To calculate TACoS, divide your total ad spend by your total sales revenue and then multiply that by 100 or use our Tool to calculate your tacos. This information will contextualize your ad spend with a more big-picture view, clarify any rigid boundaries for your ad spend, and gauge how much your business utilizes advertising to drive sales Knowing your TACoS is an important step to ensure you are maximizing the return on your ad spend. It also helps indicate how effective or ineffective your advertising efforts have been. The higher the TACoS, the less return you are getting on your ad spend.
When analyzing your TACoS, you should consider both the relative and absolute numbers. By looking at the relative number, you can compare your current TACoS value to previous quarters or years to track your performance. This helps you understand whether you are improving or declining your TACoS value from quarter to quarter.
By looking at the absolute value of your TACoS, you can get a more in-depth view of how effective your advertising is. If your absolute TACoS value is higher than your industry average, it might indicate that your ad strategy is not optimized for maximum ROI. On the other hand, if your absolute TACoS value is lower than the industry average, it may indicate that you have an effective advertising strategy that’s driving sales and customers efficiently.
Ultimately, understanding your TACoS will help you adjust your ad spend and make sure you are maximizing your return on investment. If you’re seeing a significant increase in your TACoS over time, it may be a sign that you need to rethink your ad strategy and look for more cost-efficient ways to drive sales.