For many brands, the primary objective when using Amazon’s advertising platform is clear: drive sales growth. While metrics like ROAS and ACOS have traditionally been used to evaluate campaign performance, they often fall short in accurately measuring the true impact their advertising spend has on total sales. This article explores the significance of TACoS (Total Advertising Cost of Sales) as a superior metric tailored to brands with sales growth as the primary objective of Amazon advertising.
1) ROAS and ACOS: Limited Perspectives
ROAS and ACOS have long been staples in the Amazon advertising KPI toolkit, focusing on revenue generation and cost-effectiveness, respectively. However, they provide limited insights into the true impact of advertising on sales growth. Their narrow focus on revenue and cost fails to capture the holistic picture of advertising’s contribution to overall sales growth.
2) The Quest for Incremental Growth
Amazon advertisers are not merely aiming for revenue or cost efficiencies—they are in pursuit of incremental sales growth. ROAS and ACOS often attribute sales to advertising that would have occurred organically, overlooking the incremental impact of ad campaigns. This oversight can hinder advertisers’ ability to accurately gauge the effectiveness of their strategies in driving real sales growth.
3) Enter TACoS: Fueling Sales Growth
TACoS emerges as a beacon of clarity in the pursuit of sales growth. By evaluating the total advertising cost relative to total sales, TACoS provides a comprehensive view of advertising’s impact on revenue generation. Unlike ROAS and ACOS, which may inflate perceptions of success, TACoS focuses squarely on driving incremental sales growth—a critical objective for many Amazon advertisers.
4) Aligning with the Primary Goal
The primary goal of advertising on Amazon is clear: driving sales growth. TACoS aligns perfectly with this objective, offering advertisers a nuanced understanding of how their advertising investments contribute to revenue growth. By prioritizing TACoS, advertisers can optimize their strategies to drive sustainable sales growth over time, maximizing the return on their advertising investments.
5) Implementing TACoS for Success
Incorporating TACoS into Amazon advertising strategies requires a shift in focus towards driving incremental sales growth. Advertisers must prioritize campaigns and tactics that contribute directly to sales growth, rather than solely focusing on revenue or cost metrics. By embracing TACoS as the primary performance metric, advertisers can align their strategies with the overarching goal of driving robust sales growth on Amazon.
