Insights

ACOS Going Up? Tips for Advertising on Amazon

The video explores the challenges and strategies related to Amazon advertising, particularly the rising costs of Advertising Cost of Sales (ACoS) and how this impacts sellers. ACoS is described as the total advertising spend divided by sales, and the video offers a formula to help sellers calculate their own ACoS. The speaker explains that ACoS has increased dramatically due to growing competition, particularly since 2016, when Amazon began actively recruiting Chinese sellers, making the marketplace more competitive.

One key point discussed is that products often appear multiple times on search result pages—both in sponsored and organic listings—due to the effectiveness of advertising combined with high organic rankings. This can take up significant real estate on search pages, benefiting sellers who rank well organically and advertise strategically.

The video also stresses the importance of having a well-structured advertising campaign. While software can help automate adjustments, it cannot replace the intuition needed to build a campaign that aligns with a seller’s goals. The speaker advises sellers to maintain close control over their advertising budget and warns against cutting advertising in hopes of boosting sales by lowering prices, which has been shown to negatively impact rankings and sales.

Furthermore, the speaker highlights the importance of setting an ACoS goal based on a percentage of sales and adhering to that budget to ensure profitability. The discussion includes practical advice on allocating advertising spend and scaling ad campaigns over time while cautioning that over time, advertising can lead to diminishing returns.

The overall takeaway is that while Amazon advertising is becoming more expensive, it is still a necessary investment in most cases. Sellers must keep a careful eye on their ad spend, continually optimize their campaigns, and understand that success on Amazon requires a mix of effective advertising and strong product listings.

Watch the video below to dive deeper into these strategies and learn more about how to manage your Amazon advertising effectively.The video explores the challenges and strategies related to Amazon advertising, particularly the rising costs of Advertising Cost of Sales (ACoS) and how this impacts sellers. ACoS is described as the total advertising spend divided by sales, and the video offers a formula to help sellers calculate their own ACoS. The speaker explains that ACoS has increased dramatically due to growing competition, particularly since 2016, when Amazon began actively recruiting Chinese sellers, making the marketplace more competitive.

One key point discussed is that products often appear multiple times on search result pages—both in sponsored and organic listings—due to the effectiveness of advertising combined with high organic rankings. This can take up significant real estate on search pages, benefiting sellers who rank well organically and advertise strategically.

The video also stresses the importance of having a well-structured advertising campaign. While software can help automate adjustments, it cannot replace the intuition needed to build a campaign that aligns with a seller’s goals. The speaker advises sellers to maintain close control over their advertising budget and warns against cutting advertising in hopes of boosting sales by lowering prices, which has been shown to negatively impact rankings and sales.

Furthermore, the speaker highlights the importance of setting an ACoS goal based on a percentage of sales and adhering to that budget to ensure profitability. The discussion includes practical advice on allocating advertising spend and scaling ad campaigns over time while cautioning that over time, advertising can lead to diminishing returns.

The overall takeaway is that while Amazon advertising is becoming more expensive, it is still a necessary investment in most cases. Sellers must keep a careful eye on their ad spend, continually optimize their campaigns, and understand that success on Amazon requires a mix of effective advertising and strong product listings.

Watch the video below to dive deeper into these strategies and learn more about how to manage your Amazon advertising effectively.