Amazon PPC Costs Rising: Why Your ACoS Keeps Climbing and How to Fix It
- Amazon Growth Lab
- Dec 15, 2025
- 12 min read
Updated: Dec 23, 2025
You've been selling successfully on Amazon. Your Amazon PPC campaigns used to run at 18% ACoS. Profitable. Predictable. Scalable.
Now you're at 32% ACoS and climbing. You've increased your budget twice trying to maintain sales volume. Your ad spend hit $50,000 this month. Your profit margins are collapsing.
You're caught in Amazon's ad auction inflation spiral, and 90% of sellers responding to rising ACoS are making it worse by doing exactly what you're doing. They're spending more.
Industry research suggests the average return on Amazon advertising has declined to approximately 2.5-3:1 for many sellers. That's roughly $2.50-$3.00 in sales for every dollar spent, or 33-40% ACoS. If you're experiencing climbing ACoS, you're not alone. You're experiencing the structural economics of a marketplace where millions of third party sellers now compete for the same customer eyeballs.
At Amazon Growth Lab, we manage over $100M in Amazon sales annually. We've seen this pattern accelerate dramatically in 2024-2025. Spending more on Amazon ads won't solve this.
You need to restructure your entire approach to Amazon PPC advertising to reduce ad dependency while maintaining sales velocity.
Key Takeaways
Rising ACoS is structural, not tactical. Increasing bids and budgets typically makes the problem worse, not better.
TACoS matters more than ACoS. A 30% ACoS campaign can be efficient if it's driving organic sales and your TACoS is 15%.
Listing optimization comes before PPC optimization. Poor listings waste ad spend regardless of campaign structure.
The goal is reducing ad dependency. Successful Amazon businesses derive 60-70% of sales from organic rankings, using ads strategically rather than as a permanent crutch.
Most accounts have 20-30% wasted spend. Negative keywords, campaign structure, and match type issues are fixable without reducing sales.
Key Definitions
ACoS (Advertising Cost of Sale):
The percentage of ad-attributed sales spent on advertising. Calculated as Ad Spend ÷ Ad Sales × 100. An ACoS of 25% means you spent $25 in ads to generate $100 in ad-attributed sales.
TACoS (Total Advertising Cost of Sale):
The percentage of total sales (organic + paid) spent on advertising. Calculated as Ad Spend ÷ Total Sales × 100. TACoS shows true advertising efficiency because it accounts for organic sales driven by ad visibility.
Break-Even ACoS:
The maximum ACoS at which you neither profit nor lose money on ad sales. Calculated as (Unit Profit Margin ÷ Selling Price) × 100. Any campaign running above break-even ACoS loses money on every sale.
CPC (Cost Per Click):
The amount you pay each time someone clicks your ad. Amazon's auction system determines CPC based on competition, relevance, and expected conversion rates.
How Does Amazon's Ad Auction Work?
Amazon Sponsored Products operates as an auction where you bid for keyword placement. While often described as a "second-price auction" similar to Google Ads, the actual mechanics are more complex. Amazon factors in bid amount, relevance, and expected conversion rates. Generally, winners pay something close to the next-highest competitive bid rather than their maximum, but the exact calculation varies by placement and competition.
Why Do Amazon CPCs Keep Rising?
In competitive categories, average CPCs have increased significantly. Keywords that cost $0.75-$1.00 in 2020 now often reach $1.50-$2.50 or higher in 2025, though this varies substantially by category, seasonality, and competition level. Some niches remain relatively affordable while others have seen even steeper increases. Here's why the trend continues.
More Amazon sellers join daily:
According to marketplace data, Amazon continues to see substantial seller growth, with competition intensifying in 2024-2025. Every new competitor increases demand for the same limited ad placements. When 20 sellers bid instead of 10, competitive pressure rises, increasing what you pay.
Amazon's algorithm encourages bidding wars:
Campaign Manager shows you're "below first page bid" and suggests raising bids on your Amazon PPC ads. You increase from $2.00 to $2.50. Your competitor sees the same message and raises it to $2.60. The cycle continues until someone's margin breaks.
Amazon profits from competition:
Unlike Google, Amazon generates revenue from both advertising and sales. According to Amazon's financial reports, advertising revenue exceeded $30 billion annually, reflecting massive seller investment in Amazon PPC advertising.
What Does the ACoS Death Spiral Look Like?
Month 1: ACoS climbs from 20% to 25%. Seller increases bids to maintain impression share in Amazon search results.
Month 2: ACoS hits 28%. Seller increases budget to maintain sales volume for their sponsored product ads.
Month 3: ACoS reaches 32%. Seller realizes profit margins are destroyed but fears stopping ads will crash organic ranking.
