACoS?

Dynamic bids down only can, because Amazon lowers your bid when an ad is less relevant to the search or on a placement that doesn’t perform well. Up and down bidding raises bids by up to 100% for all placements, which can lift sales but also cost per click.