If you run Amazon FBA and use Amazon Advertising (PPC / Sponsored Ads), one of your top goals is likely reducing ACoS  i.e., having more efficient ad spend and higher profitability. In this detailed guide, we’ll explore what ACoS is, what a “good” ACoS looks like, and 10+ proven strategies to lower ACoS (without sacrificing volume). Use this guide as a step-by-step playbook to optimize your Amazon ad campaigns.

1. What is ACoS (and why it matters)

ACoS stands for Advertising Cost of Sales. It is one of the core metrics in Amazon advertising that tells you how much you spend on ads versus how much revenue you generate from those ads.

• Formula:

  ACoS=Ad SpendAd Sales×100%\text{ACoS} = \frac{\text{Ad Spend}}{\text{Ad Sales}} \times 100\%ACoS=Ad SalesAd Spend​×100%

• Example: If you spend $100 on ads and get $400 in attributed sales, your ACoS = (100/400) × 100 = 25%.

A lower ACoS means your ads are more efficient — you spend less to generate a certain amount of sales. If your ACoS is above your profit margin, then ads are eating into your profits.

Why ACoS matters:

• Helps you see the efficiency / profitability of your ad campaigns

• Enables you to make data-driven decisions (which keywords to scale, pause, etc.)

• Allows you to set targets and budgets with better control

• Works as a feedback loop: improving listing conversions, CTR, bidding all feed into lowering ACoS

Amazon itself also encourages you to think in terms of ACoS and RoAS when optimizing campaigns.

2. How to calculate ACoS (and target ACoS)

As mentioned:

ACoS = (Ad Spend ÷ Ad-attributed Sales) × 100%

But beyond that, it’s important to derive your target ACoS:

1. Calculate your break-even ACoS
   You should know your cost structure: product cost, Amazon fees (referral, FBA, storage, etc.), shipping, overhead. Suppose after all these costs your net margin is 20%. In that case, your break-even ACoS might be around 20%. If your ACoS is higher than that, your ads are eroding profit.

2. Set your target ACoS
   Your target should be comfortably below break-even so you still make profit. Many sellers aim for something like 15%–25%, but the ideal depends on your niche, competition, and business goals.

3. Adjust targets per campaign / product
   Some products are more competitive and may require higher ACoS; newer products or lower-margin ones may need stricter caps.

3. What is a “good” ACoS (benchmarks)?

There is no one-size-fits-all, but here are commonly accepted benchmarks:

• If your ACoS is below ~25%, it is often considered efficient / healthy (especially in many categories)

• Between 25–40% is okay in some cases, but optimization is needed.

• Above 40–50% is usually a red flag unless your margins are very generous or you’re using ads for ranking / exposure rather than pure profit.

Again, what “good” means depends heavily on your product margins, competition, and growth strategy.

4. The levers behind ACoS: CPC, CTR, Conversion Rate, Ad Spend

To reduce ACoS, you must understand what drives it. The main levers:

• CPC (Cost Per Click) — how much you pay when someone clicks

• CTR (Click-Through Rate) — how many people click your ad when it is shown

• Conversion Rate — how many clicks lead to purchases

• Ad Spend & Budget Allocation — how much money gets into each campaign/keyword

If you can reduce CPC, increase CTR, improve conversion rate, and allocate spend to best-performing targets, ACoS will drop.

Trellis emphasizes exactly these three levers: “increase CTR, reduce cost per click, improve conversion rate.”

5. Strategy #1: Optimize your product listings (for better conversion)

This is often the most under-leveraged but crucial step. A highly relevant, persuasive product listing turns clicks into sales — which drives down ACoS.

What to do:

• Title, bullets, description: use strong keywords, benefits, features, and make it scannable

• High-quality images / infographics / videos: more images, lifestyle photos, zoom detail, video if possible

• Use A+ / Enhanced Content (if brand registered)

• Backend search terms: include all relevant keyword variations (without repetition)

• Ratings & reviews: aim to increase positive reviews and respond to negative ones

• Pricing & promotions: ensure that pricing is competitive and use deals or coupons to boost conversions

When customers click your ad and don’t buy (because the page isn’t compelling), your conversion rate is low, which raises your ACoS. Optimizing your listing improves conversion rate and lowers ACoS.

6. Strategy #2: Use refined keyword targeting (long-tail, negative keywords)

The right keywords matter deeply. Blindly pumping ad spend into broad, high-competition keywords often leads to wasted clicks.

Key tactics:

A. Focus on long-tail / buyer-intent keywords

These are more specific, lower competition, and often cost less per click, but convert better. E.g., instead of “water bottle,” use “insulated stainless steel 500ml water bottle.” SourceApproach suggests focusing on where big brands are weaker (long-tail, non-competitive zones) rather than competing head-on.

B. Use negative keywords aggressively

Review your search term reports regularly, and add irrelevant, low-conversion terms as negatives. This prevents wasted spend.

C. Bid higher for converting keywords, lower/disable non-performers

Allocate more budget to those keywords that historically convert at lower cost, and lower bids or pause the rest.

D. Expand keyword base intelligently

Use keyword research tools (Helium 10, Sellics, etc.) to discover new good keywords, but always test before scaling.

7. Strategy #3: Structure campaigns strategically

How you structure campaigns influences clarity, budget control, and optimization. Poor structure can lead to mixing good and bad keywords in same campaigns, making decisions harder.

Best practices:

• Single Product Ad Groups (SPAGs): group one product (ASIN) with its own set of keywords so you can isolate performance.

• Separate automatic vs manual campaigns: Use automatic campaigns to discover converting search terms; move winners to manual.

• Budget caps per campaign: Don’t let one campaign drain entire budget.

