Why You Shouldn't Just Look at ACOS

• Case Study: The Bigger Picture Behind a 50% ACOS
• Key Metrics That Transformed the View
• The Outcome: More Sales, Higher Profitability
• A Few Important Considerations
• Fun Fact: We See This in 90% of Our Case Studies
• Final Thoughts: Look Beyond ACOS to Maximize Profitability

When it comes to Amazon advertising, many sellers focus solely on the Sponsored Ads metrics—especially ACOS (Advertising Cost of Sales). But if you’re only looking at ACOS, you might be missing a huge piece of the profitability puzzle.

In this blog post, we’ll dive into a real-world example to show why you should be looking beyond ACOS and considering the bigger picture of TACOS (Total Advertising Cost of Sales) and organic performance. We’ll explore how doubling ad spend resulted in much more than just higher ACOS—it led to substantial growth in both organic sales and overall brand profitability.

Case Study: The Bigger Picture Behind a 50% ACOS

Let’s look at an example that perfectly illustrates this point. In the last two months, we made a strategic decision to double the ad spend for one of the accounts we manage. As expected, ad sales also doubled, but the ACOS remained at 50%, which on the surface might not look profitable at all.

However, when we zoomed out and analyzed the entire account, the story changed dramatically.

Key Metrics That Transformed the View

Here’s what happened when we looked beyond the ACOS numbers:

• TACOS dropped from an average of 34% to 28%: TACOS reflects the total cost of advertising as a percentage of overall sales, and seeing this drop meant that while ACOS remained high, the business was spending less on ads in relation to total sales.
• Organic sales nearly tripled (2.8x): Doubling ad spend had a significant positive effect on organic sales. As the brand gained more visibility through paid ads, organic search rankings improved, leading to a sharp increase in non-paid sales.
• Orders increased by 1.4x: In addition to the spike in organic sales, total orders (both organic and ad-driven) rose by 40%, boosting overall revenue.

The Outcome: More Sales, Higher Profitability

The net result? The brand is now generating an additional $2,300 in monthly sales while being more profitable than before. Despite the 50% ACOS, the overall picture shows improved TACOS and higher organic sales, making the account more profitable as a whole.

This is why ACOS, on its own, doesn’t tell the full story. In this case, a 50% ACOS was far from a problem—it was a key driver in scaling up brand sales, improving organic performance, and attracting new-to-brand (NTB) customers, all while staying profitable.

Why Higher ACOS Can Still Be Beneficial

If you're wondering how a higher ACOS can be a good thing, consider this:

• Scaling Up Sales: A higher ACOS, when properly managed, can contribute to overall sales growth. By boosting ad spend, you gain more visibility and drive more traffic, which can have a ripple effect on your organic sales.
• Improved Organic Performance: More ad sales often lead to better organic rankings, as Amazon's algorithm factors in your overall sales volume. In this case, the tripling of organic sales is a testament to that.
• More NTB Customers and Repeat Purchases: Higher ad visibility means you can attract more new customers, which often results in increased repeat purchases and customer lifetime value (CLV).

A Few Important Considerations

Before jumping to conclusions, it’s important to keep the following in mind:

• Minimizing Wasted Spend: Just because we had a higher ACOS doesn’t mean we were okay with any inefficiencies. We worked hard to eliminate wasted ad spend. In this case, 90% of our ad spend went toward highly relevant targets and strategies.
• ACOS Doesn’t Justify Poor Performance: A high ACOS isn’t automatically acceptable—only the ACOS you get after thorough optimization counts. In this instance, the 50% ACOS was the result of strategic decisions and careful monitoring of performance metrics.
• Finding the Right ACOS for Your Products: The key is to look at all the metrics—ACOS, TACOS, organic sales, and orders—together to determine the right ACOS for your specific products and business goals.

Fun Fact: We See This in 90% of Our Case Studies

This example isn’t an anomaly. In fact, 90% of the case studies we analyze reveal similar results. Focusing too narrowly on ACOS often leads sellers to miss out on the bigger picture of overall account health and profitability.

Final Thoughts: Look Beyond ACOS to Maximize Profitability

If you’re solely fixated on ACOS, it’s time to widen your scope. The right ACOS for your products might not be the lowest possible number—it could be the one that drives broader business growth, including higher organic sales, better customer acquisition, and stronger brand awareness.

By looking at TACOS, organic performance, and total orders, you can make more informed decisions about your ad spend and overall strategy. So next time you’re analyzing your Amazon PPC campaigns, remember to consider the whole picture, not just the ACOS. It could reveal new opportunities for scaling up profitably.

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