Posted by Nojus Latvinskas
If you have been selling on Amazon and running PPC campaigns, you probably came across some terminology that may seem confusing and not clear at first glance.
One of those “secret” metrics that have crossed your mind is TACOS.
In this article, we will cover everything you need to know about TACOS: what it is, how to calculate and the main differences between ACOS and TACOS.
We will answer the boiling question for once and all - what is TACOS in Amazon PPC?
Along the way, we will share a handy TACOS calculator so you do not have to rack your brain while coming up with the number.
TACOS is the total advertising cost of sales. As the name implies, it is the percent of ad spend relative to your total sales.
It allows you to gauge how your advertising campaigns are contributing to your organic sales. This metric provides you a snapshot into your overall ad performance and business health.
The goal of advertising is to improve organic position for relevant keywords and thus lower TACOS, in turn.
PPC advertising is not isolated to your total ad sales. In fact, it greatly influences your TACOS.
All the sales derived from ads are actually closely tied to your organic growth so it is important for us to understand how PPC is helping us grow our overall sales.
When you are running ads, people notice it, click on your product listing and purchase your product if they like what is presented on the product detail page. With every sale made from advertising, your organic position moves up which increases your total sales.
Now you can see how ads contribute heavily to your organic growth, aside from a few other factors. By knowing your TACOS, you can realize if you are too reliant on ads and should pull back on ad spend or not.
TACOS is definitely one of the most important metrics when selling on Amazon to define the success of your ad efforts.
Keep in mind that when you first launch your Amazon product, your visibility will be low on the search page. So the majority of your sales will be driven directly by your PPC campaigns. The activity of you placing the ad on the search page, a customer clicking on it and your product being bought.
While you get charged a certain fee for the click, of course.
To figure out TACOS for your Amazon business, you can take the ad spend from your ad console and divide it by total sales (both organic and paid sales).
To find out total sales for a specific timeframe, go to Seller Central, hover over “Reports” and click on “Business Reports”
Then select the date range and it will show your total product sales.
TACOS = (Advertising Cost of Sales / Total Revenue) x 100
For example, if your monthly ad spend is $300 and your total sales for the same period is $1000, then your TACOS would be 30%.
$300 / $1,000
0.3 x 100 = 30% TACOS
That means for every dollar spent across all PPC campaigns, roughly 3 sales are generated as a result.
While TACOS takes into account your overall sales (those reflected in the business report), ACOS is gauged by looking at your ad performance separately.
ACOS only measures the performance of your advertising campaigns without looking at the effect of ad campaigns on your organic sales.
In other words, it will only show you the relationship between dollars spent on ads and sales attributed to your PPC campaigns.
To find out ACOS, use the following formula for calculating:
(Advertising Cost of Sales / Ad Attributed Sales) x 100
For example, let’s imagine such numbers:
Since $300 / $1000 equals 0.3%
0.3% x 100 = 30% ACOS
Respectively, TACOS are 20% (in most cases, this would be considered a profitable business).
Your ACOS will usually be higher because it only accounts for ad sales.
However, you should not expect to have low TACOS either when you first launch your product due to minimal visibility on the search page.
As you spend more money on advertising, you should see your TACOS decrease because of stronger positioning on the page and higher visibility.
Basically, you will be less reliant on ads to drive revenue for your brand.
Again, having all of this result achieved through advertising (and ads partly taking a credit).
The definition of a good ACOS varies by your business goal and product specifics.
For example, if you have a product with a profit margin before ads of 45%, you may be willing to aim for 20% TACOS.
You can use Amazon’s revenue calculator tool to calculate ACOS for the US and EU markets.
Because your SKU economies can justify this idea.
The logic is that if you maintain TACOS of 20% and considering your profit margin before ads is 45%, you will be left with a 25% net profit margin.
That will be the actual money that goes straight to your pocket as an Amazon seller.
Now if you are selling a cheaper product with a slim profit margin, that is, say, 20% and aim for 20% TACOS, you will not be profitable.
So your goal should be to strive for 10-15% TACOS for that type of product so that you can still make a reasonable amount of profit.
Now you see how a good TACOS depends on your economics and there is no one size answer.
But as a general rule of thumb, we would suggest to keep TACOS at between 10 to 15% because that indicates a healthy split between ad sales and organic ones.
Remember, organic sales are created by the sales velocity that PPC advertising campaigns help you drive.
When your TACOS decrease, it means that your organic position for important category keywords has improved and gone up higher or the ad spend decreased without affecting your overall sales.
Yes, you can definitely spot some opportunities to reduce ad spend and still maintain all your sales.
Also, you might have started running a special PPC campaign for ranking (targeting 1 keyword per campaign with a high bid to appear at the top of the page) that led to an improvement in organic growth.
Thus, your TACOS has decreased.
When you see TACOS going down, it is a great indicator that your ad efficiency has improved.
When your TACOS increase, it means that your organic position for certain keywords has dropped which then led to a higher dependency/reliance on PPC ads to fuel business growth.
Or, another case may be that you bumped up your ad spend without increasing your overall sales.
