Amazon PPC audit checklist: break-even ACoS and the hidden leaks

Why a good ACoS can still lose money

ACoS is ad spend divided by ad sales. Amazon's own guide is clear about the limit: to stay profitable, your ACoS has to be lower than your profit margin. A blended ACoS for the whole account says nothing about which products are below that line and which are far above it.

This is what we found on a real account this year (figures rounded, client not named). The account reported a 16% ACoS, which looks healthy. One automatic campaign at 4.5% was carrying everything else:

This checklist is the order we work through on every audit. Each step takes minutes once you know where to look.

Step 1: Work out break-even ACoS for each category

Break-even ACoS is your profit margin before advertising: price, minus landed product cost, minus Amazon's fees, divided by price. Do it per category or product line, because margins differ and a blended figure hides the products that can never be profitable on ads.

Example for one product. Your own figures go in our break-even ACoS calculator.

Any campaign or category running above its break-even ACoS loses money on every ad sale, whatever the account average says.

Step 2: Run the hero campaign test

One efficient campaign, often a broad automatic one or a branded one, can pull the account average down and hide the leaks. The test is simple:

1. Sort campaigns by ad sales. Use the last 30 or 60 days so one good week does not skew it.
2. Take out the top campaign. Recalculate account ACoS from the rest: their total spend divided by their total ad sales.
3. Compare every campaign with its break-even. Use the category break-even from step 1, not the account average.
4. Mark the leaks. Anything above break-even goes on the fix list: lower bids, tighter targeting, a better listing, or a pause.

If the account ACoS doubles when one campaign is removed, the account is not healthy. It is being carried.

Step 3: One product, one advertiser

Amazon's advertiser guide says a product must be eligible for the featured offer (the Buy Box) to be advertised with Sponsored Products. If another account holds the featured offer, your Sponsored Products ad for that product cannot win, even though the campaign looks active.

This happens more than brands expect: a second seller account in the same company, a reseller or distributor on your listing, or a suppressed offer. In one audit, 97 of 486 advertised products were only buyable from another account.

• Open the live product page for every advertised product and check who the featured offer is from.
• If you sell from two accounts, advertise each product from the account that holds the featured offer.
• Pause ads on products you are not the featured offer for, until that is fixed.
• Check stock: out-of-stock products stop serving too.

Step 4: Bid at the bottom of the suggested range

Amazon shows a suggested bid range for keywords and targets. Our rule is to start at the bottom of that range, or about 20% under it, and raise bids only on terms that convert. Starting high buys expensive clicks before you know which ones sell.

In the audit above, manual keyword bids of $0.50 to $0.70 were where the money leaked, while automatic clicks at around $0.06 converted. Cheaper clicks that convert beat expensive clicks that do not.

Step 5: The weekly cut

Once a week, open the search term report for the last 7 to 14 days and apply one rule:

A search term with 5 or more clicks and 0 orders becomes a negative keyword. The budget it was using moves to the terms that do convert.

For higher-priced products or listings that convert slowly, raise the click threshold so you do not cut a term too early. The point is a fixed weekly habit, so waste never builds up for a month before anyone looks.

The checklist

Copy this into your weekly routine. The first five are monthly; the rest are weekly.

• Break-even ACoS worked out for every category or product line.
• Every campaign compared with its own category's break-even, not the account average.
• Hero campaign test done: account ACoS recalculated without the best campaign.
• Campaigns above break-even listed with a fix: lower bid, tighter targeting, better listing or pause.
• Live product page checked for every advertised product: your offer holds the featured offer.
• Only one account advertises each product.
• Out-of-stock products removed from campaigns.
• New keyword bids set at the bottom of the suggested range, or about 20% under.
• Bids raised only on terms with orders.
• Search terms with 5+ clicks and 0 orders added as negatives.
• Budget from cut terms moved to converting terms.
• Account ACoS reported with and without the top campaign, every month.