To analyze how powerful your PPC campaigns are, you can utilize metrics like ACoS, TACoS, and ROAS.
Defining Amazon ACoS, TACoS, and ROAS
ACoS (Advertising Cost of Sales)
ACoS on Amazon means "Advertising Cost of Sales". This metric reveals to you the amount PPC revenue you are creating from the money you are spending on PPC ads.
The equation to address for ACoS is "Ad Spend" separated by "Sales From Ads". For instance, in the event that you burned through $100 on PPC ads for a product and created $400 in sales from those PPC ads, your ACoS on that product would be $100 (Ad Spend) separated by $400 (Sales From Ads) = 25%.
When in doubt, the lower your ACoS is, the better. Lower ACoS scores imply that you are getting all the more value for your money and a higher ROI (Return on Investment) on your PPC advertising dollars.
TACoS (Total Advertising Cost of Sales)
Amazon TACoS means "Total Advertising Cost of Sales". While this may seem to be like ACoS from the start, the key difference is "total", which represents all sales of a product instead of simply those created by PPC advertisements.
The condition to create TACoS is "Ad Spend" isolated by "Total Sales". For instance, on the off chance that you burned through $50 on PPC ads for a product and had $500 in total sales on that product (calculating in sales created from those PPC ads just as from different avenues like organic sales), your TACoS on this SKU would be $50 (Ad Spend) partitioned by $500 (Total Sales) = 10%.
The ACoS of a product explicitly reveals how much revenue you are procuring in sales straightforwardly from the PPC ad being referred to. The TACoS gives you a broader image of how the product's sales are getting along in general according to your PPC investment.
ROAS (Return On Ad Spend)
ROAS is a mainstream metric in the internet business industry that works comparably to ROI. It represents Return On Ad Spend, which uncovers precisely the amount of a return your advertising campaign is yielding.
The equation for ROAS is "Ad Sales" partitioned by "Ad Spend". On the off chance that you sell $500 worth of product and burn through $100 on PPC advertisements, your ROAS would be $500 (Ad Sales) separated by $100 (Ad Spend) = 80%.
This metric is fundamentally equivalent to ACoS however in reverse. While ACoS is measuring how high or low your advertising costs are, ROAS is measuring how high or low the return on your advertising costs are. You should utilize whichever of these metrics you are more OK with as they recount a similar story.
Focus on TACoS
Ideally, every product would have an amazingly low ACoS (which would yield an incredibly high ROAS) as this would imply that you were getting a significant return on the entirety of your PPC advertisements. Yet, contingent upon your goals for a specific product or advertising campaign, a high ACoS isn't really something terrible. Instances of good high-ACoS PPC advertising campaigns remember ones for which you are attempting to blow out an old product at a low price or ones that you are hoping to increase brand awareness.
For instance, say you are battling for space in a very competitive niche. Spending an enormous sum on advertising may not be a profitable strategy over the long term, yet in the momentary it very well may be an effective method to increase your brand's recognition as your advertisements appear alongside more settled and notable brands. This could in the end prompt more organic sales.
This is the thing that makes the TACoS metric so valuable. Indeed, you ought to consistently be monitoring and defining goals for your ACoS (or ROAS) to determine which advertising campaigns are the most feasible and are returning the most elevated profits. Yet, your general absolute sales comparable to advertising spending is a higher priority than those explicitly produced by PPC clicks as your advertisements might be driving more organic sales through brand recognition.
