Many Amazon sellers in Latin America are running at 30-50% ACOS without understanding why their advertising "isn't working." The reality: it's not that Amazon Ads is expensive — it's that the campaigns aren't structured to make money.
What Is ACOS and When Is It "Good"?
ACOS (Advertising Cost of Sales) is the percentage of your ad-attributed sales that goes back to paying for those ads. The formula is straightforward: ACOS = ad spend ÷ ad sales × 100.
The key concept most sellers miss is the Break-Even ACOS: it equals your net profit margin. If your margin is 35%, your Break-Even ACOS is 35%. Spending above that means every ad-driven sale costs you money. Your target ACOS should be 5-10 points below that number.
Healthy ACOS (< your margin)
- Electronics: 12–18%
- Home goods: 20–28%
- Apparel: 25–35%
Warning Signs
- ACOS > 50%
- Increasing budget without improving sales
- Broad match keywords with no negatives
The 5 Mistakes That Spike Your ACOS
Before talking solutions, you need to understand why ACOS spirals out of control. These are the most common mistakes we find when auditing Latin American seller accounts:
Mistake 1: Auto campaigns running without review
Auto campaigns harvest irrelevant search terms without discrimination. Without weekly Search Term Report reviews, you're paying for terms that will never convert.
Mistake 2: No negative keywords
Your ad is showing for searches like "free," "tutorial," or "how to make" — users who will never buy. Every click is wasted money.
Mistake 3: One-size-fits-all bids
Using the same bid for exact, phrase, and broad match is a costly error. Each match type has a different conversion value and needs a different bid.
Mistake 4: Not separating campaigns by performance
Mixing star products with new launches in the same campaign dilutes your budget. Winners need their own campaigns with dedicated spend.
Mistake 5: Ignoring the Search Term Report
This report is the ground truth of your PPC account. If you're not reviewing it weekly, you're operating blind and losing money every day.
Campaign Structure That Reduces ACOS
The 3-tier campaign structure is the professional standard for keeping ACOS under control and scaling profitably. Each tier has a clear purpose:
Example: 3-Tier Structure
Tier 1 — Exact Match: Your highest-converting keywords with a proven track record. Controlled budget and aggressive bids. This tier is your revenue engine.
Tier 2 — Phrase Match: Expansion keywords that capture variations of your core terms. Medium bids. Constantly feeds Tier 1 with new winners.
Tier 3 — Auto / Broad: Discovery mode with low bids. Its only job is to surface new profitable keywords for Tiers 1 and 2, and identify irrelevant terms to add as negatives.
Negative Keywords: The Most Overlooked Lever
Adding negative keywords is, quite literally, free money. It costs nothing and immediately stops spend on terms that will never generate a sale.
High-traffic but completely irrelevant terms to add right away: "free", "used", "tutorial", "how to make", competitor brand names you don't carry. Check your Search Term Report this week — there's a very good chance you're paying for several of these right now.
"In every account we audit, we find between $200 and $800 in monthly spend wasted on completely irrelevant search terms. Negative keywords are free money." — Diego Medina F, Founder MerchandisePROS
Bid Optimization: The Target ACOS Method
Once you have the right structure and negatives in place, the next level is systematic bid optimization. Follow this process every week:
Step 1: Calculate your target ACOS
Target ACOS = net profit margin minus 8-10 points. If your margin is 35%, your target ACOS is 25-27%.
Step 2: Keywords above target ACOS
Reduce the bid by 20%. Don't pause them yet — give them room to improve efficiency at a lower bid first.
Step 3: Keywords below target ACOS with good volume
Increase the bid by 15%. These are your winners — give them more budget to scale profitable sales.
Step 4: Keywords with 0 sales after 20+ clicks
Pause or add as negatives. If after 20 clicks there isn't a single sale, the keyword is not qualified for your product.
Step 5: Review every 7 days minimum
Amazon Ads optimization is not a one-time event — it's a weekly process. Consistency is what separates profitable accounts from ones that bleed money.
Metrics to Monitor Every Week
Not all metrics are equal. These four directly impact your ACOS the most and should live on your weekly dashboard:
ACOS per Campaign
Not the account-level average — per campaign and per keyword. Averages can mask keywords that are destroying your profitability.
CTR (Click-Through Rate)
Target: >0.5%. A low CTR signals your main image or price is not competitive. The problem may not be the bid — it may be the listing itself.
CVR (Conversion Rate)
Target: >10% for competitive niches. A low CVR with good CTR means the listing isn't converting — a problem with images, price, or reviews.
Impressions vs. Clicks
The ratio between impressions and clicks indicates relevance. Many impressions with few clicks means your ad is showing for searches where you aren't attractive.
Real Case: Electronics Seller in Mexico
To make this concrete, here is a real-world example of the kind of results this method produces when applied consistently:
USB Cable Seller on Amazon Mexico
Starting ACOS: 58%
Actions taken over 30 days:
- Added 140 negative keywords identified in the Search Term Report
- Split campaigns into 3 groups by product type and performance tier
- Reduced bids on 40 keywords that were above the target ACOS
Final ACOS: 21%
Monthly savings: $340 USD — without reducing sales volume.
Frequently Asked Questions About Amazon ACOS
What is a good ACOS for Amazon Mexico?
It depends on your margin, but generally between 15-25%. Your Break-Even ACOS equals your net profit margin. Ideally, you want to be 8-10 points below that number.
Should I pause campaigns with a high ACOS?
Not necessarily. First check whether the issue comes from specific keywords. Add negatives, adjust bids, and give it 7-14 days before pausing an entire campaign.
What is the minimum budget to run Amazon Ads in Latin America?
With $15-20 USD per day you can gather enough data to optimize. Below $10/day, data accumulates too slowly to make reliable decisions.
Do auto campaigns help reduce ACOS?
Yes, but only as a discovery tool with low bids. Move profitable keywords to exact-match campaigns and add irrelevant ones as negatives.
Can MerchandisePROS audit my Amazon Ads campaigns?
Yes. Our free audit includes a basic PPC structure analysis. For a full campaign review, we offer one-on-one consulting at $115/hour.
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