Target ACoS & Breakeven Logic
When configuring the advertising strategy, EVA requires defining a Target ACoS (%). This value represents the advertising efficiency level the platform should attempt to maintain while optimizing campaigns.
The Target ACoS functions as the primary performance benchmark used by EVA when evaluating advertising results. By comparing campaign performance against this target, the system can determine whether advertising activity should become more aggressive or more conservative.
To help guide this configuration, the interface also displays a Breakeven ACoS value and may provide recommended target values.
What Target ACoS represents
The Target ACoS defines the percentage of advertising cost that is acceptable relative to the revenue generated from ads.
For example:
- If a store sets a Target ACoS of 25%, this means the store aims to spend no more than $25 on advertising for every $100 in advertising-generated sales.
This value effectively defines the acceptable balance between advertising cost and revenue.
Campaigns performing above the Target ACoS are considered inefficient relative to the defined strategy, while campaigns performing below the target are considered efficient.
What Breakeven ACoS means
- The Breakeven ACoS represents the maximum advertising cost percentage that can be sustained without losing profitability.
- At the breakeven point, advertising spend equals the product’s available margin. In other words, revenue generated from advertising exactly covers the cost of advertising and the product margin.
- If ACoS exceeds the breakeven value, advertising costs may begin to reduce overall profitability.
- Because of this, the breakeven value provides an important reference point when defining the Target ACoS.
Relationship between Target ACoS and Breakeven
- When configuring advertising strategy, the relationship between these two values determines the overall advertising approach.
- If the Target ACoS is close to the Breakeven ACoS, the strategy prioritizes growth and sales expansion, accepting higher advertising costs.
- If the Target ACoS is significantly below Breakeven, the strategy prioritizes profitability and efficiency, keeping advertising spend well below the margin limit.
- Selecting a target within an appropriate range ensures that automated optimizations remain aligned with the desired balance between growth and profitability.
Recommended values
- The system may display recommended Target ACoS values to assist with configuration.
- These recommendations are generated based on available performance data and provide a reference for selecting a realistic efficiency goal.
- Users can follow the recommended range or define a custom target depending on their advertising strategy.