If you’re running PPC campaigns and not keeping an eye on TACoS, you’re making a huge mistake. TACoS stands for Total Advertising Cost of Sales. It tells you how much you’re spending on ads compared to your total sales. This helps you see the bigger picture and whether your ads are helping boost your overall business and if your organic sales are actually growing over time. This beginner-friendly guide will walk you through exactly how it works.
What Exactly Is Amazon TACoS?
TACoS stands for Total Advertising Cost of Sales. It’s a key metric in Amazon advertising that shows how much you’re spending on ads compared to your total sales revenue, including both ad sales and organic sales. It’s measured in percentage.
Here’s the formula it uses:
TACoS = (Ad Spend / Total Sales) × 100
For example, say your monthly ad spend is $100 and your total sales were $1,000.
TACoS = $100 / $1,000 × 100 = 10%
This means that 10% of your total revenue went toward advertising.
Or in other words, for every $1 spent on ads, you generated $10 in total sales.
What’s the Difference Between TACoS and ACoS?
TACoS and ACoS measure different things.
ACoS stands for Advertising Cost of Sales. It only looks at how much you spend on ads compared to the revenue generated from those ads.
TACoS, on the other hand, stands for Total Advertising Cost of Sales. This metric compares your ad spend to your total sales, which includes both ad-driven and organic sales.
ACoS is usually higher than TACoS because it only considers sales that come directly from your ads. It doesn’t include any organic sales. That’s why ACoS can sometimes make your ad performance look worse than it actually is.
Let’s break it down with an example:
Say you spent $100 on ads. From those ads, you made $300 in sales.
ACoS = $100 / $300 × 100 = 33.3%
Now let’s say your total sales (including organic) were $1,000.
TACoS = $100 / $1,000 × 100 = 10%
Looking only at ACoS, it might seem like you’re spending a lot to get results. But when you look at TACoS, you can see that your ad spend is actually supporting a much larger volume of total sales. Focusing only on ACoS can give you an incomplete picture.
What Does It Mean When Amazon TACoS Decreases or Increases?
When your TACoS goes down, it usually means your organic sales are growing faster than your ad spend. That’s a good sign. It means your advertising is doing more than just getting clicks. It’s helping your products rank better, build visibility, and drive more non-paid sales. It also means your business is becoming less dependent on ads and is starting to benefit from long-term growth.
When TACoS increases, it means your ad spend is taking up a larger share of your total revenue. This could happen if your organic sales are slowing down, or if you’re increasing your ad spend without seeing a similar boost in total sales. An increasing TACoS doesn’t always mean something’s wrong. It could happen during a product launch or a sales push, but if it stays high for too long without a clear reason, it’s something to pay attention to.
What Is a Good TACoS?
A good TACoS is typically between 5% and 10%; however, this can vary by product, category, and business goals. Lower is generally better as long as your total sales are steady or growing.
What Can Cause High TACoS?
Several issues can lead to a high TACoS, like:
- Poor organic rankings
- Too much reliance on ads
- Unoptimized product listings
- Irrelevant or underperforming keywords
- High competition driving up ad spend
How to Lower Your TACoS
- Optimize your product listing with better images, clearer bullet points, and relevant high-volume keywords.
- Target high-converting keywords. Use Amazon’s Search Term Report and Helium10 to guide you.
- Run ads only on listings that are optimized and already performing well. Avoid pushing products that don’t convert.
- Pause keywords with high spend and low return. Reallocate that budget to top-performing campaigns.
- Use long-tail keywords. These are more specific and less competitive.
- Add negative keywords to your campaign so you don’t waste ad spend on clicks that don’t convert.
When Should You Track TACoS?
Always, but especially when you’re launching a new product, scaling an existing one, or trying to reduce your spend on paid ads. TACoS tells you if your investment in advertising is helping your overall business and not just generating quick, short-term sales.
Final Thoughts
TACoS gives you a complete view of how well your ads are supporting your total sales on Amazon. If you’re just starting out, don’t obsess over having the lowest TACoS. Instead, focus on improving your listings, running clean campaigns, and tracking both organic and paid performance.
Need help managing your Amazon TACoS? Let Enso Brands help you run smarter, more profitable campaigns. Our full-service Amazon PPC team can monitor your metrics, cut wasted spend, and boost your overall sales. Reach out today to get started.
