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As an Amazon seller, you must keep a close eye on your costs to ensure you’re profitable.
This becomes even more important when you’re investing in Amazon Advertising, where it can be tricky to figure out if your campaigns are really paying off.
One of the most important metrics to track if you’re using Amazon PPC is your TACoS (total advertising cost of sale).
In this guide, we’ll explain everything about Amazon TACoS—what it means, what numbers you should aim for, how it’s different from ACoS, and why it matters for your business.
P.S. While you’re focusing on optimizing your advertising costs, don’t forget about potential lost revenue from FBA discrepancies.
At Getida, we help Amazon sellers like you recover money from lost or damaged inventory, shipping errors, and fee miscalculations – all while you focus on growing your business.
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Table of Contents
What is TACoS in Amazon?
TACoS stands for Total Advertising Cost of Sales, a metric used in Amazon advertising to measure ad spending relative to total sales revenue.
Unlike ACoS, which only accounts for direct ad sales, TACoS considers total sales, including ad-driven and organic sales.
This broader view is particularly important on Amazon because of how the platform’s algorithm works – it rewards advertisers with improved organic rankings when their ads perform well.
This creates a powerful positive feedback loop:
- Increased ad visibility leads to more sales
- More sales improve your organic ranking
- Better ranking drives more organic sales
- Higher overall revenue reduces your TACoS
That’s why TACoS gives a more complete picture of advertising impact and business performance.
How Does TACoS Impact Profitability in Amazon Advertising?
TACoS directly influences your bottom line by showing how much of your total revenue goes toward advertising costs.
Here’s how it affects different aspects of your business:
Sales Cycles
Successful ads can boost product visibility, leading to more organic sales and improved profitability:
Positive Sales Cycle:
A virtuous cycle kicks in when increased ad spend:
→ leads to more ad sales
→ which lifts organic ranking
→ resulting in more organic sales
→ enabling further optimization like lowering bids or pausing poor-performing campaigns
→ decreasing TACoS.
Negative Sales Cycle:
The inverse happens when budget cuts:
→ reduce ad sales
→ hurting organic visibility
→ diminishing organic sales
→ forcing panic spending
→ spiking TACoS.
Profitability Assessment
To understand your true profitability, consider this example:
Let’s say your gross profit margin is 30%, and your TACoS is 12%.
Your net profit margin would be:
Net Profit Margin = Gross Profit Margin – TACoS
30% – 12% = 18% net profit margin
How to Calculate TACoS
The TACoS calculation is straightforward but requires accurate data tracking of advertising expenses and total sales revenue.
Here’s the formula:
TACoS = (Total Ad Spend / Total Sales Revenue) x 100
- Total Ad Spend: Your total advertising expenses across Amazon Sponsor Brands Ads, Sponsored Products Ads, and Display Ads campaigns.
- Total Sales Revenue: Revenue from all sales, including organic and paid.
If you spent $5,000 on ads and sold $50,000 across organic and sponsored products, your TACoS would be 10%.
Let’s break this down with another practical example:
Monthly figures:
- Ad spend: $2,000
- Organic sales: $15,000
- Ad-generated sales: $5,000
- Total revenue: $20,000
TACoS calculation:
TACoS = ($2,000 / $20,000) × 100 = 10%
This means you’re spending 10% of your total revenue on advertising.
Many Amazon seller tools provide pre-calculated TACoS metrics on their dashboards.
But if unavailable, you can easily compute TACoS yourself as long as you maintain accurate sales data.
What is a Good TACoS Amazon Sellers Should Aim For?
There is no universal “good” TACoS percentage as it depends on factors like:
- Product category
- Business maturity
- Seasonality
- Campaign goals
However, as a rule of thumb:
- TACoS < 10% – Excellent. Low reliance on ads allows aggressive optimization.
- TACoS 10%-20% – Good room for improvement as 1/5th of the revenue is spent on ads.
- TACoS > 20% – Potential overdependence on paid advertising.
Compare TACoS to historical averages and industry benchmarks to contextualize performance better.
The trajectory over time matters more than any single data point.
TACoS vs. ACoS - Comprehensive Comparison
While TACoS and ACoS may seem similar at first glance, understanding their differences is key to making informed decisions:
What They Measure:
- ACoS: Efficiency of ad spend relative to sales directly attributed to those ads
- TACoS: Impact of total ad spend on overall business revenue and profitability
Calculation:
- ACoS = (Ad Spend / Ad Sales) x 100
- TACoS = (Ad Spend / Total Revenue) x 100
Context:
- ACoS: Short-term campaign performance
- TACoS: Long-term business growth
Optimization Approach:
- ACoS: Tighten targets for immediate wins
- TACoS: Loosen control for compounding gains
Monitoring both provides a balanced perspective – TACoS provides a broader business perspective, whereas ACoS helps with campaign-level Amazon PPC strategy decisions.
How to Optimize TACoS for Better Results
Improving your TACoS requires a multi-faceted approach:
1. Boost Your Ad Efficiency
Getting your ads to perform better doesn’t have to be complicated.