Month 4: Seller either accepts unsustainable ACoS or slashes ad spend, watches sales collapse, and wonders what happened.
This pattern looks like bad Amazon PPC management. It's actually rational seller behavior in an irrational auction environment.
What Is a Good ACoS on Amazon?
Every Amazon seller asks: "What should my ACoS be?" The answer depends on your business model, margins, and strategy. Amazon doesn't publish official ACoS benchmarks, but based on our experience managing hundreds of accounts and industry data, here are typical ranges we observe:
Product Category | Typical ACoS Range | Why |
Home & Kitchen | 25-35% | High competition, moderate margins |
Electronics | 15-25% | Lower margins, price-sensitive |
Beauty & Personal Care | 30-45% | High competition, brand loyalty matters |
Sports & Outdoors | 20-30% | Moderate competition, seasonal |
Supplements | 25-40% | Extremely competitive, compliance issues |
These ranges are heuristics based on our analysis of client accounts and third-party industry benchmarks. They're not Amazon-defined standards. Actual results vary significantly based on subcategory, competition level, product maturity, and your specific margins. Your optimal ACoS depends on your break-even calculation, not category averages.
How Do You Calculate Break-Even ACoS?
Your break-even ACoS is the maximum you can spend on Amazon advertising without losing money:
Break-Even ACoS = (Unit Profit Margin ÷ Selling Price) × 100
Example:
You sell a product for $100. After Amazon referral fees (15%), FBA fees ($8), landed cost ($35), and other costs ($7), your profit margin is $35.
Break-Even ACoS = ($35 ÷ $100) × 100 = 35%
Any campaign running above 35% ACoS loses money on every sale. If your break-even is 35%, many sellers target 20-25% ACoS to leave room for organic sales and maintain healthy margins. This varies based on growth stage and strategy.
Why Is TACoS More Important Than ACoS?
ACoS (Advertising Cost of Sale) only measures ad efficiency in isolation:
ACoS = Ad Spend ÷ Ad-Attributed Sales
TACoS (Total Advertising Cost of Sale) measures ad efficiency against your entire business:
TACoS = Ad Spend ÷ Total Sales (Organic + Paid)
How Does TACoS Change the Picture?
A PPC campaign with 30% ACoS sounds expensive. But if it's driving strong organic sales, your TACoS might only be 15%. You're actually running efficiently. Your Amazon ads are doing their job of building visibility that converts to organic sales.
The seller focusing only on ACoS sees an expensive advertising campaign. The seller tracking TACoS sees an efficient growth engine.
New product launches typically run 40-60% ACoS initially. You're not trying to be profitable; you're buying reviews and ranking. After 60-90 days with 25+ reviews and page 1 ranking, you dial back Amazon PPC ads and let organic sales carry the product.
How Does Organic Ranking Affect Amazon Advertising Costs?
If you depend entirely on Amazon ads for sales, you'll never achieve sustainable profitability on Amazon. The auction dynamics ensure CPCs rise faster than your ability to raise prices.
What Is the Amazon Ranking Flywheel?
Phase 1 (Months 1-3):
Heavy ad spend (30-50% ACoS) to generate sales velocity and reviews through sponsored product campaigns. Your Amazon PPC ads aren't profitable yet. You're investing in ranking.
Phase 2 (Months 4-6):
Organic ranking improves. You dial back ad spend while maintaining sales volume. ACoS drops to 20-30% as organic percentage grows.
Phase 3 (Months 7+):
Strong organic ranking means 60-70% of sales are organic. You advertise strategically to maintain visibility and defend against competitors. ACoS stabilizes at 15-25% or lower.
Most sellers experiencing rising ACoS are stuck in Phase 1 forever. They're advertising but not ranking. Their Amazon ads generate sales, but those sales don't convert to improved organic position. They're renting visibility instead of building it.
Why Aren't My Amazon Ads Building Organic Rankings?
If your listings aren't optimized for the keywords you're advertising, ad sales provide less ranking benefit for those terms. You're paying for traffic that doesn't build as much long-term value as it could.
Example: You advertise "stainless steel water bottle" at $2.40 per click through sponsored product ads. Your listing title is "Premium Water Bottle for Sports and Gym." Your title doesn't contain "stainless steel," which limits how strongly Amazon's algorithm associates your ASIN with that keyword organically.
Your ad sales may still provide some ranking benefit, but it's significantly reduced compared to a listing where the advertised keyword appears in the title and other ranking factors. You're getting less long-term value from each advertising dollar than you could be.
How Does Listing Optimization Reduce Amazon Ad Costs?
