Track both, but for different jobs. ACOS (ad spend divided by ad-attributed sales) shows how efficient a campaign is. TACoS (ad spend divided by total sales) shows how dependent your business is on ads. Use ACOS to tune campaigns and TACoS to judge overall health, and compare both with a break-even figure built from your actual margins.
What ACOS and TACoS actually measure
Both metrics express advertising spend as a percentage of sales. The difference is the denominator.
- ACOS = ad spend ÷ sales attributed to ads × 100. It is a campaign, ad group or keyword-level efficiency measure.
- TACoS (Total Advertising Cost of Sales) = ad spend ÷ total sales × 100. Total sales include organic and ad-attributed orders, so it is a business-level measure.
ROAS is simply the inverse of ACOS (ad-attributed sales ÷ ad spend). If you already track ROAS, you are tracking ACOS in another form.
Check the attribution window and sales definition in your Amazon Ads console, since they decide what counts as ad-attributed. Whatever you choose, keep it the same month to month.
Why ACOS alone can mislead
ACOS only sees sales that ads claim credit for. A campaign can show a comfortable ACOS while it mostly captures shoppers who would have bought organically anyway. Your ad bill rises, but total sales barely move.
ACOS also ignores what is happening to the rest of the catalogue. If organic sales fall while ad sales rise, ACOS can look stable and the business is still getting more expensive to run.
Why TACoS gives the wider picture
Because TACoS divides by total sales, it shows whether ad spend is building organic momentum or replacing it. A steady or falling TACoS alongside growing total sales usually means ads are helping rankings and reviews compound. A rising TACoS with flat total sales suggests you are paying more for the same revenue.
TACoS is less useful for tuning a single keyword, because organic sales cannot be split cleanly by keyword. It is also noisy for new launches, where heavy ad spend is intentional and total sales are still small.
Which metric to track, and when
- Optimising campaigns, keywords and bids: ACOS (or ROAS).
- Judging overall ad dependence and budget: TACoS.
- Launching a product: accept a high ACOS for a defined period, and watch whether organic sales and TACoS improve afterwards.
- Mature, high-volume products: watch TACoS closely, and use ACOS as a guardrail against break-even.
For most Indian brands, the practical setup is ACOS at campaign level, TACoS at product and account level, both reviewed monthly against one target.
Set a break-even ACOS from real margins
A target ACOS copied from a blog post is not a target. Build yours from your own numbers: selling price, product cost, referral and closing fees, fulfilment or shipping fees, return losses and the GST effect on your pricing. Your break-even ACOS is roughly your contribution margin before ad spend, as a percentage of selling price. Anything above it loses money on each ad-driven sale, unless you are deliberately buying rank.
Do not rely on remembered fee rates. They vary by category, price band and fulfilment model, and they change. Take them from your current Amazon seller agreement, rate card and settlement reports, and confirm tax treatment with your tax adviser.
Connect ad metrics to fee and settlement checks
Ad spend usually sits outside the sales settlement, so it is easy to analyse ads in one sheet and fees in another and never see true profit. If a fee is overcharged or a return is not recovered, your real margin is lower than the one behind your break-even ACOS, and an ACOS that looked safe may not be.
A reconciliation tool such as MarketplaceMetrics by Fundle matches marketplace sales to settlements, checks commissions and fees against agreed terms, and tracks returns and recovery cases. Myntra Excel reports are reviewed today, and Amazon can be discussed as part of scope. Whatever tool you use, make sure your margin inputs are verified, not assumed.
Worked example
Illustrative figures only, not benchmarks.
- Month A: total sales ₹10,00,000; ad-attributed sales ₹2,00,000; ad spend ₹30,000. ACOS = 30,000 ÷ 2,00,000 = 15%. TACoS = 30,000 ÷ 10,00,000 = 3%. Organic sales = ₹8,00,000.
- Month B: total sales ₹10,20,000; ad-attributed sales ₹3,00,000; ad spend ₹54,000. ACOS = 18%. TACoS = about 5.3%. Organic sales = ₹7,20,000.
On ACOS alone, Month B looks like a modest slip. TACoS shows that ad spend rose by ₹24,000 while total sales rose by only ₹20,000, and organic sales fell by ₹80,000. Ads are likely absorbing orders that used to come organically.
If your verified contribution margin before ads were 25% (also illustrative), both months sit under break-even ACOS, but the thin extra margin in Month B would be worth investigating before raising budgets.
Questions and answers
Is a lower ACOS always better?
No. A very low ACOS can mean you are bidding only on branded or already-converting searches and limiting growth. Judge ACOS against your break-even figure and your goal, whether that is profit, launch visibility or share, and check TACoS and total sales alongside it.
Does Amazon India report TACoS directly?
TACoS is generally something you calculate yourself, by dividing ad spend by total sales for the same period. Pull ad spend from the advertising console and total sales from your business or sales reports, and confirm that both use the same dates and definition.
What is a good TACoS for an Indian seller?
There is no universal good number. It depends on category, margins, fees, return rates and growth stage. Work out your break-even from your own contribution margin, set a TACoS range below it, and track the trend rather than copying another seller's figure.
How often should I review ACOS and TACoS?
Review ACOS weekly for active campaigns and TACoS monthly at product and account level. Monthly review also lets you tie ad spend to settled sales, returns and fee checks, so your margin assumptions stay current instead of drifting.