In the fiercely competitive world of Amazon Advertising, maintaining a low Advertising Cost of Sales (ACoS) is vital for profitability.

As Amazon’s marketplace evolves into a pay-to-play environment, sellers must employ aggressive bidding strategies to remain competitive, particularly in crowded categories.

Two critical challenges emerge in this context:

1- Achieving and balancing high sales volumes while keeping your ACoS low is essential for sustainable growth.

2- Ensuring your product’s ads stay prominent without overspending and compromising on ad visibility and positioning is key to long-term success.

Let’s delve into advanced strategies to optimize your Amazon PPC campaigns, minimize costs, and boost profitability while effectively managing these challenges.

A Deeper Dive: Amazon ACoS Explained
Advertising Cost of Sales (ACoS) is a key metric in Amazon PPC that reveals the efficiency of your ad spend in generating sales.

It is calculated as a percentage by dividing your total ad spend by the revenue generated from those ads.

For example, if you spend $150 on ads and generate $600 in ad sales, your ACoS is 25%.

A lower ACoS indicates greater efficiency, allowing you to achieve your sales targets with less spending, which is essential for maximizing profitability.

Let’s explore some sophisticated techniques to refine your Amazon PPC strategy and reduce your ACoS effectively.

Advanced Techniques: To Lower Your Amazon ACoS
To achieve success, keeping your Amazon Advertising Cost of Sale (ACoS) as low as possible, ideally below the break-even point, is crucial. 

While running ads can enhance your product’s visibility, garner more reviews, and elevate your best-seller ranking, the key challenge is reducing your ACoS to boost profitability.

Here are few proven strategies to help you lower your Amazon ACoS and start realizing substantial returns:

1- Focus on High-Performing SKUs and Leverage PDP for Revenue Boost

Maximize your advertising investment by focusing on your top-performing SKUs—those that consistently deliver high sales and strong returns. By allocating more budget to these high-converting products, you enhance your ROI and drive substantial revenue growth.

To further capitalize on these best-sellers, leverage A+ Content and Brand Story sections to upsell and cross-sell other product variations. Highlight complementary items or premium versions, encouraging customers to explore more options and increase their overall purchase value. This strategy ensures your budget is spent effectively while enhancing purchase value through strategic product promotions.

2. Refine Your Keyword Strategy

Run a keyword search using Helium10 andEffective keyword optimization is at the heart of a successful Amazon PPC campaign. Start by conducting comprehensive keyword research to identify high-performing keywords. Utilize tools like Amazon’s Bulk Download File and Search Term Report to analyze data on keyword performance. Look for keywords with low ACoS and high conversion rates, and allocate more budget to these. Conversely, reduce bids or pause keywords that have high ACoS but low conversions.

Incorporate both broad and long-tail keywords into your strategy. Broad keywords can increase visibility but may lead to higher ACoS. Long-tail keywords, though less searched, often attract highly targeted and conversion-ready buyers, leading to a lower ACoS.

3- Clear Campaign Goals:

Established specific, measurable, attainable, relevant, and time-bound (SMART) goals for each PPC campaign. This includes defining objectives such as increasing sales (conversion), achieving a target ROAS, or boosting brand organic visibility (ranking). It helps you identify the purpose of each campaign when created, makes it easy to analyze performance KPIs and optimize them accordingly. This approach minimizes the risk of errors and ensures your efforts are aligned with your business goals.

4. Optimize Bid Strategies

Bid optimization is crucial for maintaining control over your ACoS. For keywords that perform just above your desired ACoS, use precise bid adjustments to bring them back in line. Here’s a refined formula to calculate your new bid:

If you are not using any placement use this formula
New Bid=Current Bid x (Target ACoS/Current ACoS)

For instance, if your actual ACoS is 55% and your target is 30%, and your current bid is $2.50, the new bid limit would be:

New Bid=2.50 x (30%/55%) = 1.36

If you are using any placement use the following formula
Target CPC = Current CPC x (Target ACoS / Current ACoS)

After identifying your target CPC, calculate your new bid limit according to your type-of-placement as equal to target CPC

For FIXED or Down Only Bidding Strategy:
New Bid= Base Bid x ( Placement %/100) + Base Bid

For Dynamic Up and Down Bidding Strategy:
First we adjust bid as per placement due to bidding strategy

For TOS placement, BID AJUSTMENT = 100% or 1.00x
For PP & ROS placement, BID AJUSTMENT = 50% or 0.5x
Base Bid Adjustment= Base Bid x Bid Adjustment + Base Bid

Then we apply Placement Multiplier to get your final bid
Targeted Bid= Base Bid Adjustment x (Placement %/100) + Base Bid Adjustment

Adjusting bids to this calculated level helps you maintain visibility while controlling costs.

TIP: Dont implement a change in bid more than 5% in a bid per day

5. Implement Negative Keywords

Negative keywords are a powerful tool to prevent your ads from showing up for irrelevant searches. By excluding non-converting or low-relevance keywords, you can reduce wasted spend and improve your overall ACoS. Daily update your negative keyword list based on performance data to ensure your ads are targeting only the most relevant search queries.

6. Scale Winning Keywords

Once you have identified high-performing keywords with a low ACoS, consider scaling them up. Increase your bids on these keywords to gain more visibility and capture a larger share of the market. This strategy can enhance your ad’s position in search results, driving more traffic and sales. However, monitor these adjustments closely to ensure that the increased spend does not negatively impact your ACoS.

6. Segment Your Campaigns for Better Control

Campaign segmentation allows for more precise control and optimization of your ads. By dividing your products into distinct campaigns based on performance, profitability, or category, you can tailor your bidding strategies more effectively. This segmentation enables you to allocate budgets more efficiently, reduce ACoS, and improve overall campaign performance.

7. Leverage Advanced Targeting Options

Amazon offers various targeting options, including product targeting, category targeting, and audience targeting. Utilize these options to refine your campaigns. Product targeting can help you focus on specific competitor products, while category targeting allows you to reach broader audiences within specific categories. Audience targeting, particularly with Amazon’s Display Ads, lets you reach potential customers based on their shopping behavior and interests.

8. Use Automated Tools and AI for Optimization

Consider leveraging automated tools and AI-powered solutions for bid management and campaign optimization. These tools can analyze vast amounts of data and make real-time adjustments to bids and budgets based on performance trends. Automation can save time and improve efficiency, helping you maintain a low ACoS with less manual intervention.

Conclusion

Achieving a low ACoS on Amazon involves strategic, data-driven tactics: focus on high-performing SKUs, Leverage PDP for Revenue Boost, identify campaigns clear goals, refine keyword strategies, optimize bids, and leverage advanced targeting.

Stay competitive with constant campaign optimization and adaptation for increased profitability and growth.

For expert guidance, visit Prime Advertising to optimize your Amazon PPC campaigns effectively.