Evaluate Amazon PPC ACoS Through Profitability and Unit EconomicsEvaluate Amazon PPC ACoS Through Profitability and Unit Economics
The network for creativity
Join 1.25M professional creatives like you
Connect with clients, get discovered, and run your business 100% commission-free
Creatives on Contra have earned over $150M and we are just getting started
🚨 𝐘𝐨𝐮𝐫 𝐀𝐦𝐚𝐳𝐨𝐧 𝐏𝐏𝐂 𝐂𝐚𝐦𝐩𝐚𝐢𝐠𝐧 𝐂𝐚𝐧 𝐇𝐚𝐯𝐞 𝐚 “𝐆𝐨𝐨𝐝” 𝐀𝐂𝐨𝐒… 𝐚𝐧𝐝 𝐒𝐭𝐢𝐥𝐥 𝐋𝐨𝐬𝐞 𝐌𝐨𝐧𝐞𝐲 This is one of the biggest PPC reporting traps I see. A campaign shows 𝟐𝟓% 𝐀𝐂𝐨𝐒. Everyone is happy. But ACoS alone doesn't tell you whether those sales are actually profitable. 𝐋𝐨𝐨𝐤 𝐚𝐭 𝐭𝐡𝐞 𝐮𝐧𝐢𝐭 𝐞𝐜𝐨𝐧𝐨𝐦𝐢𝐜𝐬. Imagine a product selling for $𝟑𝟗.𝟗𝟗. After Amazon fees, COGS, shipping, and other costs, the contribution before advertising is $𝟏𝟏 𝐩𝐞𝐫 𝐨𝐫𝐝𝐞𝐫. Your campaign generates: ACoS: 𝟐𝟓% Ad sales: $𝟏𝟎,𝟎𝟎𝟎 Ad spend: $𝟐,𝟓𝟎𝟎 Orders: 𝟐𝟓𝟎 Ad cost per order: $𝟏𝟎 That leaves only: $𝟏𝟏 𝐜𝐨𝐧𝐭𝐫𝐢𝐛𝐮𝐭𝐢𝐨𝐧 − $𝟏𝟎 𝐚𝐝 𝐜𝐨𝐬𝐭 = $𝟏 You're generating sales. You're showing a respectable ACoS. But you're barely creating profit. Now imagine another campaign: ACoS: 𝟑𝟐% Ad cost per order: $𝟖 Contribution before ads: $𝟏𝟓 That campaign can actually leave more money per order despite having the higher ACoS. 𝐓𝐡𝐢𝐬 𝐢𝐬 𝐰𝐡𝐲 𝐈 𝐝𝐨𝐧'𝐭 𝐮𝐬𝐞 𝐨𝐧𝐞 𝐮𝐧𝐢𝐯𝐞𝐫𝐬𝐚𝐥 𝐀𝐂𝐨𝐒 𝐭𝐚𝐫𝐠𝐞𝐭 𝐚𝐜𝐫𝐨𝐬𝐬 𝐚𝐧 𝐚𝐜𝐜𝐨𝐮𝐧𝐭. Before deciding whether an ACoS is “good,” I want to understand: 𝐒𝐞𝐥𝐥𝐢𝐧𝐠 𝐩𝐫𝐢𝐜𝐞 ↓ 𝐂𝐨𝐧𝐭𝐫𝐢𝐛𝐮𝐭𝐢𝐨𝐧 𝐦𝐚𝐫𝐠𝐢𝐧 ↓ 𝐀𝐝 𝐜𝐨𝐬𝐭 𝐩𝐞𝐫 𝐨𝐫𝐝𝐞𝐫 ↓ 𝐏𝐫𝐨𝐟𝐢𝐭 𝐚𝐟𝐭𝐞𝐫 𝐚𝐝𝐯𝐞𝐫𝐭𝐢𝐬𝐢𝐧𝐠 Because the real question isn't: ❌ “𝐈𝐬 𝐦𝐲 𝐀𝐂𝐨𝐒 𝐥𝐨𝐰?” It's: “𝐇𝐨𝐰 𝐦𝐮𝐜𝐡 𝐩𝐫𝐨𝐟𝐢𝐭 𝐝𝐨𝐞𝐬 𝐞𝐚𝐜𝐡 𝐚𝐝𝐯𝐞𝐫𝐭𝐢𝐬𝐢𝐧𝐠 𝐝𝐨𝐥𝐥𝐚𝐫 𝐚𝐜𝐭𝐮𝐚𝐥𝐥𝐲 𝐜𝐫𝐞𝐚𝐭𝐞?” This changes how I manage bids, budgets, keywords, placements, and campaign targets. A 20% ACoS campaign isn't automatically better than a 30% ACoS campaign. 𝐓𝐡𝐞 𝐞𝐜𝐨𝐧𝐨𝐦𝐢𝐜𝐬 𝐛𝐞𝐡𝐢𝐧𝐝 𝐭𝐡𝐞 𝐀𝐂𝐨𝐒 𝐝𝐞𝐭𝐞𝐫𝐦𝐢𝐧𝐞 𝐭𝐡𝐚𝐭. 📩 𝐖𝐚𝐧𝐭 𝐦𝐞 𝐭𝐨 𝐚𝐧𝐚𝐥𝐲𝐳𝐞 𝐲𝐨𝐮𝐫 𝐀𝐦𝐚𝐳𝐨𝐧 𝐏𝐏𝐂 𝐛𝐚𝐬𝐞𝐝 𝐨𝐧 𝐩𝐫𝐨𝐟𝐢𝐭𝐚𝐛𝐢𝐥𝐢𝐭𝐲—𝐧𝐨𝐭 𝐯𝐚𝐧𝐢𝐭𝐲 𝐦𝐞𝐭𝐫𝐢𝐜𝐬? Message me “𝐏𝐏𝐂 𝐀𝐔𝐃𝐈𝐓” for Amazon PPC management and optimization.
Post image
Mudassir's avatar
Good example. The first number I work out is break-even ACoS: contribution margin before ads divided by price. In your case that's about 27.5%, so a 25% ACoS looks healthy but leaves roughly $1 per order. I set target ACoS per product from that, not one account-wide number.
Back to feed
The network for creativity
Join 1.25M professional creatives like you
Connect with clients, get discovered, and run your business 100% commission-free
Creatives on Contra have earned over $150M and we are just getting started