Why ACOS Is the Wrong Metric to Optimize For

Most Amazon brands optimize PPC to ACOS targets and lose money doing it. Here's why ACOS misleads and what to optimize for instead.

Article summary

Most Amazon brands optimize PPC to ACOS targets and lose money doing it. Here's why ACOS misleads and what to optimize for instead.

Key Takeaways

Three months ago a supplements brand fired their agency. The agency had been hitting their 25% ACOS target every single month for two years. The brand's profit on Amazon was down 22% year over year.

About the Author

This is the problem with ACOS. It is the most-watched number in Amazon PPC. It shows up first on every dashboard, first in every report, first in every agency pitch deck. And optimizing to it has cost the brands I've worked with more money than almost anything else I see in the industry.

The argument I'm making

I'm going to make a case in this post that ACOS is the wrong metric to optimize for. Not the wrong metric to track. There's a difference. It's worth knowing. It just should not be what you are optimizing toward, because optimizing to ACOS means optimizing the wrong outcome.

What ACOS actually measures

If you are spending more than $10,000 a month on Amazon PPC and you are judging your account, your agency, or your in-house manager primarily on ACOS, this post is going to push you to reconsider that.

Why account-wide ACOS targets fail

Key Takeaways ACOS measures spend efficiency, not profit. Two campaigns can have the same ACOS and very different margin contributions. Account-wide ACOS targets are a trap. They aggregate campaigns with different jobs into one misleading number. TACOS is better, but still incomplete. It accounts for organic sales but still does not measure what pays your bills. The metric I optimize for instead is contribution margin multiplied by velocity , broken down by campaign type and product lifecycle stage. Optimizing to ACOS rewards short-term efficiency at the expense of ranking, market share, and brand defense.

The TACOS argument

Most Amazon brands optimize PPC to ACOS targets and lose money doing it. Here's why ACOS misleads and what to optimize for instead.