What's a "good" ACoS?

🙄

No but I get it.

You want to make sure you're doing it right.
That you're not missing something and leaving sales on the table.


So let's talk ACoS.

One main thing you should know. (One thing new brands don't understand)

Your ACoS is determined by two things that are hard to control from inside the ad console.

1) Your Conversion rate
2) Your CPC


ACoS = Ad spend / Ad Sales

Your ad spend is determined by...
How many clicks on average it takes you to convert (ad CVR)
How much you're paying for each click (CPC)

Then how much you make when someone buys (sale price)


You can control your cost-per-click with good bid management.
There's just one problem.

Your competition.


See the ad auction is just that, an auction.
If your competitor is willing to pay $15 for a TOS placement guess what the TOS CPC will be?

$15.01!


Here in lies the problem with the whole "what's a good ACoS question".

In a perfect world you could calculate what CPC you need to reach your desired ACoS.

Heck I'll give you the forecasting formula!


(Sale Price * Target ACoS) / ( 1 / Conversion Rate ) = Target CPC


In theory you could set all your bids to your target CPC and hit your target ACoS.

The problem is your bids end up so low you price yourself out of the ad auction.
Resulting in no impressions!


So what's a good ACoS?

As low as your market will allow without losing market share!

I know it's not a defined number but it's the best number.


You find it by testing.