How to Lower ACoS on Amazon

The fastest way to lower Amazon ACoS is not to lower every bid. It is to find out where your advertising spend is producing weak economics and fix the specific cause.

ACoS, or Advertising Cost of Sales, is one of the most commonly used Amazon PPC metrics:

ACoS = Ad Spend ÷ Ad Sales × 100

If you spend ₹10,000 on ads and generate ₹50,000 in attributed sales, your ACoS is 20%.

The calculation is simple. The optimization is not.

A high ACoS can come from expensive clicks, poor conversion, irrelevant traffic, weak search-term control, or a campaign that is intentionally designed to discover new demand.

That is why the right question is not:

"How do I get my ACoS down?"

It is:

"Why is my ACoS high, and which change will improve the economics without damaging useful sales?"

1. Know Your Break-Even ACoS First

You cannot decide whether an ACoS is too high until you know how much advertising cost your product can support.

Your break-even ACoS depends on the contribution available before advertising.

For example, suppose a product sells for ₹2,000.

After product cost, Amazon fees, fulfillment, discounts, and other variable costs, assume ₹600 remains before advertising.

Your break-even advertising cost is therefore ₹600 on a ₹2,000 sale:

Break-even ACoS = ₹600 ÷ ₹2,000 × 100 = 30%

An ACoS of 25% may leave contribution after advertising.

An ACoS of 35% may not.

The actual numbers will differ by product, marketplace, and business model. The important point is that your ACoS target should come from the economics of the product, not from an arbitrary industry benchmark.

If you have not calculated your break-even point yet, use the SellerRoot Break-Even ACoS Calculator to work out the maximum advertising cost your product can support before advertising moves you into a loss.

2. Find Where the Waste Is Coming From

Start with spend, not with the ACoS percentage.

Look for targets and search terms that are consuming meaningful money without producing enough sales.

Review:

• Search terms with high spend and no orders
• Targets with repeated spend and weak conversion
• Irrelevant search queries
• Product targets with poor economics
• Keywords with expensive clicks and low sales
• Campaigns that consistently exceed the acceptable acquisition cost

Do not treat every click without an order as wasted spend.

Amazon PPC needs clicks to generate data. A search term may require several clicks before producing an order.

The better question is whether the spend has crossed a level that the product economics can reasonably support.

3. Reduce Wasted Search-Term Spend

Search-term optimization is often one of the most direct ways to improve ACoS.

A keyword may look reasonable while the actual customer searches generated from it are poor.

For example, a seller targeting:

office chair

could receive searches for:

• office chair for home
• ergonomic office chair
• cheap office chair
• gaming office chair
• office chair replacement wheels
• office chair parts

Some may be highly relevant. Others may not match the product.

Review the search-term report and identify patterns.

For consistently irrelevant or uneconomic queries, consider negative targeting.

For strong search terms that repeatedly generate sales, consider giving them more deliberate control through your campaign structure.

This turns search-term data into campaign decisions.

4. Do Not Lower Every Bid

A high ACoS does not automatically mean the bid is too high.

Imagine a keyword has:

• Strong conversion
• Consistent sales
• Good product margin
• High ACoS because CPC is elevated

Lowering the bid may reduce ACoS, but it can also reduce traffic and sales.

Now consider another keyword with:

• High CPC
• Weak conversion
• Significant spend
• Few or no sales

That target has a different problem.

Bid changes should therefore follow diagnosis.

Ask:

• Is the traffic relevant?
• Does it convert?
• Is the CPC justified by the value of an order?
• Is the keyword strategic?
• Is the campaign trying to maximize profit or acquire more sales?

Then decide whether the bid needs to move.

5. Improve Conversion Rate

Sometimes the best way to lower ACoS is to improve the product detail page rather than the advertising campaign.

ACoS increases when advertising generates clicks but too few orders.

For example, if traffic costs ₹1,000 and produces ₹4,000 in sales, ACoS is 25%.

If the same spend produces only ₹2,000 in sales, ACoS becomes 50%.

The advertising cost did not change. The sales generated from the traffic did.

Review:

• Main image
• Title
• Bullet points
• Product description
• A+ Content
• Reviews and rating
• Price
• Coupons
• Product availability
• Competitive positioning

If a relevant keyword has strong click-through but weak conversion, reducing the bid may only hide the symptom.

6. Move Budget Toward Productive Campaigns

Budget allocation can affect ACoS just as much as bid management.

Look for two situations.

Profitable campaigns that run out of budget

If a campaign consistently generates sales within your target economics but runs out of budget, restricting it may limit growth.

Review whether additional budget can be supported.

Weak campaigns consuming budget

If a campaign uses a significant portion of the available budget but repeatedly produces poor economics, investigate whether that spend should be reduced or redirected.

The objective is not to spend the entire budget.

The objective is to put available advertising money where it has a reasonable chance of producing the desired business outcome.

7. Separate Branded and Non-Branded Performance

Blending branded and non-branded traffic can make ACoS harder to interpret.

Branded searches often behave differently from category or generic searches.

A customer searching directly for your brand may already have strong purchase intent.

A customer searching for a generic category term may require more persuasion.

Separating these campaigns can make it easier to understand:

• Where sales are coming from
• Which traffic is incremental
• Which campaigns are defending existing demand
• Where acquisition costs are higher
• Where optimization effort should be focused

This does not mean branded campaigns should always have a lower ACoS target. Their business role may simply be different.

