What is TACoS and why does it matter more than ACoS?
TACoS is ad spend divided by total sales, including organic. ACoS only looks at the sales advertising produced, so it cannot tell you whether advertising is growing the business or replacing organic demand. If ACoS stays flat while TACoS rises, you are buying sales you were previously getting for free — the campaigns look fine and the business is becoming more dependent on paid traffic.
The two ratios, side by side
| Measure | Numerator | Denominator | Answers |
|---|---|---|---|
| ACoS | Ad spend | Ad sales | Is this campaign efficient? |
| TACoS | Ad spend | Total sales | How dependent am I on ads? |
They can move in opposite directions, and that is the interesting case.
Three patterns worth recognising
ACoS flat, TACoS rising. Advertising is replacing organic sales. The campaigns look healthy; the business is becoming paid-traffic dependent.
ACoS rising, TACoS flat. The auction got more expensive but advertising is not a bigger share of the business. Often seasonal and often fine.
ACoS flat, TACoS falling. Organic sales are growing faster than ad spend. This is what a successful launch looks like three months in.
Using it during a launch
During a launch a high TACoS is the point: you are buying rank. What matters is whether it falls afterwards. A launch TACoS that never comes down was not a launch, it was a subsidy.
Checklist
- Do you track TACoS alongside ACoS, by product?
- For launched products, is TACoS trending down?
- When ACoS looks fine, have you checked whether organic sales fell?
Frequently asked questions
What is TACoS?
Total advertising cost of sale: ad spend divided by total sales including organic, rather than only the sales attributed to advertising.
What does a rising TACoS mean?
Advertising is taking a larger share of total revenue. With a flat ACoS it usually means ads are cannibalising organic sales rather than adding to them.
What is a good TACoS?
It depends on the stage. A launch deliberately runs a high TACoS to build rank; a mature product should see it fall as organic sales take over.