What is a good ACoS on Amazon? I hear the question often repeated by self-published authors when they advertise with AMS.
The answer is it depends. Yeah, that sounds like a copout. But allow me to give you a quick answer.
ACoS should be 70% or less for standalone books. If your commission percentage is 35%, then your ACoS should be at or below 35%. These levels ensure you aren’t losing money.
When advertising the first book in a long series, readthrough will help you profit at high ACoS levels. How high? My ten-book series turns a profit if I keep the ACoS below 610%.
What is ACoS?
Amazon’s Advertising Cost of Sale (ACoS) is a crucial metric for measuring ad campaign performance. ACoS tells you if you’re turning a profit or losing money on your advertisement.
How to Calculate ACoS on Amazon
We calculate ACoS by dividing the advertising cost by the revenue received from your book sales. As an example, if you spend $30.00 to advertise your book and you receive $50.00 in sales, your ACoS is $30/$50 or 60%. So:
ACoS = 100 x ( [total ad spend] ÷ [total sales] )
Maximizing Efficiency in Amazon Advertising
A low ACoS means you’re earning more than you’re spending. That’s a good thing.
But your target ACoS will vary from book to book. Why? Because an author’s goals will differ for each novel.
Sometimes you will accept an ACoS above 70% on a standalone novel if you are trying to draw eyes. Readers who had never heard of you will recognize your books after seeing a few of your ads. They might go on to buy your backlist.
ACoS changes with what you’re selling, your ad goals, and how much you can spend.
Lowering Cost
It goes without saying that it is better to spend less for a sale. But did you know the AMS platform lists ACoS for individual keywords in your campaign?
Open your advertisement and check how each keyword is performing. Are you wasting money on keywords that don’t produce orders? Are some keywords performing so well that you can safely raise your bid price and still make money?
Don’t just look at your campaign’s overall ACoS. Get granular and dig into each keyword. By pausing poor performers, you will lower the ACoS for your entire campaign and increase your profits.
Optimize Your Sales Page
Another way to lower ACoS is by improving conversions. Here, we keep our bid prices steady and focus on how our books convert.
Here is how this works.
Let’s say you pay an average of 30 cents per click. After 20 people click on your ad, one person orders your book, which is priced at $5. A 70% commission yields $3.50 in earnings for you.
The advertisement cost you $6.00 (20 clicks x 30 cents per click), so you lost money.
Optimizing your sales page entails ensuring your book description is engaging and convinces readers to buy.
Also, the quality of your cover matters. A lot. An optimized sales page includes a terrific book cover and a quality description that hooks the reader.
After optimizing your sales page by purchasing a better cover or improving the description, you might find your conversion rate improves.
If it only takes 10 clicks before someone orders your book, the advertisement will only cost you $3.00 (10 clicks x 30 cents per click). Your ad becomes profitable.
Case Study
In 2020, I released “Her Last Breath”, the first book in my Wolf Lake series. Until that point, I expected to sell 1 book for every 25 clicks.
My designer produced an eye-catching book cover that drew attention. I spent several days studying descriptions for the bestselling thrillers on Amazon. After a week, I’d perfected my description so it did my book justice.
As a result, I sold 1 book for every 20 clicks, a 25% improvement over my typical conversion rate.
Because I’d written a good story, readthrough to later books in the series proved strong. The improved conversion rate and readthrough allowed me to raise my bids and still earn a healthy profit.
What is a Good ACoS?
As stated earlier, the rule of thumb for self-published authors is to keep their ACoS at 70% or lower on standalone novels. This is an acceptable number, as it ensures you aren’t losing money, provided your commission rate is the standard 70%.
Can you do better? Sure, you can. An excellent ACoS is 35% or lower. Here, you generate a 100% return on your investment because you make $70 for every $35 you spend on advertising.
Does this sound impossible? It’s not. Many of my keywords generate a 100% return on investment.
On the other hand, an ACoS above 70% is high for a standalone novel.
Keyword Experimentation
Be patient.
At the onset, I recommend you break even or lose a little money on your new advertisement. Tinker with the keywords by pausing the non-performers, raising bids on the most-profitable targets, and adding new keywords every week.
Rinse and repeat. After several weeks, you will eliminate the money wasters and leverage the profitable keywords.
If you do this correctly, a 35% ACoS is attainable.
The Importance of Historical Data Analysis
Before initiating an advertisement or bidding on a new keyword, examine historical data. How have your previous advertisements and keywords performed?
Past performance isn’t always indicative of future returns, but it’s a great place to start.
Example:
Your past advertisements show that you sell 1 book for every 15 clicks, and your book is priced at $5.
If we want to generate an ACoS of 70% or lower, we plug the following numbers into our equation.
Target cost per click = (Book Price / (Clicks per Order)) * 70 percent
Target cost per click = ($5 / (15/1)) * 0.70
Target CPC = $0.23
When Should You Accept a High ACoS?
Authors often accept a high ACoS depending on their needs.
Most of my books are part of a series. I consider book #1 to be my loss leader. I’m willing to accept a high ACoS because I’ll make up the cost when buyers read the rest of my series.
But you don’t have to write in a series to accept a high ACoS.
A new author with limited readership might consider a high ACoS as a worthy investment. While losing money on her ads, she draws eyes to her books and expands her readership. This can pay off down the road.
Many authors don’t mind a high ACoS when advertising a new release. Driving sales toward your book during its first 30 days online will improve the book’s rank and lead to higher organic sales in the coming months.
The Product Lifecycle of Your Book
Consider where you book lands in the product lifecycle. If it is a new release, a high ranking will propel your book onto the Top-100 New Releases list. Ranking among these new releases will further boost your sales. In this case, a high ACoS is more than acceptable.
An old book on your backlist is ineligible for the new release list. Shooting for a low ACoS and maximizing your profitability is a good strategy. However, the boost your book will receive from organic sales if you raise its ranking might warrant a high-ACoS strategy.
Summary
- A good ACoS for a standalone novel is anything below 70%
- An excellent ACoS is any number below 35%
- An ACoS above 70% is considered high
- ACoS doesn’t exist in a vacuum. Series readthrough makes high ACoS values profitable
Have you experienced success with Amazon Ads? Reach out and let me know what your favorite technique is.