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Amazon offers sellers an opportunity to advertise their products, increase sales, and boost profits. However, you have to put in some work. And that can involve measuring the key metrics of your ad strategy's effectiveness.
TACoS offers a good overview of how your ad spend impacts your total sales, giving you a clear picture of your overall ad and sales performance. At Merch Jar, we understand the importance of accessing and optimizing your Amazon TACoS.
In this article, we'll break down everything you need to know about TACoS, from its definition and calculation to practical tips for optimization.
Let’s get started.
At Merch Jar, we understand the importance of ad efficiency. Our automated tools have helped businesses optimize their Amazon ads, increasing profitability and managing ad spend efficiently. Our experience with Amazon TACoS comes from working directly with diverse clients to fine-tune their advertising strategies.
For example, we have helped our clients set and adjust their target CPC (Cost Per Click) to meet specific TACoS goals. This has resulted in more efficient ad spending and higher returns. We've also enabled businesses to monitor and analyze their campaigns effectively, improving ad performance and profitability on Amazon.
In simple terms, TACoS refers to the Total Advertising Cost of Sale. So, Amazon TACoS is a metric that shows how your ad spend relates to your total business sales. It basically indicates whether your ad spend has resulted in more, less, or no change at all. TACoS provides a good representation of your business’ performance on Amazon.
TACoS also involves your organic sales and ads. A compelling ad campaign should increase organic sales and revenues generated from within your company.
At Merch Jar, we offer efficient ad automation services. Our Starter Automations handle all your essential advertising tasks and are pre-configured to boost profitability.
In case you’re wondering whether there’s any difference between Amazon TACoS and ACoS, you’ll get the answers here. While TACoS and ACoS are two critical metrics, they have fundamental differences.
ACoS is calculated by dividing the ad spend by ad revenue. The result is a percentage that shows how much is spent on advertising for each dollar of revenue generated directly from ads. ACoS shows the immediate performance of your ads.
On the other hand, TACoS provides a more comprehensive metric. It includes the total revenue from both ad-driven and organic sales. TACoS is particularly important because it shows how your Amazon advertising efforts contribute to your product's organic growth.
For instance, a low TACoS shows high organic sales relative to your ad spend. However, a high TACoS means your ads are not contributing to organic sales and your brand’s growth.
Calculating TACoS isn’t tricky. Just follow these steps and the formula we have listed below:
Then, divide your total ad spend by your total sales revenue x 100.
Here are the primary reasons why you should measure your Amazon TACoS:
A low or decreasing Amazon TACoS means your ad spend contributes to more sales and your brand’s growth on Amazon. Follow these steps to optimize your TACoS.
To reduce your TACoS, focus on targeting high-converting keywords when posting ads and removing irrelevant clicks that don't convert. This will help you spend your ad budget more efficiently and can improve your overall ad performance.
Improve your product listings with high-quality images, captivating titles, detailed descriptions, and optimized bullet points to increase organic traffic and sales. This will reduce your TACoS through increased sales without additional ad spend.
You can use Amazon’s advertising options, such as Sponsored Products, Sponsored Brands, and Sponsored Display, to reach a broader audience.
This strategy will effectively reduce dependence on any single ad type, offering a balanced approach that can lead to a more sustainable ad spend and better overall sales performance.
Ensure you regularly review your Amazon TACoS and other metrics to identify trends that will help you make adjustments when necessary. Regular monitoring lets you modify your ad campaigns in real-time and ensure your ad spend aligns with your overall sales goals. Tools like Merch Jar provide advanced analytics and reporting to help you stay on top of these adjustments.
Amazon TACoS offers a comprehensive view of your ad’s profitability and overall business performance. Measuring your TACoS helps you gain performance insights, balance ad spend and profitability, and finally, make balanced decisions.
Merch Jar can further streamline this process. We offer automated bid adjustments, advanced analytics, and comprehensive reporting to help you stay on top of your ad performance.
Get started with Merch Jar today.
