TACoS divides the same spend by all your sales. Break-even ACoS equals your profit margin before advertising: if you keep 30% of each sale after Amazon's fees and the cost of the product, an ACoS under 30% means the ads are profitable on the sales they are credited with.
The formula
- ACoS=ad spend ÷ ad-credited sales
- TACoS=ad spend ÷ all sales
- Break-even ACoS=margin before advertising
What is a good ACoS?
One below your break-even ACoS, by enough to leave the profit you want. A product with a 40% margin can run at a 35% ACoS and still make money on every ad-driven sale; a product with a 15% margin cannot. As with ROAS, a benchmark ACoS without a margin attached says nothing about your products.
ACoS vs ROAS
They are the same measure turned upside down. ACoS is spend divided by sales; ROAS is sales divided by spend. An ACoS of 25% is a ROAS of 4.
Why TACoS matters
ACoS only sees the sales Amazon credits to the ads. TACoS sees all of them. If ad spend holds steady while TACoS falls, total sales are growing faster than ad spend, which suggests the ads are lifting sales beyond the ones they are credited with. That reading is an inference: other causes, such as a price change or a competitor going out of stock, look the same.