Amazon PPC ACoS too high? Never mind ACoS, focus on your TACoSMar 10, 2020
We all know that your Advertising Cost of Sales (ACoS) is important in Amazon PPC. But is it the be-all and end-all?
ACoS is the fickle percentage that many sellers rely on to help them determine how they bid on search terms.
But there are many ways to measure the success of Amazon Advertising. ACoS is just one of them.
You see the problem with ACoS is that it is confined to measuring only your advertising efforts.
It fails to measure the true value of your ad spend and how it impacts the overall performance of your business.
That's why here at Sponsored Profit, we prefer to measure True AcoS or Total ACoS (TACoS). And no, we're not talking about yummy Mexican food!
You see, TACoS measures your advertising spend relative to the total revenue generated, and the effect of advertising on long-term growth.
It provides a much more accurate picture of how your ad spend is actually performing.
To work out your TACoS, you divide your total advertising spend by your total sales revenue and then multiply it by 100.
Tracking your TACoS over time shows how your ad spend creates a 'snowball' effect by helping increase your organic sales.
The longterm goal is for your TACoS to remain flat or falling over time as this implies that organic sales are increasing and you are becoming less dependent on ad sales.
Conversely, a higher TACoS means your total sales are more influenced by your advertising spend. But this is not necessarily a bad thing. For example, it is to be expected if you have recently launched a product.
Ultimately, like ACoS, your TACoS is relative to your business and PPC goals. But unlike ACoS, monitoring TACoS will give you a much better indication of how much your advertising is driving sales.
Armed with this information, you can create more effective long-term strategies for your Amazon business.
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