I haven’t hit my ACoS target yet!

There are so many factors that go into whether or not a campaign can run at a specific ACoS. These include:

• The competitiveness of a market
• Your ad’s conversion rate
• Your average order value

You can calculate your expected ACoS with this formula:

ACoS = ( (1 / conversion rate) * CPC ) / average order value

1 / conversion rate * CPC gets you the spend per sale and dividing by the average order value gets you your ACoS.

For example, if you’re selling a $20 item and people tend to buy one of them when they order (so you have a $20 average order value), your average CPC is $0.30 and your average conversion rate is 5%, you will have an ACoS of 30%. If your conversion rate is 3%, your ACoS goes to 50%!! You can use this formula to get an idea of what’s possible. 

It can take even the most experienced consultants weeks or months to get a campaign to achieve desired performance. If you have your account structured well, this can reduce the time. If there’s no method to which campaigns have what keywords and which ad groups advertise what ads then it’s going to take a while longer. Consider revamping your account structure before optimizing bids.