You’ve launched your Amazon PPC campaigns – nice work! But here’s the deal: running ads is only half the game. If you don’t know which metrics to track, it’s like throwing money into a black hole.The big three you need to watch? ACoS, TACoS, and ROAS. These metrics are key for figuring out if your campaigns are doing what they should—making you money.
Let’s break this down so you can optimize smarter, not harder.
ACoS, TACoS, and ROAS—What’s the Difference?
Here’s the short and sweet version:
ROAS = Return on Ad Spend: How much revenue you get for every $1 of ad budget spent.
ACoS = Advertising Cost of Sale: How much you spend on ads as a percentage of the revenue it generates.
TACoS = Total Advertising Cost of Sale: Ad spend as a percentage of your total sales (including organic revenue).
What is ACoS?
ACoS (Advertising Cost of Sale) shows how much money you’re spending on ads versus how much revenue you’re pulling in from those ads. It’s critical for tracking profitability and performance for your Amazon PPC campaigns.
Whether ACoS is “good” or “bad” depends on your goals—are you launching a new product, driving visibility, or maximizing profits? Either way, ACoS tells you if your ads are worth the money.
How to calculate ACoS:
Ad Spend ÷ Ad Revenue x 100 = ACoS
Example: You spend $100 on ads and generate $1,000 in ad revenue.
ACoS = ($100 ÷ $1,000) x 100 = 10%
A lower ACoS = higher profitability. A higher ACoS means it’s time to tweak your ads.
What is TACoS?
TACoS (Total Advertising Cost of Sale) takes things a step further. It measures ad spend compared to total revenue, not just revenue from ads. This gives you a bigger picture of how ads impact your overall business and long-term growth.
TACoS is especially useful because it factors in organic sales. The goal? See ad-driven sales turn into organic momentum over time.
How to calculate TACoS:
Ad Spend ÷ Total Sales x 100 = TACoS
Example: You spend $500 on ads and generate $3,000 in total sales (ads + organic).
TACoS = ($500 ÷ $3,000) x 100 = 16.6%
Why it matters:
If TACoS is low—your ads are driving solid ROI and your organic sales are strong.
If TACoS is high—you’re relying too much on ads, and organic sales need a boost.
What is ROAS?
ROAS (Return on Ad Spend) is all about efficiency. It measures how much revenue your ads generate compared to the cost of running them.
The formula:
Ad Revenue ÷ Ad Spend = ROAS
Example: You spend $100 on ads and generate $1,000 in revenue.
ROAS = $1,000 ÷ $100 = 10x
Translation: For every $1 you spent, you made $10 back. High ROAS = good. Low ROAS = time to tweak your keywords, bids, or strategy.
Why You Should Focus on ACoS and TACoS First
While ROAS is important, ACoS and TACoS give you the clearest picture of profitability and performance. Here’s why:
- Measure ROI More Effectively
ACoS shows how well your ad spend converts into revenue. TACoS shows how ads contribute to your overall sales growth (organic + paid).
For example: If your ACoS is 10% on a product that sells for $50, you’re spending $5 on ads to make $50. That’s solid profit. If your ACoS is too high, say 70%, you’re only making $15 on a $50 product—time to adjust.
2. Spot Trends and Take Action
Understanding ACoS and TACoS trends helps you know when to celebrate and when to hit the brakes:
Increase in ACoS and TACoS: Good if you’re launching a new product (visibility is key), but bad if you’re overspending without results.
Decrease in ACoS and TACoS: Organic sales are growing—cue the confetti!
High ACoS but low TACoS: Your ads are performing well, and organic sales are strong.
High TACoS: You’re spending more, but organic sales aren’t keeping up—time to re-evaluate.
Common Questions About ACoS & TACoS
1. How long does it take for ACoS to stabilize?
It depends on your product and its market. Some products see profitability quickly, while others might need a few weeks of higher ACoS to build momentum.
2. What if ACoS is close to 100%?
This is normal for new products or during early testing phases. Treat this as an investment to discover high-converting keywords and build reviews. Over time, ACoS should come down as your product gains traction.
3. Is running at 100% ACoS sustainable?
Not long-term, no. If ACoS stays high after a few weeks, it’s a sign the product may need better keywords, bids, or offers. While ROAS is great for measuring ad efficiency, ACoS and TACoS are the power couple you want to focus on. Together, they give you a clear view of profitability and long-term growth.
Use these metrics to make smarter, data-driven decisions—adjust your keywords, optimize bids, and fine-tune your campaigns so you’re not just spending money but making money.
Stay smart, stay profitable, and keep aging your e-commerce strategy to perfection.
Need help mastering your Amazon PPC campaigns? Barrel Aged E-Commerce has you covered. We’ll handle the heavy lifting so you can focus on growing your business. Reach out today!
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