Killing it in ecommerce is all about metrics. Knowing which metrics to pay attention to, and how to move the needle is key to seeing problems before they become enormous, and identifying opportunities before all of your competitors. Most sellers now believe they can’t succeed with Amazon advertising, and are carefully watching their ACOS. But the bigger picture is better served by looking at TACOS.
TACOS in marketing simply means “Total Advertising Cost of Sale.” The goal of TACOS in marketing is to help you understand how much you’re spending on advertising compared to the revenue generated. Essentially, you can get a clearer picture of how your PPC advertising is performing so you can make adjustments to your short-term and long-term marketing strategies.
To calculate TACOS, simply take your total number of advertising dollars spent and divide that number by the total sales revenue. Once you have that number, multiply by 100 and you’ll have your TACOS. The goal is to have the lowest number possible, which would signify a strong marketing strategy that’s working.
Many business owners only look at their Advertising Cost of Sales (ACOS), but that metric doesn’t give a full picture of your performance. The formula for calculating ACOS is similar, but instead of looking at total revenue sales, you focus on advertising revenue for just one advertising channel. Both metrics are important to consider to improve the chances of success, but too many people neglect to take TACOS in marketing into consideration.
ACOS is a quick way to see how a particular advertisement is performing. TACOS looks more at both advertising revenue and organic sales revenue. While those are the main differences to understand, how you interpret and evaluate them goes much deeper than that. The lower the ACOS and TACOS numbers you have, the better you generally will be overall. However, it’s not always that simple and it requires a deeper dive into the numbers.
When you evaluate both ACOS and TACOS in marketing you always want TACOS to remain stable or decrease. There might be times where both ACOS and TACOS increase, but don’t abandon your marketing strategy right away if this happens. Instead, monitor the numbers closely and your TACOS should slowly decrease when organic sales from a new product you might have introduced start increasing.
The one thing you want to avoid when evaluating ACOS and TACOS in marketing is when TACOS increases, but ACOS decreases. When this happens, it’s an indicator that organic sales are not as big of a percentage of your total revenue. So while ACOS decreasing is a good thing, TACOS increasing means your advertising efforts are counterproductive.
Good TACOS in marketing depends on various factors, including profit margins, the type of product being sold, and internal business goals. There are a few key points to consider, in general, to determine good TACOS, including:
The most important thing to remember is to always look at the big picture when evaluating ACOS and TACOS to determine why the numbers look how they do and what needs to be changed, if anything.
Evaluating TACOS in marketing closely can ensure you maximize every advertising dollar spent. And when you analyze the numbers and are willing to adjust, you can alter your strategies periodically to ensure you create as much stability as possible. When you know the percentage of revenue is generated by your advertising spending, you can fill in any gaps in your strategy and understand what’s working well for you. Without looking at the whole picture with TACOS in marketing, you could be missing some key points. Focus your strategy on TACOS in marketing and you’ll be on your way to developing a solid foundation that only requires minor tweaks over time.
Editorial recommendations both onsite and in native publisher content can improve your TACOS both by driving sales directly AND by making your PPC advertisements more efficient.
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