🎯 ACOS Optimization: Reduce Wasted Ad Spend and Boost Profitability

👆🏽 Click here for the Youtube video on running more profitable ad campaigns!

Learn the critical difference between ACOS and ROAS, how to price for profit, and why even a 10x ROAS can leave you broke.

This episode of the Simple and Smart SEO Show with guest Austin Becker is your new ad spend survival guide.

🎧 Listen Now: The Hidden Cost of High ROAS (ft. Austin Becker)

Podcast Summary:

In this episode, Crystal Waddell and Austin Becker talk about ACOS optimization, why profit margins matter more than revenue, and how Shopify sellers can stop losing money on ads.

Key Topics Covered:

• What is ACOS and how it differs from ROAS

• Why a low ACOS = higher profitability

• How to price your product to include ad costs

• Strategies to reduce ACOS and eliminate wasted spend

• Using collection pages and product videos for better SEO

• How Amazon, Target, and Walmart impact your ad visibility

👉🏽 Jump to Timestamps

• 00:07:14 – What is ACOS?

• 00:08:00 – ACOS vs ROAS

• 00:10:05 – Why Pricing Mistakes Kill Profit

• 00:13:00 – The $0-to-Profit Pricing Shift

• 00:18:00 – Use Video SEO to Compete with Amazon

  
  

🧠 TL;DR: What You Need to Know About ACOS Optimization

• ACOS = Ad Spend ÷ Ad Revenue (a lower percentage is better)

• ROAS = Ad Revenue ÷ Ad Spend (a higher multiple is better)

• They are inverses: 10% ACOS = 10x ROAS

• You can have a great ROAS and still be losing money if your ACOS is too high

• Include negative keywords and optimize bidding strategy to lower ACOS

• Base ad budgets on profit margins, not revenue

• Optimize collection pages and embed product videos for higher campaign performance

📊 What Is ACOS? (Advertising Cost of Sale)

ACOS = (Ad Spend ÷ Sales Revenue) × 100

If you spend $15 in ads and make $100 in sales, your ACOS is 15%.

“ACOS tells you how much of your revenue is eaten up by ads—just like rent or payroll.” — Austin Becker

💡 Key Metric Tip:Use ACOS like any other business expense. Aim for a lower ACOS than your profit margin to remain profitable.

🔄 ACOS vs ROAS: What's the Real Profit Metric?

Metric	Formula	Goal
ACOS	Ad Spend / Revenue	LOWER is better
ROAS	Revenue / Ad Spend	HIGHER is better

Example:

• ACOS of 20% = ROAS of 5x

• ACOS of 5% = ROAS of 20x (amazing!)

“People get excited about a 10x ROAS, but they don’t realize they’re still losing money if their ACOS is too high.” — Crystal Waddell

💸 How to Calculate a Break-Even ACOS

To calculate your break-even ACOS, use this formula:

Break-even ACOS = 100% – Profit Margin

If your product’s profit margin is 30%, your break-even ACOS is 70%. Spend more than that, and you’re losing money.

“A lot of great products fail because their owners never calculated this.” — Austin Becker

🧰 Strategies to Lower ACOS and Increase Profit

1. Use Negative Keywords

• Prevent irrelevant clicks that waste budget

• Regularly check your search term report

• Example: Filter out searches for “free” or wrong product type

2. Improve Ad Relevance

• Use long-tail keywords

• Match product targeting to customer intent

• Write better ad copy tied to landing page content

  
  

3. Optimize Bidding Strategy

• Start with lower bids, then scale what converts

• Use campaign performance data to pause low-ROI ads

• Allocate budget to top performing keywords

  
  

4. Focus on Conversion Rate

• Improve product listings with high quality images

• Highlight break-even price and shipping info

• Use video to build trust and keep visitors engaged

  
  

📦 Shopify + Amazon: How ACOS Optimization Impacts Both

Crystal and Austin stress that Shopify store owners often forget to price in ad spend—and it kills profit.

“I could have had a 10x ROAS and not make any profit! I doubled my prices overnight and made more money with fewer sales.” — Crystal Waddell

Whether you're selling on Amazon or driving traffic to Shopify, you need to protect your margins:

• Account for returns

• Build in buffer profit for bad hires, broken products, seasonal dips

• Keep ad spend to ≤ 5–10% of your product price

📈 Beyond ACOS: How to Compete with Amazon in Search

✅ Add Videos to Product Pages

Embed YouTube videos with schema markup to increase your visibility in Google.

“Videos show up with thumbnails in search. Bigger, more clickable.” — Austin Becker

✅ Optimize Collection Pages

Make it easy for visitors to navigate by style, use case, or category—just like Amazon.

• Clear filters (e.g., “ankle socks,” “compression socks”)

• Fast path from homepage → product page in 3 clicks

✨ Pro Tip: Sell More When People Are Buying

Instead of forcing consistent sales year-round, double down during peak seasons like:

• March (Spring break)

• Prime Day (July)

• Black Friday/Cyber Monday

• Holiday season

• 
  

“I used to fight for consistency. Now I plan for spikes.” — Crystal Waddell

✅ Frequently Asked Questions (FAQ)

Q: What is a good ACOS for Amazon sellers?A: Under 30% is good. Under 15% is great. It depends on your product margin.

Q: How do I calculate break-even ACOS?A: Subtract your profit margin from 100%. Example: 100% – 25% margin = 75% break-even ACOS.

Q: Can I still lose money with a good ROAS?A: Yes. A 10x ROAS could still leave you unprofitable if your ACOS is too high.

Q: How do I reduce wasted ad spend?A: Use negative keywords, eliminate irrelevant search terms, and optimize bids.

Q: Should I use ACOS or ROAS?A: Use ACOS—it’s more actionable for real business

owners.

🚀 Ready to Stop Losing Money on Ads?

👉🏽 Ready for a small business support group that UNDERSTANDS your creative business? 👈🏽

If you’re tired of throwing money at campaigns that don’t convert—or worse, make you look profitable when you're not—join the SEO Squad.

✅ Learn to maximize your profits based on margins through organic marketing

✅ Build product pages that rank and conver

t✅ Get expert help with Shopify SEO, Amazon PPC & more

👉 Join the SEO Squad →