Glossary/ACOS
What is ACOS?
ACOS, or Advertising Cost of Sales, is ad spend divided by ad-attributed revenue, expressed as a percentage. It is the reciprocal of ROAS — a 25% ACOS is a 4.0 ROAS, a 50% ACOS is a 2.0 ROAS — and it answers the same question from the cost side: of every hundred baht of attributed revenue, how many went to the ad auction. Amazon sellers grew up on ACOS and Shopee, Lazada, and TikTok Shop sellers mostly grew up on ROAS, but the two are the same measurement and inherit the same limitation: both use gross attributed revenue, so neither knows whether the sale was profitable.
01/Formula
Formula
ACOS = Ad spend / Attributed revenue × 100% ACOS = 1 / ROAS × 100% Break-even ACOS = contribution rate × 100%
Example
A campaign spends ฿2,500 and is attributed ฿10,000 of revenue. ACOS = 2,500 / 10,000 = 25% (equivalently, ROAS 4.0) The SKU keeps 15% contribution before ads, so break-even ACOS = 15%. At 25% ACOS the campaign is 10 points of revenue underwater.
02/In detail
How do you find your break-even ACOS?
Break-even ACOS has an unusually clean form: it is simply the contribution rate. If a product keeps 30 baht of contribution on a 100 baht sale before ads, then 30% is exactly the share of revenue you can hand to the auction before the sale stops paying. This makes ACOS the easier of the two metrics to reason about in a meeting — everyone can hold “our margin is 30%, so our ceiling is 30%” in their head, where the ROAS equivalent of 3.33 requires a division. The catch is identical to ROAS: the contribution rate must be a real one, built from order-line economics rather than from the wholesale-to-retail spread.
Should you use ACOS or ROAS?
They are algebraically identical, so the choice is about which errors each invites. ACOS compresses the profitable range into a small band near zero and stretches the unprofitable range toward infinity, which makes bad campaigns look dramatic and good ones look indistinguishable. ROAS does the reverse: it separates high performers cleanly and squashes everything unprofitable into the gap between 0 and 1. For triage and alerting, ACOS reads better because it has a natural ceiling to compare against. For scaling decisions, ROAS reads better because the differences between a 6 and a 9 are visible. Most mature ad operations carry both and argue in whichever one makes the trade-off legible.
What is total ACOS, or TACOS?
Total ACOS divides ad spend by all revenue in the period, not just ad-attributed revenue. It is a useful counterweight because it moves when ads cannibalise organic sales: if attributed revenue rises while total revenue does not, ACOS improves and total ACOS does not. That divergence is the cheapest available signal that a campaign is buying customers who were already coming, which is the question incrementality testing answers properly. Total ACOS is not a substitute for that test, but it is free, and it catches the most obvious cases.
03/Why it matters
The trap, in one paragraph.
ACOS is the metric most ad dashboards optimize toward, and on its own it is misleading in a specific direction: it always makes campaigns look better than they are, because the denominator is gross. A 25% ACOS sounds comfortably efficient until you account for 15% marketplace fees, 60% COGS, and 5% in seller-funded vouchers — at which point the campaign has consumed 25 points of a 15-point contribution rate and is losing ten baht per hundred of revenue it generates.
Common mistake
Treating a category benchmark ACOS as a target. A published “good ACOS for fashion is 15%” carries no information about your COGS, your commission band, or your voucher policy. The only ACOS ceiling that means anything is your own contribution rate, and two sellers in the same category can differ on it by 20 percentage points.
04/In DataGlass
How ACOS is used in DataGlass.
DataGlass shows platform ACOS next to break-even ACOS — the contribution rate of the SKU mix the campaign actually sold, not a shop-wide average. Campaigns whose ACOS sits above their own break-even line are surfaced as loss-making regardless of how they rank in the platform dashboard.
05/Sources
- [1] Shopee Ads Thailand — Keyword Ads and CPC auction mechanics
Shopee documentation of keyword-ad bidding and budget control — the spend side of the ACOS ratio.
- [2] Shopee Thailand — seller commission and fee schedule
The fee deductions that determine the contribution rate, and therefore the break-even ACOS ceiling.