How to Reduce TACoS: A Quick Guide for Amazon Sellers

Keeping track of your progress is crucial to any journey. The same applies to you as an Amazon seller. To improve and enhance your growth, you must be able to properly measure it.

Advertising on Amazon is a great way to increase brand awareness and sales. Proper use of Amazon PPC campaigns can have a really good impact on your organic reach. TACoS is a very useful and reliable metric provided to sellers by Amazon.

What is Amazon TACoS?

TACoS is a method for determining how your actions affect your business objectives. TACoS is an abbreviation for "Total Advertising Cost of Sales" in Amazon advertising. It is critical to keep an eye on TACoS.

In fact, it assists sellers in understanding how Amazon advertising relates to business performance. The TACoS formula determines the proportion of advertising spending to total sales.

How to check if TACoS is healthy?

Ideal TACoS is subjective to the marketing strategies and the very nature of a brand. It is normal for newly launched products in the market to have a high TACoS.

TACoS of existing products should be decreasing, indicating an increase in organic sales. Some guidelines for determining good Amazon TACoS are:

a. TACoS flat or falling

This is a positive sign indicating that your organic sales are increasing, generating good sales and increasing brand awareness.

b. TACoS rising

This indicates that you are increasing your ad spend, but your organic sales are not increasing or may be decreasing. A high TACoS rate indicates that your advertising is generally underperforming and should be optimised.

c. ACoS falling, TACoS rising

This signals that your organic sales are decreasing and becoming a smaller part of your total revenue, time to evaluate

d. ACoS and TACoS both rising

This is acceptable for promoting a new product. The primary goal of launching a new product is to increase sales. TACoS should begin to decline over time as organic search for the product improves.

Steps to Reduce TACoS

The above mentioned checkpoints will help you evaluate the status of your Amazon business. Even if your TACoS are high, don’t worry. We have some insider tips to share with you to reduce your TACoS and skyrocket your sales.

1. Improve the efficiency of Ad campaigns

You can reduce your ACOS and TACoS by spending less or more effectively on advertisements. Ad efficiency primarily determines whether reducing ad spending will have a negative impact on total sales.

When you optimise Amazon ads, you can save money on advertising.Under normal circumstances, a negative short-term cycle begins when the cost of advertising is reduced. However, TACoS stabilises over time.

2. Boost your Organic Sales

Increasing the percentage of your organic sales is another excellent way to improve yourTACoS and overall growth.

Improve your product listing to have a long-term, long -lasting effect on your organic growth. Product listing could also be used to supplement your long-term advertising strategy. When listing your product or service, make sure you:

a. Add videos, titles, and bullet points to your product content to better describe your product or service.

b. On your product details page, make sure the pricing is up to date and relevant to the search terms.

c. On time, respond to potential customers’ questions about the products.

d. You can use Amazon keyword tools to identify the most popular keywords to include in your product listing.

Furthermore, keywords provide Search Engine Optimisation (SEO) features that improve your brand’s presence on Amazon.

It is possible to advance both of these outcomes at the same time by focusing on conversion rate (CVR). Bidding on your highest converting terms can help you lower your TACOS by optimising spend, and a higher CVR will help you climb the organic rank for that keyword.

Conclusion

Understanding how TACoS affects everything else in your Amazon ad performance is critical if you want to run a profitable Amazon business. Of course, this is not the only metric or aspect of your business to consider.

To bring your Amazon marketing into a more precise focus, it is best to consider many interconnected indicators — and TACoS is an important part of that.

It provides insight into how your ad spend contributes to your brand’s long-term growth.With this information, you can assess the overall health of your Amazon business and make sound decisions about your next steps.

Xena is an AI-powered ecommerce growth platform that uses data intelligence to both automate & optimize ecommerce growth on Amazon & Walmart.