What is ACOS (Advertising Cost of Sale)?
ACOS is the percentage of revenue spent on ads. It tells you how much ad spend it takes to generate a dollar of sales. It’s common in marketplaces but useful anywhere you attribute revenue to campaigns.
Understanding ACOS
ACOS frames efficiency by asking what share of revenue you spend on advertising, the inverse of ROAS’s lens. Where ROAS shows revenue per dollar spent, ACOS shows how much spend generates a dollar of sales. That makes ACOS intuitive for guardrails and scenario planning across teams. The metric is sensitive to margin structures, so the same ACOS can be healthy for high‑margin products and weak for low‑margin ones. Attribution rules also shift apparent ACOS because wider windows credit more revenue to ads.
Channel mix influences ACOS (branded search often lowers it, prospecting raises it), and seasonality or promos can change baselines. Compare like‑for‑like periods to avoid false conclusions. Evaluate ACOS at the product set level to prevent blended averages from hiding poor performers. Creative relevance and feed quality move click and conversion rates, changing ACOS without touching bids. Used correctly, ACOS is a simple way to align finance and marketing.
Why ACOS matters
ACOS is simple to set and track, making it a practical guardrail for budgets and bids when you know your margins. It becomes especially useful when you need to align finance and growth teams around shared goals. It also creates a common language for scenario planning and pacing across campaigns.
- Guardrails: Set targets that protect margins.
- Alignment: Shared metric between finance and marketing.
- Simplicity: Easy to explain and monitor.
How ACOS works
ACOS works by dividing ad spend by attributed revenue to show what percentage of sales went to advertising costs (Formula: ACOS = Ad Spend ÷ Attributed Revenue). For example, $2,000 spend on $10,000 revenue equals 20% ACOS. It's the inverse of ROAS (ACOS = 1 ÷ ROAS when using the same revenue base). Channel mix influences ACOS—branded search often lowers it, prospecting raises it—so compare like periods. Creative relevance and feed quality move click and conversion rates, changing ACOS without touching bids. Attribution windows shift how much revenue is credited to ads, so keep measurement consistent.
Meta Information
- Primary Keyword: ACOS (Advertising Cost of Sale)
- Secondary Keywords: ACOS formula, ACOS vs ROAS, marketplace ACOS
- Target Word Count: 800–1,000 words
- Meta Title: What is ACOS? Advertising Cost of Sale Explained | Marpipe
- Meta Description: ACOS measures ad spend as a percentage of attributed revenue. Learn the formula, targets, and how catalog ads and feed quality influence ACOS.
- URL: marpipe.com/ad-glossary/acos-advertising-cost-of-sale
# What is ACOS (Advertising Cost of Sale)?
ACOS is the percentage of revenue spent on ads. It tells you how much ad spend it takes to generate a dollar of sales.
It’s common in marketplaces but useful anywhere you attribute revenue to campaigns.
Understanding ACOS
ACOS frames efficiency by asking what share of revenue you spend on advertising, the inverse of ROAS’s lens. Where ROAS shows revenue per dollar spent, ACOS shows how much spend generates a dollar of sales. That makes ACOS intuitive for guardrails and scenario planning across teams. The metric is sensitive to margin structures, so the same ACOS can be healthy for high‑margin products and weak for low‑margin ones. Attribution rules also shift apparent ACOS because wider windows credit more revenue to ads.
Channel mix influences ACOS (branded search often lowers it, prospecting raises it), and seasonality or promos can change baselines. Compare like‑for‑like periods to avoid false conclusions. Evaluate ACOS at the product set level to prevent blended averages from hiding poor performers. Creative relevance and feed quality move click and conversion rates, changing ACOS without touching bids. Used correctly, ACOS is a simple way to align finance and marketing.
Why ACOS matters
ACOS is simple to set and track, making it a practical guardrail for budgets and bids when you know your margins. It becomes especially useful when you need to align finance and growth teams around shared goals. It also creates a common language for scenario planning and pacing across campaigns.
- Guardrails: Set targets that protect margins.
- Alignment: Shared metric between finance and marketing.
- Simplicity: Easy to explain and monitor.
How ACOS works
ACOS works by dividing ad spend by attributed revenue to show what percentage of sales went to advertising costs (Formula: ACOS = Ad Spend ÷ Attributed Revenue). For example, $2,000 spend on $10,000 revenue equals 20% ACOS. It's the inverse of ROAS (ACOS = 1 ÷ ROAS when using the same revenue base). Channel mix influences ACOS—branded search often lowers it, prospecting raises it—so compare like periods. Creative relevance and feed quality move click and conversion rates, changing ACOS without touching bids. Attribution windows shift how much revenue is credited to ads, so keep measurement consistent.
Best practices
- Set ACOS targets from margin: tighter margins need lower ACOS.
- Segment by SKU or product set; exclude chronic underperformers.
- Improve product data (price, availability, category, reviews) to lift intent.
- Use templates to clarify price, promo windows, and social proof.
- Monitor incrementality—don’t chase ultra-low ACOS if volume collapses.
Key Takeaways
- ACOS measures ad spend as a percentage of revenue (ad spend ÷ revenue).
- Set ACOS targets based on margin; segment by product set to avoid blended averages.
- Improve feed quality and creative clarity to lower ACOS without changing bids.
- Pair ACOS with volume and incrementality to avoid starving growth.
