Placement ACOS Doesn’t Matter? Why You’re Making a Huge Amazon PPC Mistake & How to Fix It

You’re staring at your Amazon PPC placement reports, and something doesn’t make sense. Product pages have a low ACOS, so you’re increasing bids there, right? Meanwhile, top of search has a higher ACOS, so you’re decreasing bids.

This is one of the biggest mistakes Amazon sellers make when optimizing placements, and it can cost you serious money. The reality is, focusing solely on placement ACOS is a flawed approach that ignores the bigger picture.

In this article, we’ll break down why placement ACOS is misleading and how to actually optimize your placements for maximum profitability. Let’s dive in.

Why Optimizing For Placement ACOS Is a Trap: It’s Not What You Think

Most sellers think they can control placement ACOS directly by adjusting bids. Here’s what’s happening: they see a low ACOS on product pages and assume that means product pages are more efficient. They then try to pour more money into that placement.

The problem? The cost per click (CPC) for placements doesn’t exist. Placement modifiers are only increases to your keyword bids. You can’t separate placements from your keyword bids; they have to work together. The key is revenue per click (RPC), starting with your keyword bids and then factoring in placement adjustments.

Placement Adjustments: A Real-World Example

Let’s look at a single campaign optimized in AdLabs to show you where sellers get confused:

• Top of Search: 15% ACOS
• Product Pages: 10% ACOS
• Rest of Search: Higher ACOS (let’s say 20%)

Most sellers would keep product page bids as is, maybe increase them slightly. Then they’d decrease top of search and rest of search bids, trying to get everything to that sweet 10% ACOS.

Here’s why this is wrong: the base bids in this campaign average around $0.75. The reason product pages have the lowest ACOS is simply because they have the lowest CPC. It’s not about the placement adjustment itself; it’s the keyword bids within that campaign affecting the results.

How to Actually Optimize Placements: Conversion Rate Is King

The real key to placement optimization is conversion rate. In the example above, let’s say:

• Product Pages: Lowest conversion rate
• Rest of Search: Better conversion rate
• Top of Search: Conversion rate almost double product pages

In this case, it makes much more sense to increase bids for top of search. Let’s say the RPC for top of search is 89% higher than the worst performing placement. AdLabs would recommend an 89% increase for top of search, even though its ACOS is already higher.

Most sellers are spending too much on product pages because they aren’t considering that bids and placements are a single unit. You need to direct your ad dollars to the most efficient placements.

What If My Target ACOS Changes?

Let’s say your target ACOS is 30%. You might think you need to double your spend on placements with a 15% ACOS to hit that target. That means increasing bids by 100% on top of search and rest of search, and 200% on product pages.

This is a bad idea. All you’re doing is globally increasing all the bids in the entire campaign. You’ll likely hit your 30% ACOS target, but you’ll be wasting money on inefficient keywords.

Or, let’s say your target ACOS is 10%. You might try to set all your placement adjustments to 0% to lower your ACOS. But you can’t go below 0%. The only way to hit your target ACOS is to lower your base bids.

The target ACOS is not a variable in calculating placement settings. Episode 44 of the Amazon Ads Podcast explains this in detail. If you’re targeting a 100% ACOS, the placement adjustments will still be the same: 0% for the worst performer, and increasing from there.

This is because the only thing that matters is the relative difference in conversion rate. The placement with the worst-performing conversion rate gets set to 0%. Then, you control the overall ACOS by adjusting keyword bids within that placement.

Don’t Get Fooled by the Delta Column

Sometimes, AdLabs will recommend decreasing a placement adjustment. This can freak sellers out, especially if they’re below their target ACOS.

For example, let’s say top of search was previously set to a 129% increase. Now, AdLabs is recommending an 89% increase. The delta will show a decrease.

Don’t panic! This is still a net positive increase. It just means the relative conversion rates between placements have changed. The spread between the three conversion rates is different than it was during the last optimization.

Think of it this way: the ACOS itself is a historical value for whatever date range you’re looking at. But the bid adjustments are not historical values; they’re based on current data. Maybe you’ve made changes to the bids within that time frame.

Let’s say you’re looking at the last 30 days. Product pages might now be performing better than the other placements. You might see a decrease on top of search as a result, but it’s still getting a net increase.

The key takeaway: always calculate fresh, using the RPC from within your chosen time period.

Stop Looking at Current Values

Here’s the thing: don’t increase or decrease from the current bid or adjustment, for either a keyword bid or placement.

Let’s say the ACOS on top of search is 14%. You want to get it to 15%, so you manually set the adjustment to a 800% increase.

Does AdLabs still want to increase it even higher just because the ACOS is low? No! That 800% increase is a bad calculation. You have no idea how it got there. Maybe someone messed up or it’s from a different time frame.

That’s why you always want to calculate it fresh, always use the revenue per click from within that time period.

The Bottom Line: Focus on What Actually Matters

Placement ACOS can be misleading. The key to successful placement optimization is to focus on conversion rate (or, even better, revenue per click) and adjust your bids accordingly. Don’t get caught up in chasing low ACOS placements if they aren’t driving efficient sales.

The best way to truly understand your Amazon PPC performance and get better results is to sign up for a free trial with AdLabs. Then, watch the Amazon Ads Podcast for more tips and strategies.

This article is based on Episode 107 of That Amazon Ads Podcast. Subscribe for weekly Amazon PPC strategies.