The Myth of Low ACOS: Why a Higher Advertising Cost Can Still Be Profitable

In the world of Amazon PPC (Pay-Per-Click) advertising, ACOS (Advertising Cost of Sale) is often treated as the ultimate measure of success. A low ACOS is celebrated as a sign of efficiency, while a high ACOS is seen as a problem to fix. But here’s the truth: a low ACOS doesn’t always mean a good campaign. In fact, a 70–90% ACOS can sometimes be profitable, if you’re targeting the right keywords and competing in the right space.

Today, we’re going to challenge the obsession with low ACOS and explore why chasing it at all costs can hurt your revenue and stall your ROI. Instead, we’ll look at how a smart, long-term PPC strategy that’s built on a deep understanding of your audience can drive sustainable growth for your brand.

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What Is ACOS, and Why Does It Matter?

Let’s start with the basics. ACOS is a metric that shows how much you’re spending on ads relative to the sales they generate. It’s calculated by dividing your total ad spend by your total sales. For example:

• Spend $100 on ads and generate $200 in sales? Your ACOS is 50%.

• Spend $90 and make $100? That’s a 90% ACOS.

A lower ACOS means you’re spending less to earn each dollar, which sounds great on paper. But as we’ll see, an overly narrow focus on lowering ACOS can lead to missed opportunities and stunted growth.

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The Danger of Chasing a Low ACOS

It’s tempting to think that a low ACOS is always the goal. Who wouldn’t want to cut costs and boost efficiency? But here’s where that mindset can go wrong:

• Lower Revenue: If you slash ad spend to reduce ACOS, you might also reduce your ad visibility and opportunity to get higher organic rankings for keywords that were relevant but came with higher CPC initially. Fewer impressions lead to fewer clicks and, ultimately, fewer sales. You might save money on ads, but your overall revenue could drop.

• Stagnant ROI: A low ACOS doesn’t automatically mean a high return on investment (ROI). If your sales volume shrinks because you’ve dialed back advertising, your profits could flatline—or worse, decline.

• Missed Growth Opportunities: Some keywords or markets require a higher upfront investment. If you’re unwilling to accept a higher ACOS, you might miss out on chances to expand your reach or boost your organic ranking.

  
  

Imagine this: we could drop your ACOS from 60% to 30% in just 3–5 days by cutting your ad budget or targeting keywords for which you have already build relevancy (Low CPC). But would that grow your brand? Probably not. The real key to success isn’t a single metric, but your PPC strategy.

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When a High ACOS Makes Sense

So, when can a high ACOS, say, 70–90%—actually be profitable? Here are a few scenarios:

• High-Value Keywords: Some keywords have a high cost-per-click (CPC) but attract buyers who are ready to spend. A higher ACOS might sting at first, but if those sales lead to loyal customers (new customers) or bigger orders, it’s worth it.

• Boosting Organic Ranking: On Amazon, paid ads play a big role in improving your organic visibility. Spending more on strategic keywords can push your product higher in search results over time, reducing your reliance on ads later, even if it means a higher ACOS now.

• Competing Strategically: Breaking into a competitive market or positioning your product against established players often requires a bigger ad spend. A higher ACOS can be a smart investment if it helps you gain a foothold and stand out.

The lesson? A high ACOS isn’t a failure—it’s a tool. It all depends on how it fits into your broader goals.

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Why You Need a Long-Term PPC Strategy

Too many brands treat PPC as a quick fix: run some ads, get some sales, then try to reduce ACOS. But real growth takes time. Here’s why a long-term approach, think 4–6 months at minimum matters:

• Brand Building: Ads aren’t just about instant sales. They’re a chance to get your product in front of more eyes, building recognition and trust over time.

• Organic Growth: Paid ads can lift your organic ranking, but that doesn’t happen overnight. It takes consistent effort to see the payoff.

• Refinement: Winning PPC campaigns are not built overnight. It takes consistent testing, data analysis, and fine-tuning over weeks and months, not just days. Tools like Helium 10 or Jungle Scout help reduce the cost of experimentation by guiding smarter decisions faster.

  
  

Short-term wins might look good, but only a 4 to 6 month strategy turns those wins into sustainable growth and long-term profitability.

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Know Your Audience — Really Know Them

Here’s where things get interesting: understanding your audience isn’t just about knowing what they search for. It’s about knowing what else they’re shopping for on the platform. This opens up new possibilities:

• Broader Keywords: If your audience is buying related products, you can target keywords that aren’t directly tied to your item but still reach them. Selling coffee makers? Try keywords for coffee beans or mugs. Your ACOS might rise, but so could your sales.

• Beyond the Obvious: Don’t just focus on direct competitors. Look at the bigger picture—what’s your audience interested in? Targeting those areas can unlock higher ROI, even if it means taking a hit on ACOS upfront.

If you're selling fitness gear, it’s smart to bid on broader or complementary keywords like “protein powder” or “yoga mats.” The ACOS for these terms might be higher initially, but if they attract new customers who convert and return, it becomes a long-term win. Over time, Amazon’s algorithm begins to show your product organically under related products and related keyword searches (keywords that you might not have thought of). If your listing continues to convert well, your CPC naturally decreases, improving overall ad efficiency.

Just make sure to wait for at least two attribution windows to complete before evaluating performance. This gives you a clearer picture of long-term impact (keep track of organic ranks as well).

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Wrapping Up: Rethink Your PPC Goals

A low ACOS might look good in a report, but it’s not the whole story. Chasing it blindly can shrink your revenue, stall your ROI, and keep your brand from growing. On the flip side, a higher ACOS can be a powerful investment—if you’re strategic about it.

Here’s what to take away:

• Stop fixating on ACOS alone. Look at revenue, ROI, and long-term growth.

• Build a PPC plan that spans at least 4–6 months.

• Dig deep into your audience’s habits and target keywords that align with their broader interests.

At Cliqby, we’ve developed a proven system to help clients get real, sustainable results from PPC. Ready to rethink your strategy and unlock your brand’s potential? The choice is yours.