8. Control Match Types

Match types influence how much control you have over the traffic your keywords generate.

Broad match can help discover new search behavior, but it can also produce a wider range of queries.

Phrase provides more control while still allowing variation.

Exact gives tighter control over proven terms.

A practical approach is to use these match types for different jobs rather than trying to force the whole account into one match type.

Use search-term performance to decide which terms deserve more control.

9. Use Negative Keywords Carefully

Negative keywords can reduce waste, but aggressive negative targeting can remove useful traffic.

Before adding a negative, check:

• How much has the search term spent?
• How many orders has it generated?
• Is the traffic genuinely irrelevant?
• Is the poor result a temporary fluctuation?
• Could the query be valuable in another campaign?

Do not add a negative simply because one click did not convert.

Look for a repeatable pattern.

10. Check Placement Performance

Campaign-level ACoS can hide meaningful differences between placements.

Review placement-level performance where the available reporting provides enough data.

Compare:

• Spend
• Sales
• Orders
• Conversion rate
• CPC
• ACoS

If one placement consistently produces stronger economics, it may justify a different bidding approach.

If another placement is absorbing spend with weak conversion, investigate whether the campaign needs a bid or structural adjustment.

Again, do not react to a small sample.

11. Do Not Optimize Only for ACoS

A lower ACoS is not automatically a better advertising outcome.

Suppose Campaign A generates:

• ₹10,000 sales
• ₹1,500 ad spend
• 15% ACoS

Campaign B generates:

• ₹100,000 sales
• ₹25,000 ad spend
• 25% ACoS

Campaign A has the lower ACoS.

But Campaign B generates substantially more sales.

If the business objective is growth and the economics support it, simply choosing the campaign with the lower ACoS would miss the larger commercial picture.

Look at:

• Ad sales
• Total sales
• Orders
• ROAS
• ACoS
• Contribution margin
• New customer acquisition where relevant
• Organic sales impact
• Campaign objective

ACoS is a control metric, not the entire business strategy.

12. Diagnose High ACoS by Cause

Different ACoS problems require different solutions.

The mistake is using one solution for all of these problems.

13. Give Optimization Changes Enough Time

Do not change a campaign today and judge the result tomorrow unless the account has enough volume to support that conclusion.

The required evaluation period depends on:

• Daily spend
• Click volume
• Order volume
• Product price
• Campaign maturity
• Seasonality
• Recent changes

High-volume accounts can produce useful feedback faster.

Low-volume campaigns need more patience.

If you continuously change bids before enough data accumulates, you can create a cycle where the account never provides a clean signal.

14. Lower ACoS Without Destroying Sales

The safest ACoS optimization protects useful traffic while removing inefficient spend.

A practical sequence is:

Step 1: Establish the economic target

Calculate the ACoS the product can support.

Step 2: Identify the largest sources of inefficient spend

Start with high-spend targets and search terms.

Step 3: Check relevance

Determine whether the traffic is actually appropriate for the product.

Step 4: Check conversion

If relevant traffic is not converting, investigate the listing and offer.

Step 5: Adjust bids where the economics justify it

Do not reduce every bid by the same percentage.

Step 6: Reallocate budgets

Protect campaigns producing useful results and contain campaigns that are not.

Step 7: Review the result

Give the change enough data to determine whether it helped.

This approach is slower than simply cutting bids across the account, but it gives you a much better chance of improving efficiency without unnecessarily sacrificing sales.

Amazon ACoS Optimization Checklist

Use this checklist when an Amazon campaign or account has higher ACoS than your target.

• Calculate the product's break-even ACoS
• Define the campaign objective
• Identify high-spend, low-return targets
• Review search-term performance
• Add appropriate negative keywords or product targets
• Check CPC and bid levels
• Review conversion rate
• Check listing and offer quality
• Review campaign budgets
• Analyze placement performance
• Separate branded and non-branded performance
• Check broad, phrase, and exact match behavior
• Avoid changing too many variables simultaneously
• Record major optimization changes
• Reassess after enough data accumulates

Final Takeaway

Lowering ACoS is an exercise in improving advertising economics, not simply reducing advertising activity.

Start with the numbers that explain the problem:

• Where is the money going?
• Which traffic converts?
• Which traffic does not?
• What does an order actually allow you to spend?
• Which campaigns deserve more budget?
• Which targets need tighter control?
• Is the problem in the ad or on the product detail page?

Once those questions are answered, bids, budgets, negatives, targeting, and campaign structure become tools for fixing specific problems.

The goal is not the lowest possible ACoS.

The goal is an advertising account that spends money deliberately, protects profitable traffic, reduces avoidable waste, and supports the business objective.

SellerRoot helps Amazon sellers identify and prioritize these optimization opportunities across campaigns, targets, search terms, bids, and budgets.

Explore SellerRoot's Amazon PPC optimization platform

About the author

Yogendra Kashyap

Amazon Ads operators

Yogendra Kashyap is the Founder of SellerRoot and an Amazon Ads expert with 9+ years of experience helping brands grow through data-driven advertising. His expertise spans Amazon PPC, campaign optimization, search term analysis, and marketplace growth. Together with the SellerRoot team, he is building AI-powered tools for Amazon advertisers while sharing practical, experience-backed insights to help brands improve profitability and scale on Amazon.