Amazon Advertising Metrics: TACoS vs. RoAS

Explore the differences between TACoS and RoAS. See how easy it is to track these advertising metrics using Junglytics, an Amazon seller data analytics tool.

Isiah Kurz

October 27, 2023

Amazon sellers often grapple with determining the success of their advertising efforts. Advertising is an investment, after all. And you want to make sure you’re getting the best bang for your buck.

Two prominent metrics for Amazon sellers are total advertising cost of sale (TACoS) and return on advertising spend (RoAS). Let’s delve into the definitions, benefits, and drawbacks of both metrics to help Amazon sellers like you make informed decisions about your advertising strategies.

Total Advertising Cost of Sale (TACoS)

TACoS calculates the percentage of total sales that an Amazon seller spends on advertising. The formula for calculating TACoS is: TACoS = (total revenue from ads / total advertising cost) × 100%.

Junglytics, a data analytics tools for Amazon sellers, can track TACoS by product line.

TACoS encompasses not only the direct advertising costs but also the associated overheads. This is a vital metric because it provides sellers with a comprehensive view of their advertising expenses in relation to their overall sales, allowing for a more nuanced understanding of profitability.

The Benefits of TACoS

By considering all costs associated with advertising, sellers accurately gauge their net profitability. This holistic approach enables better financial planning and budget allocation.

TACoS also helps sellers identify inefficiencies in their advertising strategies, allowing them to optimize their campaigns for better results.

The Drawbacks of TACoS

TACoS has its limitations. Since it factors in all costs—including overheads—it might not provide a clear picture of the direct impact of advertising on sales.

Additionally—for sellers focused solely on short-term gains—TACoS might seem too broad in its analysis, making it challenging to make immediate, pinpointed adjustments to their campaigns.

Return On Advertising Spend (RoAS), Definition and Significance:

RoAS measures the revenue generated for every dollar spent on advertising. It is a straightforward formula: RoAS = revenue from advertising / cost of advertising.

A data analytics card showing RoAS over time.

RoAS is essential because it provides a quick and precise evaluation of the effectiveness of advertising campaigns.

The Benefits of RoAS

RoAS is lauded for its simplicity and ease of interpretation. Amazon sellers can quickly assess the performance of their advertising efforts and make prompt decisions based on the results. It is particularly useful for short-term campaigns and promotions, where immediate feedback is crucial.

RoAS also helps sellers allocate their budget efficiently, focusing on channels and strategies that deliver the highest returns.

The Drawbacks of RoAS

RoAS has a super narrow focus. By concentrating solely on revenue generation, it overlooks other vital aspects, such as overall profitability and long-term customer value. RoAS might encourage sellers to prioritize immediate gains over sustainable growth, potentially compromising the overall health of their business.

Choosing the Right Metric: TACoS vs. RoAS

Ultimately, the choice between TACoS and RoAS depends on the specific goals and priorities of Amazon sellers. Those looking for a comprehensive view of their advertising ROI, considering both short-term gains and long-term sustainability, might find TACoS to be the more suitable metric. On the other hand, sellers aiming for quick, measurable results and focusing on immediate revenue prefer the simplicity and clarity of RoAS.

Truth be told, there is no one-size-fits-all answer to the TACoS vs. RoAS dilemma. Amazon sellers must carefully evaluate their objectives, weigh the benefits and drawbacks of each metric, and, if necessary, use a combination of both to make well-informed decisions about their advertising strategies. By understanding the nuances of these metrics, sellers can navigate the complex world of Amazon advertising with confidence, ensuring both short-term success and long-term sustainability for their businesses.

Using Junglytics Data Analytics for Amazon Sellers

A primary challenge facing Amazon sellers is that Seller Central doesn’t provide TACoS. It provides RoAS and other advertising metrics. But if you want to view your TACoS, you have to do so manually.

Junglytics, a customizable data analytics platform for Amazon sellers, offers TACoS as well as more than 40 additional Amazon seller metrics. All it takes is a few clicks to build a dashboard that tracks your TACoS. Track things in real time or explore historical data with ease.

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Amazon sellers can see ad spend, RoAS, TACoS, and more all in one place.

Better still, Junglytics lets users drill down to the product and variant level, thus providing more granular insights. If, for example, you are trying to determine which color variant to advertise, Junglytics can help you do that.