Start by keeping an eye on four key Amazon seller metrics for FBA that tell you how well your campaigns are doing:
- Click-through rate (CTR – how often people click your ads)
- Cost per click (CPC – what you’re paying for each click)
- Conversion rate (CVR – how many clicks turn into sales)
- Average order value (AOV – how much people typically spend)
- Amazon sell-through rate (how quickly your inventory is selling compared to how much you have in stock)
Here’s what you can do right away to improve these numbers:
- Run search term reports to find new keywords your customers are actually using.
- Adjust your bids based on where your ads show up – top of search might be worth more than product pages.
- Use Amazon’s “down-only” bidding option to automatically lower bids when conversion is less likely.
- Test different images and ad copy to see what works best with your audience.
Remember to clean up your campaigns by removing keywords that aren’t working. This keeps your ad spend focused on what’s really bringing in sales.
2. Strengthen Your Organic Presence
Your organic visibility is like a snowball rolling downhill – the better it gets, the faster it grows.
The key is making your listings as attractive to both Amazon’s algorithm and real shoppers as possible.
Your first step should be optimizing your product pages by crafting A+ content on Amazon:
- Write clear, keyword-rich titles that make sense to people.
- Create bullet points that highlight your most important features.
- Fill out your backend search terms completely – these are free keywords!
- Keep your product descriptions informative and scannable.
Don’t forget about the human side of your listing:
- Address negative reviews promptly and professionally.
- Answer customer questions thoroughly – this helps future buyers, too.
- Use Amazon seller promotions like Lightning Deals strategically to boost sales velocity.
3. Track Your Progress Smartly
Looking at your TACoS and ACoS together over time, you’ll see patterns that can guide your strategy.
A decreasing TACoS means your advertising is working efficiently and helping your organic sales grow.
That’s exactly what you want to see!
However, if you notice your ACoS dropping while TACoS rises, it’s a red flag that your organic sales aren’t keeping pace.
And if both numbers are climbing, it’s time to take a serious look at your campaign performance.
The key is using these insights to make informed decisions rather than just guessing what might work.
Try this approach:
- Set specific goals for both metrics based on your product’s lifecycle.
- Check your trends at least weekly to catch problems early.
- Make one change at a time so you can see what works.
- Document what changes led to improvements so you can repeat them.
Get Your Unclaimed Amazon FBA Reimbursement Through Getida
While optimizing your TACoS is crucial for profitability, don’t overlook another significant opportunity to improve your bottom line: FBA reimbursements.
At Getida, we specialize in helping Amazon sellers like you recover funds from FBA discrepancies, providing:
- Continuous auditing of your Amazon account
- Expert claims management
- Comprehensive documentation support
- Risk-free, performance-based pricing
Sign up with us now to discover your eligible reimbursements and maximize your profitability alongside your advertising efforts.
Frequently Asked Questions (FAQs)
Let’s address some common questions about Amazon TACoS:
How Does Advertising Cost of Sales Affect TACoS?
Advertising Cost of Sales (ACoS) directly influences TACoS. A high ACoS typically leads to a higher TACoS unless strong organic sales offset it.
The key is finding the right balance where ad spending drives both immediate sales and long-term organic growth.
How Can I Align ACoS and TACoS for Campaign Success?
Success comes from monitoring both metrics in tandem:
- Use ACoS for day-to-day campaign adjustments
- Track TACoS for long-term strategy alignment
- Adjust bids based on ACoS while keeping TACoS goals in mind
- Focus on keywords that improve both metrics
What is the Best Way to Adjust TACoS Targets Over Time?
New product launches warrant higher TACoS as building your brand strength on Amazon takes priority.
For established products, benchmark against category averages and historical baselines while aiming for <10% TACoS—an upward trend signals a warning requiring corrections.
What Are Common Pitfalls in TACoS Calculation?
Avoid these common mistakes:
- Excluding organic sales from total revenue
- Using incorrect date ranges (use daily/weekly averages rather than 30-day aggregates for responsive decision-making)
- Forgetting to account for returns (it can skew TACoS calculations to appear better)
- Mixing currencies in international calculations
Conclusion
Understanding and optimizing your TACoS is just one piece of maximizing your Amazon business’s potential.
While you focus on fine-tuning your advertising strategy, there’s another powerful way to boost your bottom line: recovering lost FBA reimbursements.
Here’s something most sellers don’t realize: Amazon FBA discrepancies are worth billions of dollars each year.
At Getida, we specialize in finding and recovering these lost funds for you. Our team audits tens of billions of dollars in FBA transactions daily, and we secure reimbursements for over 90% of the claims we file.
Even better, on average, our customers recover 166% more from Amazon FBA than sellers who don’t use Getida.
Think about what recovering these funds could mean for your business:
- More money to reinvest in your advertising campaigns
- Lower effective TACoS
- Better overall profitability
Sign up for an audit review today! It’s time to turn those lost funds into fuel for your business growth!
