ACoS vs TACoS: Which Amazon Ad Metric Should You Steer By?

ACoS and TACoS both measure advertising cost against sales, but they answer different questions. ACoS tells you how efficient your ads are. TACoS tells you how much your business depends on them. Experienced sellers need both, because steering by either one alone leads to bad decisions.

The two definitions

• ACoS (advertising cost of sales) is ad spend divided by sales attributed to ads.
• TACoS (total advertising cost of sales) is ad spend divided by your total sales, ad-attributed and organic together.

Because total sales are always at least as large as ad sales, TACoS is always the lower figure of the two.

A worked example

These figures are illustrative. Suppose you spend £1,000 on ads and Amazon attributes £5,000 of sales to them. Your ACoS is 20%. If your total sales for the same period are £20,000, your TACoS is 5%.

The two numbers together also tell you how much of your revenue the ads drive. Here ad-attributed sales are £5,000 of £20,000, so a quarter of your sales come through ads and three quarters are organic.

What each metric is good for

ACoS belongs to the campaign. It shows whether a campaign, ad group or keyword is efficient, and it is the number to compare against your break-even ACoS for the product. TACoS belongs to the business. It shows whether spending on ads is building organic sales over time or only buying sales you would not otherwise get.

How to read them together

• ACoS falling and TACoS falling: ads are getting more efficient and organic sales are growing.
• ACoS high but TACoS stable or falling: the ads may be lifting organic ranking, so a high ACoS can be acceptable for a launch or a push on a key product.
• ACoS fine but TACoS rising: you are leaning more heavily on ads for the same revenue, which is worth investigating.
• ACoS rising and TACoS rising: efficiency is dropping and dependence is growing, the combination to fix first.

The gap both metrics leave

Neither metric tells you whether a sale made money. A 20% ACoS is excellent on a product with a 45% margin before ads and a loss on one with a 15% margin. To judge it properly you need break-even ACoS for each product, and ideally profit per order after fees, shipping and refunds, which is what a profit view adds on top of the advertising metrics.

What experienced sellers do

• Set a target ACoS per product from its break-even, not a single account target.
• Watch TACoS monthly at account and brand level to see whether ads are building organic sales.
• Judge launch spending against a time limit, so a high ACoS is a decision, not a drift.
• Check results on profit, not only on ad metrics, before scaling a campaign.

Is TACoS better than ACoS?

Neither is better. ACoS is for judging campaigns and TACoS is for judging how much the business relies on advertising. Use both.

What is a good TACoS?

It depends on your margin and how much of your revenue comes from ads, so there is no universal figure. Track your own trend and compare it to your margin before advertising.

Does ROAS replace ACoS?

ROAS is the inverse of ACoS, sales divided by ad spend, so a 20% ACoS is a ROAS of 5. They carry the same information in a different form.