At Amazon Growth Lab, when we inherit accounts with unsustainable ACoS, we don't start by optimizing Amazon PPC. We start by auditing product listings.
Why Do Poor Listings Waste Ad Spend?
Advertising without conversion optimization is burning cash. If your listing converts at 8% and your competitor's converts at 15%, you need twice as many clicks to generate the same sales. At $2.40 per click, that's the difference between profit and loss.
We optimize all critical ranking factors:
Title optimization: Front-load primary keywords you're advertising. If you're bidding on "stainless steel water bottle," that exact keyword phrase should appear in your title's first 80 characters.
Bullet points: Address customer pain points while naturally incorporating keyword variations. Amazon's algorithm reads bullets for relevance signals.
Backend search terms: Maximum 249 bytes of hidden keywords that influence organic ranking without cluttering customer-facing content.
A+ Content: Amazon A+ content improves conversion rates by 5-10% on average. Better conversion means lower ACoS because you need fewer clicks to generate each sale.
Images and infographics: Lifestyle images showing the product in use increase conversion significantly. Infographics highlighting key features reduce returns by setting proper expectations for customers.
How Do Listings and PPC Work Together?
When we optimized Ernst Grain's product listings and coordinated with their Amazon PPC advertising strategy, we achieved 30%+ revenue growth in 60 days while reducing TACoS from 5% to 2.5%. The listing optimization improved organic ranking, allowing us to reduce ad spend while maintaining sales velocity.
This is the model: Amazon ads drive initial traffic and ranking. Optimized listings convert that traffic efficiently and build organic position. Over time, organic sales dominate and ad dependency decreases.
What Campaign Structure Problems Cause High ACoS?
Sometimes rising ACoS has nothing to do with auction inflation. Campaign structure failure is often the culprit. We audit accounts spending $50K+/month on Amazon PPC and frequently find these issues:
No Negative Keywords
Amazon sellers lose thousands monthly on irrelevant search terms. If you sell "stainless steel water bottles" and appear for "plastic water bottles," every click is wasted.
Review Search Term Reports weekly and add negative keywords aggressively to your PPC campaigns.
Broad Match Gone Wrong
Broad match campaigns generate discovery but also waste. One client was spending $8,000/month on a broad match campaign for "yoga mat" that triggered for "yoga mat cleaner," "yoga mat carrier," and "yoga mat spray." None converted. All wasted budget.
Auto Campaigns Left Running Forever
Automatic campaigns are useful for discovery but inefficient long-term. After 30-60 days, harvest winning keywords into manual campaigns and pause or reduce auto campaign budgets dramatically.
Bidding on Branded Terms
If you own the brand, you likely rank #1 organically for your brand name. Bidding on your own brand name through sponsored brand ads is paying for sales you'd get anyway.
At Amazon Growth Lab, we use proprietary bidding strategies combined with Helium 10, and Jungle Scout to identify these inefficiencies. Many accounts have 20-30% wasted spend that can be eliminated without reducing sales.
When Should You Cut Amazon Ad Spend?
Sometimes the right answer is counterintuitive: Cut ad spend by 50% and accept lower sales temporarily while you rebuild organic ranking.
When to Make This Call
Your ACoS is 15+ points above break-even and climbing
TACoS exceeds 25-30% for established products
You have minimal organic sales (90%+ are ad-attributed)
Cash flow crisis: Advertising spend is consuming cash flow needed for inventory
What Does the Rebuild Process Look Like?
Week 1-2: Cut ad spend by 50%. Yes, sales will drop 30-40%. This is expected and temporary.
Week 3-4: Use saved ad budget to fix listings. Optimize every ranking factor. Improve images. Rewrite bullets. Add A+ Content.
Week 5-8: Gradually restart Amazon PPC advertising on your newly optimized listings.
Start with exact match campaigns on your highest-converting keywords only.
Week 9-12: Scale winning campaigns. Add phrase and broad match. Monitor TACoS, not just ACoS.
This approach is painful short-term but prevents the alternative: continuing unprofitable Amazon advertising until your business fails.
When Does Rising ACoS Require Expert Management?
Navigating rising advertising costs while maintaining profitability shouldn't mean choosing between cutting ads and going broke. At Amazon Growth Lab, we help sellers systematically optimize Amazon PPC advertising while reducing ad dependency.
How We Fix Rising ACoS
Campaign Structure Optimization:
We audit your PPC campaigns to identify wasted spend: irrelevant search terms, underperforming ad types, and bidding strategy inefficiencies. Our systematic approach typically finds 20-30% wasted spend that can be eliminated without impacting sales.
