Amazon sellers are more familiar with Advertising Cost of Sales (ACoS), which takes into consideration advertising spend relative to its generated sales. However, what many fail to additionally monitor is Total Advertising Cost of Sales (TACoS), which takes into consideration the full, overall effect of the advertisement.
ACoS: Advertising Cost of Sales: Cost of Advertisement / Revenue through Advertisements
This is a great way to monitor your advertising’s subsequent impact on revenue and ensure that you aren’t wasting money, it fails to take a broader look into the effects advertising can have on your business.
TACoS: Total Advertising Cost of Sales – Cost of Advertisement / Total Account Revenue.
TACoS can provide insights into the performance of your ads in relation to your OVERALL business. Lower suggests TACoS means that a small investment in advertisings results in a large increase in sales, whilst a higher TACoS suggests underperforming ads. As you monitor TACoS over time, the goal is to keep this number constant or for it to decrease.
Strategies to change TACoS
- Pull back ad spend and ad budget
- Reduce ACoS targets on underperforming campaigns, however, this can also result in reduced sales volume
- Pause advertising on underperforming products. Navigate to the Product Metrics page to see what products you are advertising that also has low/negative gross margins. Should you continue to invest in advertising for these SKUs?
- Add negative and narrower match keywords to cut down on wasted ad spend
- Try increasing prices to improve top-line sales, however, this can also reduce sales volume, thus increasing or maintaining TACoS
- Increase your average basket size by encouraging more units per sale. Consider running promotions and offering coupons to encourage purchasing of multiple units.
- Optimize your product listing page to improve conversion rates
We have successfully managed to increase reach, clicks through rate and sales for some of the biggest brands in homeware, barware, lifestyle and many more across the Amazon platform. Want to find out how we can help you? Contact us on +44 20 8080 0505 or email us at email@example.com