What is Total ACOS, and why is it important if ACOS is defined as Advertising Cost of Sales?

Total ACOS is a crucial measure in Amazon advertising, and comprehending it could be the key to developing more successful Amazon advertising campaigns. Total ACOS will always come up in discussions about Amazon PPC. Some people refer to it as Total ACOS, while others refer to it as TACOS.

What Is Amazon Advertising’s Total ACOS?

Your ad spending to total sales ratio is known as your total ACOS. Let’s imagine, for illustration purposes, that your company made $100,000 in sales and you spent $10,000. Regardless of your actual ACOS, you would have a Total ACOS of 10%.

The main factor in Total ACOS is the ratio of ad spend to total sales

How Can Total ACOS Be Determined For Amazon Advertising?

The average Total ACOS for a healthy account in Amazon advertising is around 5% to 10%.

Anything less than 5% indicates that the company is performing well organically, but given that Amazon’s top section of search results is heavily saturated with advertisements, it may eventually lose market share.

Amazon wants you to spend more money on advertising even if a low Total ACOS indicates that the company is profitable; a Total ACOS that is too low won’t be long-lasting.

What Influences Total ACOS When Advertising on Amazon?

We are aware that Total ACOS equals Total Ad Spend / Total Sales. Increasing sales or decreasing ad spending are the two ways to improve the Total ACOS number. You must decide which of the two is more achievable.

Once you’ve made a decision, you may start analyzing it to find the strategies required to achieve the desired outcome, such as a decrease in ad expenditure or an increase in sales.

For example, in order to run profitable ads, you would need to look into more effective budget distribution and bid management if you wanted to reduce your ad spend.

As an alternative, you can raise your sales by ranking your listings highly and generating more organic sales.

When lowering total ACOS, you should avoid these poor strategies.

When lowering your ACOS, you should avoid two main bad tactics. Let’s look at them now.

Focusing Too Much On Low ACOS

Your company could struggle if you place an excessive amount of focus on lowering Total ACOS.

If your Total ACOS is too low, you put yourself at risk of losing to competitors who are investing more on advertising. Spending more on advertising results in more reviews and a higher rating, both of which are essential for success on Amazon.

Ultimately, if you place too much focus on ACOS, you can start losing market share to your competitors.

Having a Rigid Total ACOS

A tough approach to your Total ACOS is another terrible tactic for lowering ACOS. You know, being strict about always keeping a specific Total ACOS percentage.

Ad spend will always change because CPC isn’t constant. Since Amazon advertising spend is a factor in determining Total ACOS, you must constantly modify your Total ACOS goals to reflect any changes.

For example, if your Total ACOS goal was 7% three years ago, you would need to considerably cut your CPCs now to keep that ACOS goal. Due to the increase in CPC over the past several years, a 7% Total ACOS today would be comparable to a 4% Total ACOS from three years ago.

What Does Amazon Advertising’s Brand Halo Mean?

Sales for products you aren’t promoting for while you run ads are known as brand halo. A customer views your ad, visits your store page, and purchases a different ASIN from the one in the first ad they viewed.

As a result, it is impossible to define Total ACOS goals for a certain ASIN. On the reports for advertised products on Amazon, you can view some of your brand’s halo data.

Why brands don’t ask Total ACOS per product is explained by brand halo. The customer journey and cross-selling that take place on Amazon are both known to brands.

How Can You Lower Your Total ACOS Using Just Amazon PPC?

It’s crucial to remember right away that PPC isn’t the only factor determining your Total ACOS. It isn’t even the most important factor. Your total ACOS is affected by your organic sales.

It’s crucial to remember right away that PPC isn’t the only factor determining your Total ACOS. It isn’t even the most important factor. Your total ACOS is affected by your organic sales.

Your organic conversion rates can be affected by something as small as a change in review ratings from 4-star to 3.5-star, which will impact how effective your adverts are.

Using Amazon PPC, pay particular attention to:

  • Diversity of the budget
  • Optimizing the bid
  • Goals that are separate

The “fat” is “trimmed” by reducing ad expenditure on anything that is not profitable via budget diversification and bid optimization.

Stop allocating your cash to the underperforming areas, such as experimental advertising, non-converting keywords, and all the campaigns that shouldn’t be operating. The simplest technique to begin lowering your TACOS is in this way.

Setting unique goals for your Amazon advertising is another point to think about. False TACOS readings might result, for example, from combining your ranking keywords with your branded search terms.

Why Should I Lower My Amazon Advertising Budget When Targeting Total ACOS?

We already know that in order to minimize the Total ACOS, we must reduce our spending.

Assuming you have one keyword, a $10 daily budget, and a CPC of $1. If you reduced the budget to $5, you would hypothetically receive five clicks each day and cut your order rate in half. On the other hand, you would still receive your ten clicks each day if you reduced the budget to $7 per day and the price to $70 per click.

The bid is the star of the show, therefore you want to discover the sweet spot where you may reduce spending without affecting the success of your campaign.

Get Started with Total ACOS Optimizing

You might run effective campaigns with a lower Total ACOS if you optimize for Total ACOS rather than just break-even ACOS.

Of course, you need correct data to properly reduce your Total ACOS. The Ad Badger Amazon PPC Software can help in this situation. To assist you build on your successes and improve the goods that struggle, we give you Total ACOS statistics broken down by product.