What is Amazon PPC?
Amazon PPC (Pay-Per-Click) advertising allows sellers to promote products in Amazon's search results and product pages. You pay only when a shopper clicks your ad. The three main campaign types are Sponsored Products (target individual ASINs or keywords), Sponsored Brands (brand spotlight ads), and Sponsored Display (reach audiences on and off Amazon).
Amazon PPC Metrics Explained
ACOS (Advertising Cost of Sales)
The most important PPC metric. ACOS = (Ad Spend ÷ Ad-attributed Sales) × 100. It tells you what percentage of your ad revenue goes to advertising. Lower ACOS = more efficient ads.
TACOS (Total Advertising Cost of Sales)
TACOS = (Ad Spend ÷ Total Sales) × 100. Unlike ACOS, TACOS includes organic sales driven by your ads, giving a fuller picture of ad ROI. Lower TACOS means advertising is driving more total revenue.
RoAS (Return on Ad Spend)
RoAS = Ad-attributed Sales ÷ Ad Spend. A RoAS of 4.0x means you earn $4 for every $1 spent on ads. Target RoAS varies by product margin — aim for at least 3-5x for sustainable profitability.
Break-Even ACOS
Break-Even ACOS = Gross Margin × 100. This is the ACOS at which you neither profit nor lose money on ads. If your product margin is 25%, your break-even ACOS is 25%.
Amazon PPC Formulas
ACOS = (Ad Spend ÷ Ad-attributed Sales) × 100
TACOS = (Ad Spend ÷ Total Sales) × 100
RoAS = Ad-attributed Sales ÷ Ad Spend
Break-Even ACOS = (Net Margin ÷ Sale Price) × 100
CPC = Ad Spend ÷ Clicks
CVR = (Orders ÷ Clicks) × 100
Ad Profit = Ad-attributed Sales − (Ad Sales × Cost Ratio) − Ad Spend
Real-World Example
Example: $1,000 ad spend generates $4,000 in attributed sales, $6,000 total sales, $35 average price, $14 cost per unit, 5,000 clicks, 100 orders:
ACOS: $1,000 ÷ $4,000 × 100 = 25.00%
TACOS: $1,000 ÷ $6,000 × 100 = 16.67%
RoAS: $4,000 ÷ $1,000 = 4.00x
Break-Even ACOS: ($35 − $14) ÷ $35 × 100 = 60.00%
CPC: $1,000 ÷ 5,000 = $0.20
CVR: 100 ÷ 5,000 × 100 = 2.00%
Ad Profit: $4,000 − ($4,000 × 40%) − $1,000 = $1,400
What is a Good ACOS for Amazon?
There's no universal "good" ACOS — it depends on your product margins and business goals:
- Below break-even ACOS: Profitable ads — scale confidently
- At break-even ACOS: Zero profit on ads but building rank/organic sales
- Above break-even: Losing money per sale — acceptable for new product launches or brand awareness if organic lift offsets it
Frequently Asked Questions
How do I lower my ACOS on Amazon?
Lower ACOS by: improving listing conversion rate (better images, copy, A+ content), tightening keyword match types, using negative keywords to filter irrelevant clicks, improving keyword relevance scores, and optimizing bids based on performance data.
Should I only run ads with positive ad profit?
Not always. New products may run negative ad profit intentionally to gain rank and reviews, expecting organic sales to offset the loss over time. Monitor TACOS (not just ACOS) to see the full picture.
What ACOS should I target for Sponsored Brands?
Sponsored Brands typically have higher ACOS (30-60%) because they build brand awareness and drive discovery. Measure success by new-to-brand customers and lifetime value, not just direct conversion.