Amazon has become the global hub for online shopping, with millions of shoppers worldwide flocking to the platform for their retail needs. And with the rise of e-commerce, Amazon advertising has become an essential tool for businesses to reach their target customers and drive sales.
As an Amazon seller, it's easy to get overwhelmed with the vast array of advertising options available on the platform. Should you invest in Sponsored Products, Sponsored Brands, or Sponsored Display ads? How much should you spend on each? And most importantly, how do you know if your advertising campaigns are actually driving sales?
Enter TACoS - the ultimate metric for measuring the effectiveness of your Amazon advertising efforts. It's also TACoS takes into account both your advertising spend and your total revenue, giving you a holistic view of how your campaigns are impacting your bottom line. By understanding TACoS, you can optimize your advertising strategy to maximize your ROI and drive more sales.
So, if you want to take your Amazon advertising game to the next level, it's time to get familiar with TACoS. With this key metric in your toolkit, you'll be able to make data-driven decisions and achieve your business goals on Amazon. So what are you waiting for? Start tracking your TACoS today and see the results roll in!
Amazon TACoS: A Key Ad Metric
TACoS stands for Total Advertising Cost of Sales, and it measures the relationship between how much you spend on advertising and your total sales on the platform - including both revenue from your ads and organic sales.
By calculating TACoS, you can get a clearer picture of how cost-effective your advertising campaigns are and how they impact your overall sales performance.
Basically, TACoS is a crucial tool for optimizing your Amazon marketing services. By keeping an eye on this metric, you can ensure that your ad spend is resulting in the best possible return on investment.
Next time you're diving into your Amazon advertising analytics, be sure to keep an eye on your TACoS and see how you can better improve your Amazon advertising campaigns.
How to calculate TACoS
To calculate TACoS, divide your total advertising spend by your total sales revenue then multiply it by 100:
TACoS = (Advertising Spend/Total Revenue) x 100
The lower your TACoS is, the better. It means that your overall business campaign is profitable.However, a higher TACoS means your total sales is becoming reliant on advertising without much profit.
If your goal is to focus on organic sales, it is wise to be on top of your TACos and monitor your ad spend and how it affects your total sales.
Note that you may see an increase in your TACos for a certain period of time, but the goal is to see it lower down in the long run.
TACoS vs ACoS
ACos stands for Advertising Cost of Sales and is calculated by dividing ad spend by ad revenue:
ACoS = (Ad Spend/Ad Revenue) x 100
While TACoS determines your total profitability by measuring your revenues from advertising and organic sales, ACoS is used to measure whether your ad is profitable or not.
Why Measure TACoS?
TACoS is such an important metric to keep an eye on because it can help you evaluate the efficiency and profitability of your advertising campaigns on Amazon. By monitoring your TACoS, you can determine whether you're spending too much on advertising, which could be eating into your profits, or if you're not spending enough, which could be limiting your sales potential.
In other words, understanding TACoS is essential for maximizing your advertising ROI and achieving your business goals on Amazon. It's time to get familiar with TACoS - let’s go into why it’s important for your business.
- Helps you figure out how much money you're making after advertising costs.
- Determines which products rely more on advertising to sell.
- Finds patterns in your sales, both good and bad.
Tips for Improving TACoS
We’ve rounded up some proven strategies on how to improve your TACoS:
- Use targeted keywords and ad placements to attract high-quality traffic that is more likely to convert into sales.
- Regularly review and adjust bid strategies to ensure you're not overspending on clicks that are not leading to conversions.
- Leverage negative keywords to eliminate irrelevant clicks that drive up your TACoS without adding any value.
- Monitor your TACoS regularly and adjust your campaigns to keep it within your target range.
- Use Amazon's Sponsored Products, Sponsored Brands, and Sponsored Display advertising options to diversify your advertising strategy and reach more potential customers.
- Optimize your product listings to improve organic search rankings, (the holy grail for amazon marketers) which can lead to more sales and lower TACoS. You can read more about Ampd’s Top 6 Ways to Create Compelling Amazon Listings here.
- Consider using Google Ads to drive external traffic to your Amazon storefront and increase your sales. You can also utilize Ampd to automate and streamline your advertising campaigns, such as optimizing bids and managing negative keywords.
Google Ads and TACoS
When it comes to driving external traffic to your Amazon products, one tool reigns supreme: Google Ads.
With its unparalleled reach and targeting capabilities, it's no wonder that savvy sellers turn to this powerful platform to turbocharge their sales. By tapping into the vast pool of potential customers searching for products like yours, you can skyrocket your organic visibility and boost your bottom line.
By harnessing the power of Google Ads, you can catapult your Amazon products to the top of the search results and gain the attention of potential buyers.
Now here’s where we can maximize TACoS.
Use it to track the effectiveness of your campaigns by measuring both ad and organic revenue. By keeping a close eye on TACoS, you can fine-tune your advertising strategy and ensure that you're getting the biggest bang for your buck.
With the promise of a well-executed marketing campaign plus Amazon’s incentive, what’s stopping you from putting your ads on Google?
Grow your Business with Ampd
Ampd is a self-serve technology that helps you launch expert Google Ads to Amazon campaigns easily. It also applies automated keyword-level Amazon Attribution data with the use of advanced data science to optimize your campaigns for the best results.
From launching ads to managing budgets and improving results over time, Ampd connects the entire experience - simplifying the usual complicated and time-consuming process. With Ampd, you can eliminate 90% of the effort and focus on growing your business.
Sign up now or book a demo today!