Amazon TACoS decoded for you
The formula for this is: TACoS = (Advertising Budget/ Total revenue) X 100
Calculating the TACoS will contextualise your ad budget with a more holistic view and gauge how effectively your business utilises advertising budgets to drive sales.
A flat or decreasing TACoS indicates that your advertising program plays a substantial role in the growth of your brand and brand awareness.
An increasing TACoS indicates that you’re not increasing sales at the same rate as you were for previous investment levels. Often, this requires a closer look at your campaign or product detail pages to ensure they are delivering the best conversion rates.
If you launch a new product, the main objective is increasing sales. Therefore, over time, TACoS should decrease as organic sales for the brand/product improve.
The goal for all your advertising efforts is to see an increase in organic sales – this is a good indication that your brand awareness and consideration have seen uplifts from your advertising efforts, and you are now becoming less dependent on paid advertising as the only driver of sales.
Measuring TACoS will provide valuable details for evaluating your overall investment in Amazon ads.
Ultimately, knowing what percentage of total revenue your ad budget generates will help you budget effectively and identify gaps and areas with growth potential.
At the Commerce People, we partner with you in your journey to eCommerce mastery. Our solutions include paid digital eCommerce (PPC) advertising services and omnichannel advertising analytics and reporting that will ensure uplifts in your advertising performance and conversion rates. So connect with us today to improve your advertising and sales performance.