Three ways to count the same metric, and two of them mislead you
Ad cost share (ACOS) can be calculated from ad spend, from total turnover, or from buyouts. Each gives a different number for the same store. Two of them flatter your business; one tells the truth.
Here is why.
Secret 1. Plain ad-based ACOS is an illusion
Competition on marketplaces has grown so much that looking at ad spend in isolation from the rest of the business is simply the wrong approach. You see a number, but it says nothing about how profitable the store actually is.
We made this mistake ourselves a few years ago. Then we saw the error and switched to turnover-based ACOS on Ozon.
Secret 2. Turnover-based ACOS is also imprecise
The formula looks logical: take the store's entire turnover and calculate the share of ad spend against it. But a product business always has returns, cancellations and mismatches in both directions.
That is where turnover-based ACOS starts to lie. Once you account for returns and cancellations, real profitability looks very different from the neat figure calculated on turnover.
Secret 3. Only buyout-based ACOS is correct
Buyouts show the real cost of acquiring a customer. No turnover illusions, no distortion from returns and cancellations.
The problem is different: no marketplace and no analytics service calculates buyout-based ACOS properly. Moreover, many services show even ordinary turnover-based ACOS with errors, including the built-in analytics inside marketplaces' own ad campaigns.
We ran into this on our own stores and realized that if we wanted accurate analytics, we would have to build the tool ourselves.
What accurate ACOS actually changes
A tool that counts ACOS from buyouts shows which products in your ads genuinely lower the cost of acquiring a customer and which only eat budget. That is not analytics for the sake of numbers: it leads to concrete decisions about what to adjust in a campaign, what to switch off and where to move budget.
If you sell on Ozon and estimate your ACOS by eye, it is worth checking what the real figure looks like once returns and cancellations are taken into account.
The takeaway
- Ad-based ACOS hides the real economics of the store.
- Turnover-based ACOS is distorted by returns, cancellations and mismatches.
- Buyout-based ACOS is the only figure that reflects the true cost of acquiring a customer.
- Most marketplace and third-party analytics get even the simpler calculations wrong, so verify the method before you trust the dashboard.
