CPC, ROAS, CPA. Abbreviations that would be classed as jargon by the non-PPC world. Well now there’s another one you should familiarise yourself with; ACOS.
ACOS is something that’s creeping into Google Ads as a metric for measuring success more and more lately, and whilst it’s still associated more with Amazon Ads, there’s no reason why it should be ignored or forgotten about, especially given how it’s easier for some advertisers to stick with one universal KPI.
Advertising cost of sales (ACOS) is a way of advertisers understanding how much they’ve spent acquiring revenue through their ad spend. Think of it as the opposite of return on ad spend (ROAS), although not in a negative way. With ROAS, the higher the percentage, the better the performance, and this metric is still a staple of how many e-commerce advertisers measure their paid search success. However, with ACOS, the lower the percentage, the better.
Let’s talk figures:
If someone has a 1,000% ROAS target, they essentially need to generate £10 of revenue for every £1 spent. This as an ACOS percentage is 10%; the advertiser can only spend 10% of what they make.
You can work out what an ACOS percentage is from a ROAS target quite easily, using the following sum:
Let’s say your ROAS target is 850%;
the way you’d calculate what you need your ACOS to be would be to take 1 and divide it by a decimalised version of your ROAS target (like how Google Ads displays conv. value/cost).
In this instance, that’s 1 divided by 8.5.
This equals 0.117.
Your ACOS target is, therefore, the two numbers immediately after the decimal point: 11%.
One other example; your ROAS target is 2,000%.
1 divided by 20 equals 0.05.
Your ACOS target is therefore 5%.
The flip side of this sum is working out what a ROAS is from an ACOS target. This isn’t something I’d envisage you having to do too often, but it’s worthwhile knowing the formula for it anyway. It is as follows:
Your ACOS target is 6%. The process you need to follow in order to work out the ROAS target is to take 1 and divide it by 0.06.
This works out at 16.66%.
All you have to do is remove the decimal point, and you have a ROAS target of 1,666%.
Sticking with supposedly cursed numbers, let’s say you have an ACOS target of 13%:
1 divided by 0.13 equals 7.69.
Here, the ROAS equivalent of a 13% ACOS target is 769%.
But how do I see this information in Google Ads, you’re asking…
Whilst Google Ads doesn’t currently have a metric for ACOS, you can create one yourself for certain viewpoints. This means you can see an ACOS column at campaign, keyword and product group view, which is extremely simple to do.
First, go to modify columns, and click + custom column
From there, simply name and create your custom column. The formula is extremely simple; the cost metric divided by the conversion value metric.
That’s it, job done.
What this will allow you to do is view your custom ACOS column in and amongst your other columns, like the example below:
And there you have it, in less than 600 words: what ACOS is, why it’s important and how to view it in Google Ads.
How you pronounce it is on you; A-cos or ay-cos – it’s like A-sos or ay-sos.
If you do have any further questions about calculating ACOS within your Google Ads advertising, or anything, for that matter. Then please do feel free to get in touch below.