Turning Amazon metrics into targets and decisions (Part 2)

Amazon Ads defines ACOS as ad spend divided by ad revenue, times 100, and says it is the inverse of ROAS (ad revenue divided by ad spend). It also says ACOS needs to be lower than your profit margin to maintain a profit. So the first number to write down is your break-even ACOS, which equals the margin you earn on a sale before ad cost. Amazon adds that there is no universal good ACOS and that new campaigns often start high.

Illustrative example: a product sells at Rs 1,000 and leaves Rs 300 before ad cost, a 30% margin. Break-even ACOS is 30%, which is a ROAS of about 3.3. A campaign that spends Rs 6,000 for Rs 24,000 of attributed sales has an ACOS of 25% and a ROAS of 4. It is profitable, but only by Rs 1,200, or 5% of ad sales. Setting a target ACOS of 20% leaves room for returns and error. Write the break-even and target next to each product.

“Increase sales” says nothing about what to change. A working goal names the metric, the starting value, the target, the change you will make and the review date. For example: raise conversion from 4% to 5% by replacing the main image and rewriting two bullets, reviewed after four weeks. Only one change per goal, or you cannot tell which one worked.

The size of the prize can be estimated before you start. Illustrative figures: 3,000 sessions a week at 4% is 120 units, and at 5% it is 150 units. At Rs 1,000 a unit, that is Rs 30,000 more sales a week from the same traffic. If the same work would cost more than that gain in a quarter, choose a different lever. Brand Registry brands can test image, title and A+ Content versions with Manage Your Experiments, which Amazon.in describes on its brands page. Other sellers can change one element and log the date.

A quarter's sales push and next year's margin often pull against each other. A discount lifts units now and can drag down margin, and heavy ad spend can lift sales while ACOS rises past break-even. Decide the rule before the pressure arrives. Example rules: discount only while ACOS stays under the break-even number; never let the Buy Box percentage fall because of a stock-out; pause a campaign that stays above break-even for four weeks after its launch period.

Amazon Ads also says ACOS should not be the only campaign metric and suggests reading it with impressions, click-through rate, conversion rate and return on investment. A campaign with a high ACOS and strong conversion may be worth keeping if the product earns repeat orders. Brand Registry brands can check that through Repeat Purchase Behavior; everyone else can use their own order history.

Use one row per goal with six columns: goal, target, current value, trigger, planned action, owner. The trigger is the part most teams skip. Illustrative triggers: conversion more than a fifth below its four-week average for two weeks in a row means review the page and price; Buy Box percentage under your usual level means check competing offers and stock the same day; campaign ACOS above break-even for two weeks means cut bids or negative-match the wasteful terms.

Review the sheet at a fixed time every week and record what you did, not only the numbers. After four weeks the log shows which actions moved which metric, and that history is worth more than any dashboard. Reset goals once a quarter. Changing them weekly makes every result unreadable.

Today: calculate break-even ACOS for your three top products. This week: copy last four weeks of the Part 1 numbers into the sheet as a baseline. Next Monday: pick one goal, one lever and a review date four weeks out, and write them in the first row.

If you have not read Part 1, start there for the weekly five and the reports behind them. The two parts work as a pair: Part 1 tells you what to look at, and this part tells you what to decide.