Why high ACOS isn’t always your real problem

June 25, 2025
By The Badger

Every month, advertisers unknowingly spend thousands of dollars on search terms that never convert — what we like to call non-converting spend.

In this episode of the PPC Den Podcast, Mike reflects on the most impactful optimization strategy of 2025: shifting budget away from non-converting search terms and directing it toward keywords that actually bring in sales — even if their ACOS isn’t perfect.

From real examples of accounts with 60% wasted spend to practical steps for analyzing your search term reports, this is the kind of talk that PPC pros live for.

You’ll hear why longer lookback windows matter, how to bucket your data for clarity, and why doing a simple N-gram analysis can reveal those sneaky little words that drain your ad budget.

In our full episode, you’ll hear:

Why high ACOS isn’t always your real problem
What to do with 60%+ non-converting spend
How to restructure your campaigns for smarter decisions
Easy steps to start cleaning up your ad account today

We’ll see you in The PPC Den!

What Is Non-Converting Spend and Why Does It Matter

Let’s start with the basics: non-converting spend is any ad spend that doesn’t lead to a sale. Simple, right? But here’s the kicker — most advertisers don’t realize just how much of their budget is going to waste.

If you’re spending $10,000 a month and 60% of that doesn’t bring in a single order, that’s $6,000 down the drain.

And we’re not talking theory — that’s a real stat from real Amazon accounts. Even the better-performing ones usually have around 25–30% non-converting spend.

So why does this matter? Because your overall ACOS (Advertising Cost of Sale) isn’t just affected by how well your best keywords are doing — it’s heavily impacted by how much you’re spending on nothing.

Think of it this way: trimming down non-converting spend is the fastest path to better results without launching new campaigns or finding new keywords.

It’s about working smarter with the spend you already have.

How to Identify and Measure Your Non-Converting Spend

Before you can fix the problem, you need to know where it lives.

Step one? Pull your search term reports — both Sponsored Products and Sponsored Brands. These reports show you exactly which search terms spent money but didn’t bring in any orders.

Here’s a simple process Mike recommends:

Download search term reports for the last 7, 14, and 28 days.
Filter for orders = 0 and spend > 0. Boom — you’ve got your list of non-converters.
Sort by highest spend. That’s where the bleeding happens first.

Mike explains that this step alone can reveal shocking results.

You might find keywords or search terms that spent $20, $40, or even $60 without a single sale.

Now for the fun part: tracking your non-converting spend as a percentage of your total ad spend.

In strong accounts, Mike often sees it at 25–30%. In weaker ones? Up to 60–70%.

Knowing this number is key. It provides a clear benchmark, and your first goal should be straightforward: aim to get it under 50%. From there, keep optimizing.

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What to Do With Non-Converting Spend: Shift, Don’t Just Cut

Once you’ve identified your non-converting spend, the instinct might be to cut it entirely.

But here’s the smarter move — shift it to keywords and search terms that do convert, even if their ACOS isn’t perfect.

Mike breaks it down with a simple but powerful example:

Let’s say you’re spending $10,000/month, and $6,000 of that doesn’t convert. If you can redirect just $1,000 of that into a keyword that has a 50% ACOS (not ideal, but still converting), you could generate $2,000 in additional revenue — without increasing total ad spend.

That’s the magic of reallocation:

Same budget
Lower overall ACOS
Higher revenue

It’s not about perfection — it’s about progress. Even a “bad” keyword with 50% ACOS is better than a keyword with zero sales.

And this shift can move the needle quickly. In Mike’s words:

There is no greater joy than reducing your ACOS and increasing sales at the same time.

Use Ngram Analysis to Spot Hidden Patterns

After cutting or shifting the obvious high-spending, non-converting terms, it’s time to dig deeper.

That’s where Ngram analysis comes in — a favorite tactic of Mike’s.

What is it?

Ngram analysis looks at individual words (or combinations of words) across all your search terms to find hidden problem areas. For example:

Let’s say these two search terms are draining the budget:

“trail running shoes”
“fitness gear for trail hikes”

Both contain the word “trail.” If you look at these terms separately, it’s hard to see the pattern. But when you analyze the root word “trail” across every search term, you might discover it never converts — even after dozens of clicks.

So instead of pausing 10 different “trail” search terms one by one, you can make a single smart decision about that root word.

This helps:

Spot recurring issues across multiple campaigns
Reduce waste from low-performing keyword themes
Take faster, data-backed action on groups of search terms

It’s like upgrading from a magnifying glass to a microscope — and it’s how advanced advertisers clean up their spend.

Track Your Progress and Set Milestones

Once you’ve cleaned up your non-converting spend and shifted budgets into better-performing areas, the work isn’t over.

The real pros track their progress over time — because optimization is a process, not a one-time fix.

Here’s how Mike recommends doing it:

Start by measuring your non-converting spend as a percentage of total spend. Most accounts fall between 30–70% non-converting. Elite ones aim for under 30%.
Set achievable milestones. If you’re at 60% non-converting spend, aim to bring it down to 50%, then 40%, and so on.
Use different time windows. Download 7-day, 14-day, and 28-day search term reports. Why? Because some keywords convert slower. If spend doesn’t double when the time frame doubles, it shows those terms need more time to mature — or that they’re just not pulling their weight.
Look for duplicate spend. A single non-converting term might be hidden across 10 campaigns — each with one click. Consolidating that view helps you make smarter decisions faster.

This type of tracking gives you control, clarity, and confidence.

You’ll stop wasting money, start growing smart, and sleep better at night knowing your campaigns are actually working for you — not against you.

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Summary

In this blog, we broke down the exact PPC technique Michael uses to turn wasted ad dollars into real sales — even when times are tough. It’s not magic, just smart strategy. Now you’ve got the playbook too.

Start looking at your non-converting spend, clean up the mess, and put that money to work where it actually brings results. If Michael’s doing it — you can too.

Want to hear how he does it step-by-step (and what kind of results it brings)? Catch the full episode of the PPC Den Podcast — it’s all in there.