How to Reduce High ACOS in Amazon PPC

Amazon PPC is a great opportunity for eCommerce sellers, but it can reduce profits quickly if your Amazon ACoS gets too high. When your ad spend keeps going up it can shrink profit margins and drag you towards loss. But the good news is you can lower your ACoS without compromising on the sales momentum. 

This guide covers everything you need to know to bring your ACoS down while maintaining high profits. Instead of cutting budgets blindly, you will learn how to improve some aspects of advertising campaigns for better control. The goal is not just lowering numbers on a dashboard, but building a profitable, scalable Amazon PPC system that supports long-term growth.

Understanding the ACoS Balancing

Before diving right into ACoS reducing strategies, it is crucial to understand what it actually represents. Amazon ACoS, or Advertising Cost of Sales, indicates the percentage of your ad spend compared to the revenue generated from those ads. For example, if you spend $100 on ads and make $500 in sales, your ACoS is 20%. ACOS can be calculated using the formula:

ACoS = (Ad Spend ÷ Ad Revenue) x 100

If you spend $200 on ads and bring in $1,000 in sales, your ACoS is 20%. That means every advertising dollar brings you five dollars in sales. This metric is key because it tells you how effectively your Amazon PPC campaigns convert ad spend into revenue.

A high ACoS means every sale costs you more, and your Amazon profit margin drops. This often indicates a need for better ad targeting or optimization.

A low ACoS means your ads are cost-effective, letting you make more profit and grow your store. It means you are spending less on ads relative to the sales you are generating, indicating more efficient advertising. Keeping your Amazon ACoS under control is central to smart Amazon campaign management and long-term business growth. However, if your ACoS is too low, you might be under-spending and missing out on potential sales. Cutting your ad spend just to lower too aggressively can cause your visibility to go down and your sales also go down with it. Aim for a balanced ACoS that aligns with your profit margins and overall business goals.

5 Strategies to Lower ACoS Effectively

1. Refine Your Keyword Strategy

Not all keywords deserve the same level of investment. Targeting only the most relevant keywords and actively using negative keywords is crucial for Amazon PPC. This approach saves your budget and improves your targeting. Invest your budget toward phrases and exact match keywords that drive converting traffic. Broad match keywords might bring traffic but it often comes with higher ACoS due to irrelevant traffic. 

Instead of broad keywords focus on long-tail keywords. These specific keywords usually have less competition and lead to more qualified traffic. Using negative keywords is also crucial for Amazon PPC. This further improves targeting and also cuts wasted ad spend resulting in lower ACoS. 

2. Optimize Listings for Higher Conversions

Before pouring more money into ads, ensure your listing is conversion-ready. Your Amazon listing directly impacts campaign performance. A well optimized listing with high quality images, keyword rich titles, and detailed descriptions contribute to better conversion rates. When your organic conversion rate improves, your PPC conversion rate also improves resulting in reduced ACoS. 

It is highly suggested to conduct A/B testing on listing elements to identify what works with customers. Even small improvements in conversion rate have a drastic impact on advertising costs. A listing that improves its conversion rate from 12% to 18% can significantly lower your ACoS by 30% which is quite huge.

3. Refine Bidding Strategies to Cut Wasted Spend

Adjusting your bid is key to reduce wasted ad spend and this is where most sellers either over spend or underspend. It is essential to keep the balance so that your sales momentum won’t stop. Brands that rely on performance data to adjust bidding get better results. 

Moving your budget toward high performing keywords is the best strategy to balance visibility without overspending. This also ensures high Amazon PPC ROAS resulting in lower ACoS. Review your placement reports regularly to understand where your ads perform best. Top of search placements typically cost more but often convert better for high-intent keywords. 

Adjust your placement based on actual performance data and avoid aggressive bidding without data to avoid wasted ad spend. 

4. Set Clear Campaign Goals and Segments

Start every campaign with a clear goal and segment campaigns to closely watch specific products or audience groups. It is also recommended to segment campaigns by intent and match type as it offers higher control. Organizing your campaign this way allows more control and easier optimization. 

You can easily identify performance drivers to optimize bids more precisely reducing wasted ad spend. This results in lower ACoS and the best thing is that you are getting it without sacrificing high converting traffic.

5. Continuous Testing & Optimization

PPC optimization is an ongoing process. It changes as the dynamic marketplace shifts. Successful sellers keep testing and improving Establish a regular optimization schedule to review performance and make decisions based on the results. Set up custom reports that highlight key metrics and track ACoS along with advertising cost of sale (TACoS), return on ad spend (ROAS) and the relationship between your organic and paid sales. 

These broader metrics prevent you from an aggressive spike in ACoS that ultimately hurts profitability. Run A/B tests for your ads, keywords, and listings to see what is actually driving the results. Making small, ongoing changes is key to steadily lowering ACoS and growing your Amazon profit margin over time.

When to Accept Higher ACoS

Higher ACoS is not always bad. Keeping the balance is the key and there are situations when you can expect higher ACoS and you should accept it.

Amazon points out that new campaigns often have higher ACoS. At first you should aim to drive visibility and impressions to gather enough data to know what is exactly working. Keep the ACoS target high and make sure your default bid is competitive right from the start. Many new sellers accept ACoS closer to break even during launch while they build data, reviews and rank and aim to bring ACoS down as the product matures. But if your ACoS stays high over time and your TACoS isn’t improving, it could mean your ads are generating clicks but not converting well.

You can also expect higher ACoS during busy times like Black Friday or holiday sales. During this earning premium placement is competitive and demands aggressive bidding which can push ACoS higher. This is not a bad sign as it can help you win loyal customers and support growth in the long run. Allowing a higher Amazon ACoS during key seasons is sometimes the best way to support future growth.

Conclusion

Lowering high ACoS is not about cutting ad spend, it’s about improving efficiency. It is possible to lower ACoS without hurting profitability. We have enlisted the most effective strategies that you can follow to build a system for profitable growth. You also have to remember that context matters in determining the right ACoS target for your business. Higher ACoS can be acceptable in some situations  like product launches and competitive seasons. The main aim should be  balanced so that your margins are protected with sales. 

If you need expert support in scaling profitably, AMZDUDES specializes in Amazon PPC management. Book a free consultation today and let our team turn your ad spend into measurable growth.

Frequently Asked Questions

What is a good ACoS for Amazon PPC?

A “good” ACoS depends on your profit margins and business goals. If your profit margin is 30%, your break-even ACoS is 30%. Many sellers aim for an ACoS below their profit margin to maintain profitability, while others may accept higher ACoS during product launches and peak seasons.

Why is my Amazon ACoS so high?

High ACoS usually results from poor keyword targeting, low conversion rates, aggressive bidding, or irrelevant traffic. It can also happen when listings are not optimized. If your ads generate clicks but fail to convert, your advertising costs increase without sufficient sales to balance them.

How quickly can I reduce high ACoS?

You may see small improvements within 1–2 weeks after optimizing bids and adding negative keywords. However, meaningful and stable reductions typically take 4–8 weeks, as Amazon’s algorithm needs time to gather data and adjust performance signals.

Does lowering bids always reduce ACoS?

Not necessarily. Lowering bids can reduce spend, but it may also reduce visibility and sales volume. The smarter approach is optimizing bids based on performance data—reducing bids on underperforming keywords and increasing them on high-converting terms.

Should I pause campaigns with high ACoS?

Not immediately. First, analyze the data. Identify whether the issue is keyword relevance, listing quality, or bidding strategy. Only pause campaigns if they consistently drain budget without contributing to sales, ranking, or brand visibility.