Success in reducing ACOS (Advertising Cost of Sale) is confirmed by monitoring several key metrics alongside ACOS itself. These metrics ensure you’re not lowering ACOS at the expense of sales or profitability, and provide a holistic view of campaign improvement.
Essential Metrics for ACOS Reduction
- ACOS (Advertising Cost of Sale): Track your ACOS percentage over time—lower values indicate higher ad efficiency.
- TACOS (Total Advertising Cost of Sale): Shows ad spend as a share of total sales (ad + organic). A declining TACOS often reflects healthy brand growth and reduced dependence on paid traffic.
- Conversion Rate (CVR): Measures how many ad clicks convert to sales. Rising conversion rates are a sign your listings and targeting are more effective.
- Click-Through Rate (CTR): Indicates ad relevance and audience engagement. Higher CTR, paired with stable or increased conversion, generally supports ACOS reduction.
- Cost Per Click (CPC): Lower CPCs help drive down ACOS, especially when conversion rates are maintained or increased.
- Sales Volume: Track weekly or monthly sales. Sustainable ACOS reduction should not come at the cost of significant sales drops.
- Break-Even ACOS: Compare current ACOS with your product profit margin. Reduction below break-even ACOS confirms profitable ad spend.
How to Measure Success
- Review trends in ACOS and TACOS together, both declining signals improved ad effectiveness and greater organic sales growth.
- Check if conversion rates and CTR improve or remain stable while ACOS drops; this means you're targeting and optimizing ads correctly.
- Use break-even ACOS calculations to confirm that your ad spend is driving profitable growth, not just lower costs.
- Monitor overall sales numbers to ensure reductions in ad spend and ACOS are not hurting your revenue.
Related post: How to track TACoS and organic sales impact over time?