• Tiered campaigns: for example, one campaign for “high priority / low ACoS” keywords and another for “test / new keywords.”

• Portfolio or campaign groups for product lines: helps monitor performance by product category.

A clean structure helps you see which campaigns/keywords are dragging ACoS up and which you should scale.

8. Strategy #4: Smart bidding / bid adjustments

Bidding strategy is one of your most powerful handles. But you must be deliberate with it.

Some tactics:

A. Use bidding rules based on performance

For example:

• If a keyword’s ACoS > 100%, lower its bid (maybe to 50% of current)

• If ACoS is above your target but <100%, reduce bid moderately (e.g. to 75%)

• If ACoS is very good (far below target), safely raise bid to capture more volume

B. Placement bid multipliers

Amazon allows you to adjust bids for different placements: top of search, product pages, rest of search. Use your data to increase in good placements, reduce in poor ones.

C. Gradual bid changes

Don’t overreact to short-term swings. Change bids gradually to avoid disruption.

D. Consider using Amazon’s dynamic bidding (up/down)

Amazon can adjust bids in real-time based on conversion likelihood. Use this option carefully and monitor its effect.

9. Strategy #5: Dayparting & scheduling

Dayparting (or ad scheduling) is adjusting bid or pausing ads during certain hours/days when performance is weaker.

Why this helps:

• During low-conversion hours (e.g., late night, off-peak times), ads may still get clicks but not convert well, pushing ACoS up.

• By restricting spend to peak hours, you get more efficient spend.

You can manually schedule campaigns or use tools that automate bid multipliers by hour/day.

10. Strategy #6: Leverage ASIN / product targeting

Besides keyword targeting, Amazon allows you to target other ASINs / competitor products. This can be powerful if done smartly:

• Target complementary or similar ASINs that convert well

• Lower bids or pause when your performance is poor

• Use it for cross-selling or capturing competitor traffic

But be cautious: ASIN targeting often has higher CPC and more unpredictable conversion rates, so monitor closely.

11. Strategy #7: Use negative keywords aggressively

We touched on this earlier, but negative keywords deserve their own focus.

Steps:

1. Export your Search Term Report (weekly or more)

2. Identify search terms that generate clicks but no conversions (or ACoS well above your target)

3. Add those as negative in the relevant campaigns

4. Continuously refine: terms that later become profitable can be re-tested

5. Use negative phrase/exact match to prevent irrelevant matches

Negatives help you stop bleeding ad spend on non-converting queries.

12. Strategy #8: Pause or reduce budget on underperforming targets

Not every keyword campaign is going to perform. Part of optimization is cutting your losses.

• Identify campaigns, ad groups, or keywords with ACoS consistently above target and minimal sales

• Pause or reduce budget / bids gradually

• Reallocate that budget to better-performing targets

• Avoid the trap of “I’ll fix this later” — every waste click adds up

This trimming mentality ensures your overall ACoS improves over time.

13. Strategy #9: Use automation / third-party tools

Manual optimization is essential, but when your account grows, automation can help you scale.

Some tools and capabilities:

• Bid automation / rules engines: tools like Sellics, Helium 10 Adtomic, Perpetua, DataDive have features to adjust bids automatically toward your target ACoS.

• Alerts & recommendations: get notified when ACoS drifts, when budget is exhausted, etc.

• Portfolio-level optimization: some tools help you shift budget across campaigns based on performance

• Daypart optimization modules built in

• Keyword discovery & negative-suggestion tools

Use these to save time and reduce human error — but don’t “set and forget.” Always monitor.

14. Strategy #10: Monitor & iterate regularly

Optimization is not a one-time job. Amazon’s marketplace, competition, CPCs, and consumer behavior shift. So you must:

• Review data daily, weekly, monthly

• Monitor shifts in CTR, conversion, CPC, impressions

• Watch for new search terms and competitor moves

• Adjust bids, budgets, negatives, new tests

• Use data-driven decisions rather than guesswork

Frequent iteration is what separates high-performing accounts from mediocre ones.

15. Bonus: Consider TACoS (Total ACoS) and balancing paid + organic

While ACoS focuses on ad-attributed sales, TACoS (Total Advertising Cost of Sales) is the ratio of ad spend to overall revenue (organic + paid). Many advanced sellers pay attention to TACoS because:

• It shows how ads affect your organic ranking over time

• It helps avoid over-investing in ads at the expense of organic growth

• It gives a holistic view of how sustainable your campaign is

If your ACoS is great but TACoS is rising, it could indicate you’re depending heavily on ads and perhaps losing organic momentum.

Balance your strategy: some ad spend helps organic ranking; don’t cut ads entirely in pursuit of low ACoS.

Actionable 30-Day Plan to Reduce ACoS

Here’s a sample roadmap you can adopt over the next month to start reducing ACoS:

By the end of 30 days you should see measurable improvement in your ACoS — the key is consistency.

Example Tips & Tricks from Real Sellers

• Many sellers recommend pausing any keyword with ACoS > 70% that hasn’t produced sales.

• Always give campaigns at least 7–14 days of stable data before making radical changes.

• Use caution when increasing bids on low ACoS keywords — don’t overshoot and turn them into bad spenders.

• In Q4 and high-competition seasons, use more gradual bid changes to avoid volatility.

• Use Amazon’s budget suggestions as a signal for scaling certain campaigns.

If you apply these strategies consistently, you’ll gradually see lower ACoS, more profitable ad spend, and better return on investment. I’d recommend you pick one or two strategies to test first (e.g. listing optimization + negative keywords), measure the impact, then scale.

If you like, I can also prepare a checklist PDF (or a campaign audit template) you can use as you go. Would you like me to do that for moizit.com?