What is the appropriate range for ACoS control? Many people make this mistake!

What is the appropriate range for ACoS control? Many people make this mistake!
Everyone knows that ACOS=Spend/Sales. ACOS is one of the important indicators to measure the success of Amazon PPC advertising. However, we cannot use a fixed mindset to look at what ACOS is better. For example, if a seller with a customer price of 899 tells a seller in the red ocean 3C market that "you must keep ACOS below 10% to make money", would you believe it?



ACOS stands for customer acquisition cost. In different categories and different environments, our customer acquisition cost should be evaluated based on the actual situation. What is the appropriate ACOS and the profit margin should also be considered. This is the break-even ACOS.

This leads to the following conclusions:

1. Average ACOS > break-even ACOS, advertising loses money

2. Average ACOS = break-even ACOS, no profit or loss, wage earner

3. Average ACOS < break-even ACOS, advertising makes money



Is the lower the ACOS, the better?


From the formula of ACOS, ACOS=CPC/(PRICE*CVR) . The two main factors to lower ACOS are to lower CPC or to increase CVR. From the perspective of CPC, lowering CPC mainly affects two aspects:

You can see the following example:

CPC 0.8 Click 50 order 5 Sales 100 ACOS 40%

CPC 0.7 Click 40 order 4 Sales 80 ACOS 35%

CPC 0.6 Click 10 order 1 Sales 20 ACOS 30%


If our profit margin is 40%, the income in the first case is 0, the income in the second case is 4, and the income in the third case is 2. Overall, it seems that option 2 is our best choice, but it is not the one with the lowest ACOS. If you only want to increase sales, option 1 is also OK.

Dynamically adjust advertising strategies


Below we formulate advertising strategies according to different advertising purposes and situations

Summarize


To a certain extent, the lower the ACOS , the better. We also need to maintain a certain volume while lowering the ACOS. Sometimes more sales can bring more profits, and can also bring our ranking up and obtain a certain amount of natural orders.

Also, when we are expanding our volume , if we find that the advertising ACOS is rising, don't panic, but look at our sales . Advertising will interfere with our natural traffic to a certain extent, and with multiple exposures to advertising, it is possible that consumers enter the product details page from the natural position. In this case, we should pay more attention to TACOS and total profit.

<<:  Amazon’s different strategies at different times

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