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Amazon Ads Metrics ACOS and TACOS for Growth and Profitability
What if you could measure your ad campaigns' success with pinpoint precision and uncover opportunities for long-term growth at the same time?
For Amazon sellers navigating the complexities of advertising, mastering key metrics like ACOS and TACOS can make all the difference between stagnation and exponential growth.
Amazon Advertising provides sellers with tools to promote their products effectively, but understanding which metrics to focus on is critical.
ACOS and TACOS are two powerful metrics that, when used correctly, allow you to evaluate your campaigns, fine-tune your ad spend, and drive both short-term profits and long-term success.
This blog will break down what ACOS and TACOS are, how to calculate them, and how to use these two metrics strategically to grow your Amazon business.
What Do ACOS and TACOS Mean?
Understanding ACOS
ACOS, or Advertising Cost of Sales, measures how cost-efficient your ad campaigns are in generating revenue.
It shows the ratio of your ad spend to the sales generated from those ads. Think of ACOS as the litmus test for your ad campaign’s profitability.
ACOS Formula:
Ad Spend ÷ Ad Sales × 100 = ACOS
Example Calculation:
If your ad spend is $100 and you generate $400 in ad sales, your ACOS is calculated as follows:
$100 ÷ $400 × 100 = 25%
Lower ACOS numbers typically indicate more profit from your ad campaigns.
However, the ideal ACOS depends on your product's profit margins and campaign goals.
Understanding TACOS
TACOS, or Total Advertising Cost of Sales, takes a broader approach by measuring your ad spend relative to total sales, including both paid and organic sales.
This metric gives insights into how ads drive overall business growth beyond paid performance alone.
TACOS Formula:
Ad Spend ÷ Total Sales × 100 = TACOS
Example Calculation:
If you spent $500 on ads and generated $3,000 in total sales (ad-driven + organic), your TACOS would be:
$500 ÷ $3,000 × 100 = 16.6%
Lower TACOS percentages are ideal, as they suggest that organic sales are contributing more heavily to your total revenue.
ACOS vs TACOS
Key Differences
- Focus: ACOS evaluates the ad efficiency for paid sales alone, while TACOS provides a comprehensive view by including all sales (organic + paid).
- Scope: ACOS is specific to immediate campaign performance, whereas TACOS reflects the broader impact of advertising on overall business growth.
- Insights: ACOS sheds light on ROI from ads, while TACOS highlights whether ads are successfully increasing overall visibility and organic sales.
Think of ACOS and TACOS as complementary metrics. Together, they offer a balanced view of how well your campaigns are both performing now and contributing to long-term success.
Why You Need Both Metrics
By monitoring both ACOS and TACOS, Amazon sellers can derive actionable insights for both ad efficiency and organic growth strategies.
- ACOS provides tactical clarity: Is this particular campaign profitable?
- TACOS offers strategic insight: Are our ads building greater overall visibility?
Having both helps you make smarter marketing decisions that balance immediate ROI with sustainable growth.
Get our ACOS/TACOS Decision Matrix — helps sellers visualize trade-offs between short-term ROI and long-term growth with clear tactical steps.
Why You Should Monitor Both Metrics
Effective ROI Measurement
ACOS helps pinpoint which campaigns are providing higher returns on your ad spend.
Conversely, TACOS shows whether your overall investment in ads drives meaningful results, like improved organic sales. For example:
- If you have a low ACOS but a high TACOS, it may indicate that while your ads are efficient, they’re not bolstering your organic growth.
Tracking the Amazon Flywheel
Amazon’s Flywheel Effect posits that investments in ads can enhance visibility, boost sales, generate reviews, and improve rankings.
This, in turn, drives more traffic and amplifies organic sales. Monitoring TACOS helps you gauge how well your ads contribute to this virtuous cycle.
Identifying Trends and Acting Faster
Changes in ACOS and TACOS can act as early warning signals. For instance:
- Rising ACOS and TACOS: Consider reviewing underperforming campaigns or adjusting bids.
- Falling ACOS but rising TACOS: Indicates a decline in organic sales despite ad efficiency. Shift focus to improving product listings or expanding ad campaigns.
