How to reduce ACOS

You’re not alone if you’ve stared at your Amazon seller dashboard and winced at the ACOS staring back. Sometimes it creeps up without warning, eating into your margins and leaving you questioning your ads, your strategy, and even your product listings. But the reality is, reducing ACOS isn’t always about cutting spend or slashing bids. Instead, it’s about a combination of smart adjustments, sharper targeting, and using every available tool to prioritize your bottom line.

ACOS (Advertising Cost of Sale) serves as the beating heart of Amazon advertising performance. It answers a simple question: “How much do I spend to make a dollar in sales?” A low ACOS means your advertising is efficient. A high ACOS signals you’re paying too much in ad spend for the return you’re getting. Optimizing this number can make an enormous difference in your take-home profit and the future health of your brand.

Let’s break down the most effective and proven ways to improve your ACOS and get more from every dollar you spend.

Nail Down Your ACOS Target

Before making any changes, clarify the “why” behind your current ACOS. Different businesses have different goals. Some brands can accept high ACOS temporarily to gain organic lift or to break into a new market. Others must hold their ACOS firmly low to ensure every sale is profitable.

Ask yourself:

• What’s my true profit per unit, after Amazon fees, shipping, and cost of goods?
• How much of this am I willing to invest in paid advertising?
• Is my goal profit, visibility, ranking, or a careful balance?

Once your target ACOS is set, you’ll know exactly how to measure progress and set benchmarks for success.

Diagnosing the High ACOS Problem

It’s tempting to adjust bids and budgets wildly when ACOS jumps, but lasting changes come from first identifying the biggest leaks:

• Keyword inefficiency: Are certain keywords eating your spend without generating sales?
• Poor ad placement or match type: Are broad match campaigns catching irrelevant traffic?
• Uncompetitive listings: Are potential buyers clicking your ad, then abandoning because your listing doesn’t close the deal?
• Pricing mismatch: Is your product priced higher than alternatives in the ad carousel?
• Review gaps: Are ads driving traffic to products with few or poor reviews?

Each of these can contribute to a high ACOS. Start by focusing on the major offenders in your account.

Master Keyword Management

Keywords are the main lever for ACOS optimization. A few strategic tweaks can often slash inefficient spend.

Refine negative keywords: Regularly review search term reports and add negative keywords to filter out clicks that never convert. This step alone can increase efficiency and lower ACOS right away.

Pause or adjust high ACOS keywords: Identify keywords with high spend and low return. Lower their bids, or pause them entirely if they clearly aren’t resulting in profitable sales.

Focus on intent-rich keywords: Long-tail, very specific keywords often convert at a higher rate and cost less per click versus broad, high-volume terms. For example:

• “organic hypoallergenic baby shampoo 16oz” vs. “baby shampoo”

The former will drive more qualified buyers, leading to more sales per click and a reduced ACOS.

Optimize match types: Use exact and phrase matches for tighter control. Let broad match campaigns be gathering grounds for new keywords, but regularly harvest performing phrases into exact or phrase campaigns.

Improve Listing Conversion

High click-throughs and low conversions are a recipe for a skyrocketing ACOS. When ad clicks are not translating into sales, the underlying issue often lies within the product listing itself.

What to scrutinize:

• Main image: Is it crisp, clear, and visually dominating?
• Title: Does it clearly state the product and main benefits?
• Bullet points & description: Are benefits front and center? Do they anticipate buyer objections?
• A+ Content: High-quality A+ pages improve conversion rates and can justify a premium price.
• Reviews and ratings: Consistency and recency matter. Campaigns that drive reviewers (within Amazon’s rules) can transform conversion rates.
• Price: Even a small misalignment compared to competitors matters when users are shopping within the same search results.

Well-optimized listings double as your best sales staff, closing transactions that your ads have initiated.

Sharpen Campaign Structure

Cluttered campaign and ad group structures can make optimization nearly impossible. Clean, segmented campaigns give you more control and clear insights.

Some tips:

• Separate branded from non-branded keywords.
• Isolate top-performing keywords into their own campaigns for fine-tuned bidding.
• Group products with similar profit margins together.
• Make use of Amazon’s Portfolio feature to organize campaigns by product line or seasonality.

An organized campaign structure means you can quickly identify what’s working and cut the deadweight.

Become Ruthless With Data

Amazon’s reporting suite is robust, but only if you check it regularly and take action based on real numbers rather than guesswork. Set up a weekly routine:

• Examine search term reports for irrelevant or high-cost search queries.
• Monitor placement reports to understand if top-of-search placements are overpriced.
• Review performance by device. Sometimes mobile and desktop perform very differently.
• A/B test new creative on Sponsored Brands or Sponsored Display campaigns.

Build easy-to-read dashboards (or use Amazon’s built-in reports) to spot negative trends before they snowball into persistent high ACOS.

Experiment With Bid Strategies

Amazon’s automated bidding tools can help, but manual bidding is sometimes superior for surgical ACOS control.

• Down only bids: Good for protecting profitability; Amazon reduces your bid when it thinks conversion is less likely.
• Fixed bids: Best when you know the value and want to avoid bid inflation.
• Bid adjustments for placements: If top-of-search performs with a profitable ACOS, consider increasing your bids for that placement only.

Monitor how changes ripple through your overall metrics. Sometimes, dialing back aggressively only shifts the inefficiency to other keywords or ASINs. It’s a process that requires both patience and persistence.

Tip: Start bid changes in small increments so you don’t lose all traction on high-performing campaigns overnight.

Diversify Ad Types

Don’t rely solely on Sponsored Products. Each Amazon ad format has its strengths, and mixing them often leads to overall lower ACOS by meeting buyers at different points in the purchase journey.

A quick comparison:

Match your budget to your business plan. Brands launching new products might tolerate higher ACOS on Sponsored Brands to build awareness, while mature listings benefit from leaner Sponsored Products campaigns focused on profitability.

Use Automation, But Monitor Closely

Amazon’s campaign automation tools (and third-party PPC software) can handle bidding, keyword harvesting, and budget adjustments. These tools save time, but regular review is vital. Automation is only as good as the data and guardrails you put in place.

• Set clear ACOS targets by campaign
• Review rules-based adjustments weekly
• Test, then refine automation settings

On autopilot, inefficiencies can scale quickly. Manual oversight prevents expensive mistakes.

Balance Volume With Efficiency

Chasing a rock-bottom ACOS shouldn’t come at the expense of market share or sustainable growth. The right ACOS for your business is one that aligns with your long-term brand building and profitability.

Sometimes, slightly higher ACOS can be justified if it’s driving top-line growth, ranking improvements, or boosting reviews. It’s all about context, margins, and where your brand sits in its growth cycle.

Checklist for Lower ACOS

• Clear, profit-focused ACOS goal for every campaign
• Ongoing keyword pruning (negatives and harvesting winners)
• Regularly optimized product listings
• Segmented, easy-to-manage campaign structure
• Data-driven decision making, not set-and-forget
• Smart use of bidding tools and ad types

Reducing ACOS is a layered effort. Smart sellers approach it as a cycle of testing, data-crunching, and fine-tuning, not a one-and-done fix. When done right, you earn more with every ad dollar—and scale your business faster.