Listing + PPC Coordination:
We synchronize listing optimization with your Amazon advertising campaigns. When your listings convert better and rank organically for keywords you're bidding on, ACoS drops naturally without reducing traffic.
TACoS-Focused Management:
We optimize for sustainable business growth measured by TACoS, not just the lowest possible ACoS. Our strategies balance sponsored product ads with organic ranking to create the flywheel effect that reduces long-term ad dependency.
Our Amazon PPC Track Record
Ernst Grain: Scaled to $10M with 2.5% TACoS through strategic PPC and listing optimization
Ray-Ban: 1,477% sales increase while maintaining profitable advertising campaigns
98% client retention rate
Managing hundreds of millions in Amazon sales with sustainable ACoS
When your ACoS is climbing above break-even, or when you want to build sustainable profitability instead of renting visibility forever, professional management ensures your Amazon PPC advertising creates long-term value.
Frequently Asked Questions
What is a good ACoS for Amazon PPC?
A good ACoS depends on your profit margins and business goals. Calculate your break-even ACoS (profit margin ÷ selling price × 100), then target 50-70% of that number. For most established products, 20-30% ACoS with TACoS under 15% indicates healthy performance.
What is the difference between ACoS and TACoS?
ACoS measures ad spend as a percentage of ad-attributed sales only. TACoS measures ad spend as a percentage of total sales (organic + paid). TACoS is more useful because successful advertising drives organic sales, making a 30% ACoS campaign efficient if TACoS is 15%.
Should I pause Amazon ads when ACoS is too high?
Don't pause completely. First eliminate wasted spend through negative keywords and campaign restructuring. If ACoS remains 10+ points above break-even, reduce spend 30-50% while improving listings. Complete pauses hurt organic ranking because Amazon considers total sales velocity.
How long does it take to lower Amazon ACoS?
Most accounts see meaningful improvement within 45-60 days. Weeks 1-3 focus on negative keywords for quick gains. Weeks 4-6 show improvement from better targeting. Week 8+ reveals significant progress as organic ranking improves from optimized campaigns.
Why is my Amazon ACoS increasing?
Rising ACoS typically results from increased competition (more sellers bidding on your keywords), declining conversion rates, poor campaign structure, or weakening organic ranking. If your ACoS jumped 15+ points in 6 months, you likely have fixable structural problems rather than just market inflation.
Can you succeed on Amazon without advertising?
Not initially. New products need ads to build ranking and reviews. After achieving page 1 ranking with 25+ reviews, reduce ads as organic sales grow. Mature products typically derive 60-70% of sales organically, using ads strategically for visibility rather than as a permanent sales driver.
How much should I spend on Amazon PPC?
Most successful sellers spend 5-15% of revenue on advertising, though this varies by product lifecycle and category. New launches require higher investment (potentially 20-30% of revenue) to build ranking. Established products with strong organic sales can advertise profitably at 5-10%.
What causes wasted spend in Amazon PPC campaigns?
The most common causes are missing negative keywords (appearing for irrelevant searches), overly broad match types, auto campaigns running indefinitely without harvesting winners, and bidding on your own brand terms when you already rank #1 organically. Most accounts have 20-30% waste.
What is the difference between Sponsored Products, Brands, and Display?
Sponsored Products promote individual items in search results and product pages. Sponsored Brands showcase your brand and multiple products at the top of search. Sponsored Display enables retargeting and appears on product pages and off-Amazon. Start with Products, add Brands once profitable.
Should I hire an Amazon PPC agency?
Consider professional management when spending $50,000+/month with rising ACoS, lacking time for weekly optimization, unsure how to coordinate PPC with listing optimization, or needing to scale but current ACoS makes it impossible. Professional management often pays for itself through waste elimination.
The Path Forward
Rising ACoS is a structural challenge, not a tactical problem you solve by tweaking bids. It requires rebuilding your entire Amazon strategy around three core principles:
Listing optimization comes first:
Your product listings must convert traffic efficiently before you can profitably scale Amazon advertising. Optimize every ranking factor, test everything, and build conversion rate as your competitive advantage.
Think in TACoS, not ACoS:
Your goal is building a business where Amazon PPC advertising drives both immediate sales and long-term organic ranking. The lowest possible ACoS means nothing if you're not building organic momentum.
Build the ranking flywheel:
Amazon ads drive initial traffic and ranking. Optimized listings convert that traffic and strengthen organic position. Over time, organic dominates and advertising becomes a strategic defense rather than your only growth engine.
At Amazon Growth Lab, this is how we've helped brands like Ernst Grain scale to $10M with 2.5% TACoS and Ray-Ban achieve 1,477% sales growth. We rebuild the entire funnel to create sustainable, profitable growth for third party sellers.
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