Executive
summary
A bath safety brand was facing stagnation in its advertising efforts on Amazon. The performance of their ads, based on traditional measurements, were as good or better than they had ever been. Their continually increasing ad budgets maintained similar performance levels, but top-line sales did not grow in parallel. They decided to partner with Marketplace Ninjas to address this issue and ensure that their ad dollars were being spent as efficiently as possible. As part of an initial discovery session and collaboration, the bath safety brand and Marketplace Ninjas agreed to shift their primary KPI from ACOS to TACoS. By transitioning from Advertising Cost of Sales (ACOS) to Total Advertising Cost of Sales (TACoS) as the primary metric, remarkable growth was achieved, showcasing a 25% increase in top-line sales despite a decrease in ACOS performance. This case study delves into the process, strategies employed, and outcomes attained by this transition.
challenge
The bath safety company initially relied heavily on ACOS as the primary indicator of advertising success on Amazon. However, this metric failed to provide a comprehensive view of advertising effectiveness, leading to suboptimal strategies and stagnant growth. Despite seemingly efficient ACOS performance, the company struggled to maximize its top-line sales and expand market share.
SOLUTION
Recognizing the limitations of ACOS, Marketplace Ninjas advocated for a paradigm shift towards TACoS—a holistic metric that considers both advertising spend and organic sales generated by advertising efforts as their new NorthStar metric. This transition involved a multi-faceted approach:
- • Marketplace Ninjas provided in-depth training sessions to advocate for using the concept of TACoS and its significance in measuring advertising effectiveness. Through group meetings and personalized consultations, the company's team gained a comprehensive understanding of the new metric and its implications.
- • Comprehensive data analysis was conducted to assess the current advertising landscape, the brand’s historical TACoS performance, and identify areas for improvement. Benchmarking against industry standards and competitor performance shed light on opportunities for optimization and growth.
- • Leveraging advanced analytics tools and market insights, Marketplace Ninjas devised tailored advertising campaigns focused on maximizing TACoS efficiency. This involved reallocating ad spend towards mid-funnel keywords, reducing bids for branded keywords, and refining ad creatives to enhance overall campaign performance.
- • Adopting an iterative approach, the company continuously tested and refined advertising strategies based on real-time performance data. A/B testing methodologies were employed to identify the most effective ad formats, messaging, and targeting parameters, ensuring ongoing optimization and adaptation to evolving market dynamics.
Results
The transition from ACOS to TACoS heralded a paradigm shift in the company’s advertising strategy, resulting in tangible improvements and transformative outcomes:
- • 25% INCREASE IN TOP-LINE SALES: Despite a decrease in ACOS performance, the focus on TACoS optimization yielded a substantial 25% increase in top-line sales. By considering the cumulative impact of advertising on both ad-based and organic sales, the company was able to shift the budget from high organically converting keywords to discovery keywords to unlock hidden revenue streams and capitalize on untapped market potential.
- • IMPROVED ROI & EFFICIENCY: Embracing TACoS as the primary performance metric enabled the company to achieve a higher return on investment (ROI) from its advertising spend. By optimizing campaigns for holistic performance rather than isolated metrics, resources were allocated more efficiently, resulting in greater overall profitability.
- • ENHANCED MARKET SHARE & COMPETITIVENESS: With a refined advertising strategy geared towards TACoS optimization, the company solidified its position within the competitive landscape and gained market share. Increased visibility, improved brand recognition, and optimized conversion rates propelled the company ahead of competitors, driving sustained growth and profitability.
SUMMARY
The case study of the bath safety company exemplifies the transformative impact of transitioning from ACOS to TACoS as the primary advertising performance metric. Through strategic guidance, iterative optimization, and a commitment to data-driven decision-making, Marketplace Ninjas empowered the company to unlock hidden revenue streams, drive exponential growth, and cement its position as a market leader on Amazon.
