If your Advertising Cost of Sales (ACoS) is hovering above 40%, you aren’t alone—but you are likely losing money. Lowering ACoS isn’t about spending less; it’s about spending smarter. Here is our 3-step framework to trim the fat from your ad spend.
Step 1: The “Negative” Cleanup The biggest drain on your budget is “Junk Clicks.” These are keywords that get clicks but zero conversions.
- Action: Go to your Search Term Report. Identify any keyword that has spent more than your Average Order Value (AOV) without a sale. Add these as Negative Exact keywords immediately. This stops the bleeding instantly.
2. Focus on “High-Intent” Long-Tail Keywords Bidding on generic terms like “Shoes” is expensive and competitive. Bidding on “Men’s Waterproof Trail Running Shoes” is cheaper and targets someone ready to buy.
- Action: Shift 60% of your budget toward long-tail keywords. The search volume is lower, but the conversion rate is significantly higher, which naturally pulls your ACoS down.
3. Optimize Bids Based on “Dayparting” Your customers don’t shop at the same rate at 3 AM as they do at 8 PM. If you bid the same amount all day, you are overpaying for low-intent traffic.
- Action: Use “Dayparting” to increase your bids during peak hours (usually evening) and lower them during off-peak hours. This ensures your budget is available when the “buyers” are active.
The Pro Tip: Don’t just obsess over ACoS. Watch your TACoS (Total Advertising Cost of Sales). If your total sales are growing and your brand is gaining organic rank, a slightly higher ACoS on certain keywords might be a strategic win.