Target ACOS = Margin before Ad Spend (Break-Even ACOS) - Target Margin after PPC

The ACoS metric and how it can be interpreted correctly is explained in more detail in this article (click here).



After subtracting all costs, the margin for the product in this example (without costs for PPC) is at 20%.

It is, therefore, possible to spend 20% of the revenue on ad spend without making losses.

Determining a Target ACOS thus depends on how much margin the product is targeting when PPC costs are included. In this example, it was decided the margin should be at least 5% so that the ACOS must not be higher than 15%. This is consequently the Target ACOS.

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