Examples like these illustrate why these metrics are crucial for holistically managing Amazon campaigns.
Calculating the Ideal ACOS and TACOS
While there’s no one-size-fits-all answer, here are some benchmarks:
- ACOS: Generally, keeping ACOS between 20%–30% is considered healthy. Low-margin products may require a stricter cap, while high-margin products tolerate higher ACOS.
- TACOS: Aim for a TACOS under 10% to signify that your ads also contribute heavily to sustained organic sales.
To find your "ideal" values:
- Analyze industry benchmarks.
- Evaluate your profit margins and business objectives.
- Experiment and optimize continuously.
Every business is different. Regularly test your strategies and fine-tune ACOS and TACOS metrics to maximize profitability within your specific category.
Making Data-Driven Business Decisions
ACOS and TACOS together provide a roadmap to improve your ad performance, allocate budgets wisely, and even influence product strategy. Here’s how to leverage them for actionable insights:
- Improve Underperforming Campaigns: If certain campaigns show high ACOS and TACOS, pause them, re-evaluate their keywords, or optimize their targeting.
- Allocate Budgets to Winning Products: Focus more budget on campaigns with low ACOS and high-performing TACOS to maximize returns.
- Support Organic Growth: Use TACOS trends to refine targeting or reinvest in products that show promising organic traction.
Applying these strategies will help you bolster both your short- and long-term advertising performance.
Mastering ACOS and TACOS to Power Growth
ACOS and TACOS aren’t just metrics; they’re your compass in navigating Amazon’s competitive landscape.
Mastering these two metrics will empower you to unlock insights, optimize advertising spend, and drive sustainable business growth.
To build a thriving Amazon business, use ACOS to improve campaign efficiency and TACOS to evaluate how your ads impact total sales and broad success.
Start small, and over time, refine your approach to achieve both growth and profitability.
Feeling inspired to hit the ground running?
Harness the power of both metrics and shape your own success story. Implement what you’ve learned today and get ready to transform your Amazon campaigns into growth engines of tomorrow!
Book a strategy call with our PPC team. We’ll help align your organic and paid strategy for sustainable, profitable ad growth.
Spend
Profitability Metrics at a Glance
- ACOS = Ad Spend ÷ Ad Sales
- TACOS = Ad Spend ÷ Total Sales
- Use both to balance short-term wins and long-term growth
- Watch trends to diagnose success or overspend
- Actionable data = better product and budget decisions
Frequently Asked Questions?
ACoS (Advertising Cost of Sale) is a metric that calculates the ratio of advertising expenditure to the revenue generated from ads, offering insights into campaign efficiency. TACoS (Total Advertising Cost of Sale), however, expands the scope to include both ad-driven sales and organic sales, providing a broader view of advertising effectiveness within the context of overall sales.
TACoS, or Total Advertising Cost of Sale, is a key performance indicator in Amazon advertising that measures the proportion of ad spend relative to total sales revenue, encompassing both paid and organic sales. It highlights how much of the total revenue is attributed to advertising efforts.
ACoS (Advertising Cost of Sales) and ROAS (Return on Ad Spend) are both important digital marketing metrics, but they offer distinct perspectives. ACoS quantifies the percentage of ad spend relative to ad sales, focusing on cost efficiency, while ROAS calculates the revenue generated for each dollar spent on ads, emphasizing return on investment and revenue generation.
A “good” ACoS (Advertising Cost of Sales) on Amazon typically falls between 15% and 25%. However, the optimal ACoS varies depending on factors such as product margins, business objectives, and the specific advertising strategies being employed.
ACoS, or Advertising Cost of Sales, is a metric used to assess the cost-effectiveness of an advertising campaign by comparing the advertising spend to the revenue it generates. It helps evaluate the profitability of an ad strategy.
TACoS (Total Advertising Cost of Sales) is utilized in Amazon advertising to evaluate the total cost of advertising in relation to overall sales revenue. Unlike ACoS, which only considers direct ad sales, TACoS incorporates both ad-generated and organic sales, providing a comprehensive view of a campaign's impact.