Maybe you launched a particular PPC campaign whose performance is not good and it is not helping you bring additional revenue for the brand.
So your ad spend shot up but there was no transition into more sales as a result.
Read on more why certain PPC campaigns may not yield more revenue.
When you see TACOS going up, it is a great indicator that your ad efficiency has decreased.
Lowering your TACoS means that a greater portion of your sales is coming from organic (non-paid) efforts, which is a sign of a healthy and sustainable business.
Here are some actionable strategies to help you reduce TACoS effectively:
Increasing organic sales helps reduce TACoS by making ad spend a smaller portion of your total revenue.
Ensure that your product titles, bullet points, descriptions, and images are optimized with high-ranking, relevant keywords.
Use Amazon SEO best practices, such as incorporating primary keywords naturally in titles and descriptions.
Add high-quality images and videos to increase conversion rates.
Well-structured campaigns with effective targeting allow you to control costs and focus ad spend on high-converting keywords.
Break your campaigns into specific categories, like branded vs. non-branded keywords and high-converting vs. low-converting keywords.
Start with an auto-campaign to identify keywords that perform well.
Once you collect the data and find high-performing keywords, move them into manual campaigns for granular bidding.
Regularly review and adjust your bids to focus on keywords that deliver strong returns.
You can read more about what makes or breaks the right PPC structure here.
Adding negative keywords prevents your ads from showing up for irrelevant searches, which reduces ad spend on low-converting terms.
Review your search term report in Amazon Advertising and identify any keywords that are generating clicks without conversions.
Add these as negative keywords to your campaigns to ensure they won’t trigger your ads in the future.
Optimizing bids for each keyword helps you spend efficiently on keywords that are driving results, while reducing spend on underperforming keywords.
Use a data-driven approach to adjust bids. For keywords that have high conversion rates, gradually increase bids to get more impressions.
For keywords that are driving clicks but not conversions, either lower the bid or consider pausing them altogether.
Investing more in high-ROAS (Return on Advertising Spend) keywords and products can increase your profit from PPC.
Identify the keywords and ASINs (product listings) that yield the highest ROAS in your account.
Increase bids on these keywords or place them in separate campaigns to allocate more budget to them, driving more conversions with a lower TACoS.
Better reviews and higher ratings improve conversion rates, making your ads more effective.
Actively manage your customer feedback by responding to negative reviews and encouraging positive reviews.
Use Amazon’s “Request a Review” button or automated follow-up messages to ask satisfied customers for reviews, as higher ratings will lead to more conversions and better ad performance.
These ad types allow you to retarget shoppers who have previously shown interest in your product, leading to higher conversion rates at a lower cost.
Use Sponsored Brand ads to showcase multiple products from your brand, and Sponsored Display ads to retarget audiences who have viewed your product or similar ones.
By keeping your brand in front of potential buyers, you increase the chances of conversions without relying solely on keywords.
Read more on how remarketing works on Amazon and how to implement it for your brand
Driving external traffic to Amazon through your own channels can increase organic rankings and sales, helping lower TACoS.
Build an Amazon Brand Store and use Amazon Attribution to track traffic from sources like social media, Google Ads, or your own website.
Drive traffic to your Brand Store or specific product pages with external ads, which will increase your organic sales and improve TACoS.
Running ads during peak purchasing times can help you control ad spend and improve conversion rates.
Analyze your sales and conversion data to identify the times of day when your target audience is most active.
Schedule your ads to run during these peak times to increase efficiency and reduce wasted ad spend.
Seasonal trends can impact how effective your ads are, affecting your TACoS.
Increase bids during high-demand seasons for your products (e.g., holidays for gift items, summer for outdoor gear).
Similarly, reduce bids or pause campaigns during off-seasons to avoid unnecessary ad spend.
Regularly reviewing and adjusting based on data allows you to optimize for ongoing improvement.
Use Amazon’s Campaign Manager and Reports to analyze key metrics, such as impressions, clicks, conversion rates, and ACoS.
Make weekly adjustments to your bids, targeting, and budget allocation based on these insights.
Also, look at your TACoS over time to gauge how much of your revenue is shifting toward organic.
Generating off-Amazon awareness helps bring in organic sales without ad spend.
Use social media, influencer partnerships, and content marketing (like blogs and videos) to drive awareness.
Direct traffic to your Amazon listings or Brand Store using Amazon Attribution to track the results.
This will boost organic sales and reduce dependency on ads, lowering your TACoS.
You can use this super handy TACOS calculator to arrive at your number (enter in ad spend and total sales):
Now that we have covered TACOS in detail, you may have something to do.
And that is to keep a close eye on your TACOS as a fundamental metric that determines your business health.
If you are not tracking it, how do you know if you are being efficient with your advertising and not throwing money out the window?
Only measuring ACOS is not enough to stay ahead of the competition in your selected category.
And tracking it does not have to be difficult.
You can use a third-party analytics software for Amazon sellers such as Sellerboard
Or if you prefer to have everything organized in an easy to navigate format, you can download our free KPI analytics spreadsheet (it’s free so you should take it!):