ACoS tells you how efficient your ads are. It says nothing about whether your business is becoming more dependent on them. For that you need one more number, read beside the first: TACoS.
The two formulas, side by side
ACoS = ad spend ÷ ad-attributed sales × 100
TACoS = ad spend ÷ total sales (ad sales + organic sales) × 100
An example, with made-up figures. In a month you spend ₹50,000 on ads. Amazon attributes ₹2,50,000 of sales to those ads. Your organic sales, the orders that came with no ad click, were another ₹5,00,000.
| Measure | Arithmetic | Result |
|---|---|---|
| ACoS | 50,000 ÷ 2,50,000 × 100 | 20% |
| TACoS | 50,000 ÷ 7,50,000 × 100 | 6.7% |
ACoS says ₹20 of ads for every ₹100 of ad sales. TACoS says ₹6.70 of ads for every ₹100 of everything you sold. The second number is the one your accountant would recognise: the advertising cost of the business.
Why read both
Ads do two jobs on Amazon. They bring the order that Amazon attributes to the click, and they move your product up the organic results, where later orders arrive with no click at all. ACoS sees only the first job. TACoS sees both.
Two accounts can show the same ACoS and be in opposite health:
- Account A. ACoS flat at 25% for six months, TACoS falling from 10% to 5%. Ad spend is the same; organic sales have doubled. The ads are building something.
- Account B. ACoS improving from 20% to 15%, TACoS rising from 8% to 12%. The ads look more efficient, but total sales are falling faster than ad spend. The business is leaning harder on ads each month.
A monthly report that shows only ACoS would congratulate Account B.
How to calculate it yourself
Amazon does not print TACoS anywhere. It takes two reports for the same date range:
- Ad spend. Amazon Ads console, Campaign Manager, the date range, the Spend total.
- Total sales. Seller Central, Business Reports, Sales Dashboard, the same date range, Ordered Product Sales.
- Divide the first by the second. Multiply by 100.
Do it monthly, on the same day, and keep the figures in one sheet. One month's TACoS tells you little; six months in a row tell you which direction the business is moving.
Festival months. In a sale event you spend more, so TACoS rises for those weeks. That is expected. What matters is whether it returns to where it was once the event ends. Mark the event weeks in your sheet so a seasonal spike is never read as a trend.
What moves TACoS down
Everything that raises organic sales relative to ad spend:
- Promote the searches that already convert. A search that sells in your automatic campaign belongs in a manual campaign with an exact match, where you set the bid. Amazon's organic ranking rewards products that sell; a search you own and convert is the one most likely to start selling without the click.
- Stop paying for searches that never order. Each one is spend with no sale on either side of the ratio.
- Keep the listing worth landing on. Ads bring the visit; the title, the images and the reviews decide the order. A better conversion rate lowers both ACoS and TACoS at once.
- Separate your brand searches. If buyers search for your brand by name, those clicks convert cheaply and flatter your account ACoS. Put them in their own campaign so the ACoS of the searches that find you new customers is visible on its own.
Where SellerSaarthi fits
The product reads your ad spend from Amazon's advertising reports and, once you connect your sales data from inside the app (a one-time Amazon permission), your total sales from Amazon's own sales report. The total ad cost report then shows your TACoS day by day, beside the ad figures, with no spreadsheet. The nightly check works on the ACoS side: each search and each bid against the target you set. Nothing changes on Amazon until you approve it, and any bid change can be undone from your activity log.
Start with the ACoS basics if you have not read them: What is ACoS? A plain guide.