significance

Typically, sellers use advertising to increase sales velocity for a specific product. By increasing sales velocity, you can in turn impact organic sales. Therefore, investing in advertising can help grow organic sales in addition to advertising sales. In addition to ACoS , TACoS can give sellers a more complete picture of how ad spend is affecting overall sales. If the ultimate goal is to increase total sales, sellers may accept a higher ACoS in the short term to increase sales velocity and improve TACoS in the long term .

A low TACoS means that your product is generating strong sales growth when advertised. Conversely, a high TACoS means that your product ads are not returning strong revenue, which likely means your ads are underperforming and you need to review and test your campaigns with new keywords, bids, products, or a combination of all three.

Calculation method

Divide your total ad spend by the total value of the revenue it generated, then multiply by 100 to get a percentage.

Differences between Aocs and Tacos

TACoS is calculated similarly to ACoS , but TACoS takes into account overall revenue, rather than revenue from advertising alone.

Indicator Description

TACoS growth – This indicates that sellers are investing more in ad spend, but organic sales are not growing at the same rate.

TACoS is decreasing or flat – This indicates that the product being advertised is generating strong or stable sales. It also indicates that organic sales are improving and the seller’s brand awareness is increasing.

Both TACoS and ACoS are increasing — although not ideal, they make sense in certain situations. If you are launching a new product, your primary goal is to increase sales. Over time, as organic search for your brand or product improves, TACoS will begin to decrease.

ACoS is decreasing while TACoS is increasing – While this rarely happens, it is a sign that a seller’s organic sales are actually decreasing or becoming a smaller portion of total revenue. Ultimately, this will deviate brands from their long-term goal of increasing organic sales and reducing reliance on paid advertising as the sole driver of sales.

References