Amazon TACoS: Calculation, Optimization Tips, Tools, and FAQs

A big TACoS is excellent on a plate, but you’ll want it as small as possible when it comes to Amazon. Food jokes left aside, this metric is a vital indicator of your overall business health. So, let’s:

• Walk you through understanding your TACoS on Amazon
• Introduce you to a powerful but less obvious Amazon TACoS optimization strategy

TL;DR: To improve your profit margins over time, aim to lower your TACoS. Affiliate marketing is one of the most effective strategies because it spares you from paying for ads and can naturally improve your product’s ranking on Amazon - you’ll see why in a bit.

Join Archer Affiliates and connect with 2,500+ vetted creators who can help boost your sales while reducing ad reliance.

What is TACoS on Amazon?

TACoS stands for "Total Advertising Cost of Sales." The Amazon TACoS metric measures how much of your total sales on the platform come from your ad spend.

As long as your TACoS is high, you depend on ads. Once it starts lowering, it indicates that your organic sales are growing.

The total advertising cost of sales is important because:

• It shows whether your overall business grows through ads or mainly organically.
• It’s an indicator of both ad performance and business profitability.

ACoS vs. TACoS

As an Amazon seller, you’ve probably come across both ACoS and TACoS. They might sound similar, but these metrics give you different insights into your ad performance. So, here’s a quick breakdown of the differences between ACoS and TACoS that will be useful to your Amazon advertising efforts:

How to Calculate Amazon TACoS

This metric is measured as a percentage and there’s a simple Amazon TACoS formula you can use to calculate it: divide the ad spend by the total sales and multiply the result by 100.

The ad spend is how much you’ve spent on ads, and the total sales is how much you’ve earned from both Amazon ads and organic sales.

The percentage you get reflects how much of your overall sales come from your advertising efforts and how healthy your business is.

What is a Good TACoS on Amazon?

In general, the lower your TACoS is, the more it’s seen as a sign of a strong, sustainable business. Still, a “good” TACoS on Amazon would depend on your goals, and it can be:

• Between 5-15%: This value would be ideal because it shows that your business is growing through organic sales, with less reliance on ads.
• Over 20%: This could mean you're too dependent on ads or are still in an early growth phase where you invest heavily in advertising.

5 Factors Affecting Your TACoS

TACoS is the result of many moving parts in your Amazon business. From product pricing to ad strategy, several key factors can cause your TACoS to fall:

1. Lack of organic sales: If your organic sales are sparse, TACoS will take up a larger percentage of your total sales, which means you rely more on ads.
2. Ad spend allocation: Spending more on ads can increase TACoS, especially if organic sales aren’t keeping pace.
3. Product pricing: Lower-priced items might require a higher ad spend to generate significant revenue, which could raise your TACoS.
4. Seasonality: The high traffic that boosts seasonal sales on Amazon can lead to a temporarily increased TACoS because the competition rises and ads become more expensive.
5. Competition – More competitors in your niche can drive up ad costs, impacting your TACoS.

How to Optimize TACoS on Amazon

The best way to optimize your TACoS is by growing your organic sales. When you do that, your overall sales grow without relying solely on ads, which will naturally lower your TACoS. So, here are a few strategies to do that.

1. Improve Product Listings

Compelling product listings lead to more organic sales. To make yours irresistible, you have to use:

• Keyword-rich, clear, and engaging product titles, bullet points, and descriptions
• A+ Content that formats your listing in an outstanding way
• High-quality images of your product in use

2. Encourage Positive Reviews

Products with more positive reviews tend to rank higher in Amazon search results, driving more organic traffic. So, encourage satisfied customers to leave reviews and always respond to customer feedback ASAP. Doing so will help you build trust, improve your reputation, and encourage repeat purchases.

3. Optimize for Amazon SEO

Proper SEO boosts your product’s visibility in organic search results, making it easier for potential customers to find your listings without relying on ads. Ensure you’re using the most relevant keywords in your titles, bullet points, and backend search terms.

4. Run Promotions and Discounts

When your sales velocity increases through promotions, it can help boost organic rankings. The result is a longer-term benefit as more customers find your product organically. So, use limited-time discounts or coupons to increase product visibility and sales.

5. Focus on Repeat Purchases

The more loyal customers you gain, the more organic sales you’ll generate over time. Again, this will reduce your reliance on paid ads to drive revenue. Here, the action point is to launch a Subscribe & Save option or offer bundles to encourage repeat purchases.

Boost Your Amazon Listing Visibility With Archer Affiliates

Our platform, Archer Affiliates, connects Amazon sellers like you with an extensive network of affiliates - influencers, publishers, and content creators who can promote your Amazon products on external channels.

Here’s why joining us will boost your listing’s visibility and help lower your TACoS:

• Increased, high-quality external traffic: Our affiliates send you targeted, relevant traffic that is more likely to convert into sales. Since Amazon’s algorithm heavily favors products that generate consistent sales, increasing traffic to your Amazon listing will improve your short-term revenue and long-term organic rankings.
• Diverse backlinking and improved organic placement: Affiliates often use blog posts, social media, and other content that creates backlinks to your product page and boosts your product’s authority. Seeing that your product is popular outside the platform, Amazon can improve its placement in search results.
• Improved profit margins: The fact that you only pay affiliates when they generate actual sales reduces your upfront costs and gives you a risk-free way to expand your audience and scale your business​. Also, the affiliate sales are accurately tracked with Amazon attribution links and are eligible for Amazon’s Brand Referral bonus.

If you like how it sounds, connect with Amazon influencers at Archer Affiliates and increase your Amazon listing’s visibility, external traffic, and organic sales. Our affiliates can help you lower your TACoS and free yourself from ad dependency.

Frequently Asked Questions (FAQs)

Here are the answers to some TACoS Amazon FAQs:

What Are Some Common Mistakes Sellers Make Regarding TACoS?

Focusing only on ad-driven sales and neglecting organic growth is one of the most common mistakes. Sellers often overspend on ads without optimizing listings or fail to adjust ad spending over time as organic sales grow. All these lead to inflated TACoS.

How Often Should I Monitor My TACoS?

Monitor TACoS weekly or bi-weekly, depending on your ad activity. Regular tracking helps you spot trends, adjust your ad campaigns or organic sales strategies before issues escalate, and balance costs and performance.

Is TACoS a More Comprehensive Metric Than ACoS?

Yes, TACoS is more comprehensive. While ACoS focuses solely on ad-driven sales, TACoS considers your entire business performance, including organic sales. So, it’s a better metric for evaluating long-term business health and ad impact.

How Do I Know if My TACoS Strategy is Working?

Your strategy will work if your TACoS decreases over time while maintaining or increasing total sales. This trajectory would indicate that your organic sales are growing and you're becoming less reliant on ads - in other words, your business is getting more profitable.

Conclusion

Advertising and affiliate marketing have their place when it comes to growing your Amazon business.

Ads can help with quick visibility, but they often lead to a higher TACoS, showing a heavy reliance on paid traffic.

On the other hand, affiliate marketing drives high-quality external traffic, helping to boost organic sales, which lowers your TACoS over time. And the lower your TACoS, the more sustainable and profitable your business becomes.

Join Archer Affiliates today and let our vetted affiliates promote your products. We’ll help you build a healthier Amazon business that is less dependent on ads and upfront payments.