Amazon ACoS Too High? Here's How to Fix It

Your ACoS isn't "too high" in a vacuum. It's too high relative to your margins, your growth stage, and your strategic goals. Before you panic and slash budgets, let's figure out what's actually going on — and fix the right problem.

I've seen sellers torch their organic rank by cutting ad spend because a blog post told them 25% ACoS was "bad." I've also seen sellers bleed cash for months at 50% ACoS because they thought they were "investing in rank." Both are wrong. The answer depends on your numbers.

What's Actually a "High" ACoS?

ACoS (Advertising Cost of Sales) is your ad spend divided by your ad revenue, expressed as a percentage. If you spend $20 in ads to generate $100 in ad-attributed sales, your ACoS is 20%.

But whether 20% is good or bad depends entirely on your margins.

The breakeven calculation:

If your product has a 30% profit margin (after COGS, FBA fees, and all other costs), then any ACoS below 30% is profitable on ad-attributed sales alone. Above 30%, you're losing money on every ad-driven sale.

General benchmarks (not rules):

• Below 15%: Very efficient. Either you've nailed your targeting or you're not spending enough to capture all available demand.

• 15% - 25%: Healthy range for most established products with decent margins.

• 25% - 35%: Acceptable during launch phases or for low-margin products that need volume.

• Above 35%: Usually problematic unless you're in an intentional land-grab strategy with a funded runway.

The real question isn't "Is my ACoS too high?" It's "Is my ACoS too high for my margin structure and growth goals?"

Why TACoS Matters More Than ACoS

Before we diagnose your ACoS problem, let me introduce a better metric: TACoS (Total Advertising Cost of Sales).

TACoS = Total Ad Spend / Total Revenue (organic + ad-attributed)

TACoS gives you the full picture. If your ACoS is 30% but your TACoS is 10%, it means your ads are driving strong organic sales. The high ACoS is doing its job — it's building organic rank and total revenue.

Conversely, if your ACoS is 20% and your TACoS is also 18%, your ads aren't generating any organic lift. You're on an ad-dependent treadmill.

Track both. Optimize for TACoS. Diagnose with ACoS.

Top 7 Reasons Your ACoS Is Too High

1. You're Targeting Irrelevant Keywords

This is the number one culprit. Your campaigns are showing ads for search terms that don't convert because the shopper intent doesn't match your product.

How to diagnose: Pull your Search Term Report. Sort by spend (descending). Look at the top 50 search terms by spend. How many of them are actually relevant to your product? If more than 20% are irrelevant, you have a targeting problem. The fix:

• Add irrelevant search terms as negative exact keywords

• Review your auto campaigns — they're usually the worst offenders

• Audit your broad match keywords for scope creep

• Set up a weekly negative keyword review process (or automate it)

2. Your Listing Doesn't Convert

Ads drive traffic. Your listing closes the sale. If your listing is weak, you're paying full price for clicks that don't convert.

How to diagnose: Check your Unit Session Percentage (conversion rate) in Business Reports. Compare it to your category average. If you're below average, your listing is costing you money on every click. The fix:

• Test your main image. This is the highest-impact element

• Rewrite your title with the primary keyword front-loaded

• Upgrade bullet points to address objections, not just features

• Add or improve A+ Content

• Check your reviews — sub-4.0 ratings tank conversion regardless of listing quality

3. You're Bidding on High-Competition Keywords You Can't Win

Some keywords are dominated by brands with deeper pockets and stronger listings. Competing on their turf at your stage burns cash.

How to diagnose: Look at your Top of Search impression share and click-through rate for your highest-spend keywords. If you're paying for top placement but not converting, the keyword might be above your weight class. The fix:

• Shift budget to long-tail keywords where you can win

• Use exact match for high-competition terms with tight bids

• Focus on keywords where your product has a genuine advantage (better price, better reviews, unique feature)

• Build rank organically before trying to buy it

4. Your Campaign Structure Is a Mess

Most sellers either have one campaign with everything dumped in, or 200 campaigns with no logic connecting them. Both lead to wasted spend.

How to diagnose: If you can't quickly explain the purpose of each campaign and how they work together, your structure needs work. The fix:

• Separate campaigns by match type (auto, broad, phrase, exact)

• Create a keyword harvesting funnel: auto discovers search terms, winners graduate to exact match campaigns

• Isolate branded keywords from non-branded

• Use portfolio budgets to control spending by product group

5. You're Not Using Negative Targeting

This is the easiest win and the most neglected. Every dollar spent on an irrelevant click is a dollar wasted.

How to diagnose: If you haven't added negative keywords in the last 30 days, you're bleeding money. Period. The fix:

• Review search term reports weekly

• Add negative exact keywords for irrelevant search terms with clicks but no sales

• Add negative ASIN targeting for products that aren't real competitors

• Use negative phrase match for entire categories of irrelevant terms

We helped one brand drop from 45% ACoS to 18% ACoS in 90 days. The single biggest lever? Negative targeting. They had over $12K/month in wasted spend on irrelevant search terms.

6. Your Pricing Is Wrong

If your product is priced 30% higher than competitors with similar reviews and features, no amount of PPC optimization will fix your ACoS.

How to diagnose: Search your main keywords and compare your price to the top 10 results. Are you competitive? Is your perceived value (listing quality, reviews, brand equity) strong enough to justify a premium? The fix:

• This isn't always "lower your price." Sometimes it's "improve your perceived value"

• Test price points. Small changes (even $1-$2) can significantly impact conversion

• Consider coupons or Subscribe & Save to improve effective price without changing list price

• Factor in referral fee tiers — sometimes a price change crosses a fee threshold

7. You're Optimizing for the Wrong Metric

If you're only looking at ACoS, you might be making decisions that hurt total profitability.

How to diagnose: Calculate your TACoS trend over the last 6 months. Is it improving even if ACoS is flat? That means your organic sales mix is growing — which is the goal. The fix:

• Shift your primary KPI from ACoS to TACoS

• Accept higher ACoS on keywords that drive organic rank improvements

• Use the "ACoS by keyword age" lens: new keywords should have higher ACoS than established ones

• Set different ACoS targets for launch campaigns vs. maintenance campaigns

A Diagnostic Framework You Can Use Today

• Pull your numbers: Current ACoS, TACoS, conversion rate, average CPC, and margin per unit

• Calculate breakeven ACoS: Your profit margin percentage = your breakeven ACoS

• Identify the gap: How far above breakeven are you?

• Run through the 7 reasons above and score each one: Is this a major, minor, or non-issue for your account?

• Prioritize the top 2-3 issues and fix them in order of impact

Don't try to fix everything at once. Make one change, measure for two weeks, then move to the next.

When to Get Help

If your ACoS has been above breakeven for more than 60 days and you've tried the fixes above, the problem might be structural — campaign architecture, competitive positioning, or listing fundamentals that need a fresh set of eyes.

At GigaBrands, we've helped brands go from 45% ACoS to 18% ACoS using a combination of AI-driven keyword analysis, systematic negative targeting, and listing optimization. We manage 50+ brands, so we see patterns across categories that individual sellers can't access.

If you're doing $50K+/month and your ACoS is eating your margin, a 30-minute diagnostic call can pinpoint whether this is a DIY fix or something that needs professional management.

Book a free strategy call: https://calendly.com/d/crft-5qs-x9w

Hunter Harris is the founder of GigaBrands, an AI-assisted Amazon growth agency managing 50+ brands with over $205M in total Amazon sales.