Let’s kick this off with a quick primer on TACoS.
What Is TACoS?
As an Amazon seller you’ve heard this one, and you likely know it as an important, nay vital metric when it comes to your Amazon advertising.
Total Advertising Cost of Sales, or TACoS, measures advertising spend relative to total revenue. Basically it’s the clearest snapshot of how your Amazon PPC (Pay Per Click) ads are performing. As such it’s also a key indicator for determining long-term strategies for your Amazon business.
How can it be used to measure the effectiveness of Google traffic?
More importantly, what’s its relationship to your success?
The Future On Amazon Is Google Traffic
If you’re not already using Google to drive traffic to your Amazon listings you soon will be. This method of generating ranking and sales volume plays perfectly into Amazon’s own strategy, which is to attract shoppers from the internet at large – not simply their own marketplace.
In fact, this is so important to Amazon they pay you to do it. That’s right. Amazon offers a Brand Referral Bonus for bringing them those vital external customers.
Finding ways to drive that traffic is an enterprise in itself, and fortunately there exist solutions, such as Ampd’s Google Ads for Amazon Sellers, which make things way easier – and more effective – than going it alone, but the most important metric is understanding what that external traffic is doing for your bottom line.
That’s where TACoS come in.
Reading The Tea Leaves
When you capture shoppers on Google and send them to your Amazon storefront or listing, you’re handing them off between platforms. Your ad runs on Google, the shopper lands on Amazon, and … voila, you’ve driven external traffic.
By advertising on Google many sellers experience an increase in organic visibility and total sales as they start feeding external traffic to their Amazon products.
TACoS, therefore, becomes a key indicator as it takes into account the revenues from your advertising and from those generated by your organic sales.
Monitoring this one metric lets you know the effectiveness of your off-Amazon (read: Google) advertising efforts.
How do you monitor TACoS?
TACoS is perhaps more simple than other advertising metrics to calculate.
TACoS = (Advertising Spend/Total Revenue) x 100
Note the calculation is for total revenue.
Obviously the higher the revenue vs the lower the spend for advertising, the better your organic results. Lowering your TACoS, consequently, gives you the perfect gauge of how your advertising efforts are performing.
Reaping The Rewards
Increasingly this method of driving traffic to your Amazon listing is the future. Knowing the overall effectiveness of those Google ads is key.
Tools like ManageByStats give you the ability to go further, drilling down to the ASIN level in order to know your TACoS for individual products, thereby evaluating the effectiveness of your Google ad campaigns across your entire store.
If you’re not already, get started driving that external traffic. Amazon wants you to. Heck, they pay you to (see above). And companies like Ampd are just waiting to help you do it right.
Drive your sales rank, drive your organic placement, watch your TACoS drop as your revenue climbs …
It’s like a sales flywheel that just keeps spinning faster.
To your success.
Your ManageByStats Team
