Amazon TACOS New Formula Breakdown: All the Factors You Need to Know

TACOS Formula Breakdown: All the Factors You Need to Know

TACOS = (PPC Clicks / Sessions) x (CPC/Price) x (1/Unit Sessions %)

Obviously, you might familiar with the above formula. This can help you to diagnose issues and solutions for setting up advertising campaigns and overall advertising strategies. In this post, let's explore all the aspects of the equation and the factors that can impact it:

Traffic (PPC Clicks / Sessions) :

Following changes in traffic can cause an increase in TACOS:

1. Increase in PPC Clicks

2. Decrease in Sessions

3. Or both happening simultaneously

Why it happens:

1. Aggressively PPC advertisement pushing without proper plan and keyword research

2. Spending too much on PPC advertising

3. Pushing Aggressively for the search terms that have already a good organic rank.

Following changes in traffic can cause a decrease in TACOS:

1. Decrease in PPC Clicks

2. Increase in Sessions

3. Both happening simultaneously

Why it happens:

1. Aggressively PPC advertisement pushing with proper plan and keyword research

2. Spending the right amount of money on PPC advertising

3. Targeting and pushing the right search terms after doing proper keyword research

Advertising Optimization (CPC/Price) :

Following changes in Advertising Optimization can cause an increase in TACOS:

1.    Increase in CPC/ High Bid for Targets

2.    Lowering the Price of items

3.    Both happening simultaneously

Why it happens:

1. Increasing CPC/bid for Targets without a proper plan leads to increasing spend without enough sales. 

2. Increasing the Price of items without changing the bid and necessary adjustments

3. Or both happening simultaneously

Following changes in Advertising Optimization can cause a decrease in TACOS:

1.    Decreasing CPC/bid for Targets

2.    Increasing Price of items

3.    Both happening simultaneously

Why it happens:

1. Maintain in CPC/bid for Targets in an optimum range

2. Increasing the Price of items without changing the bid

3. Adding negative keywords regularly

Conversion (1/Unit Sessions %) :

Following changes in Conversion can cause an increase in TACOS:

1. Decreasing the number of orders with maintaining sessions

2. Increasing sessions with maintaining a number of orders

3. Both happening simultaneously

Why it happens:

1. Recent Bad Review

2. Product detail page is not optimized

3. Lack of ability to build connection & trust of customers

4. Changing of price (Price changed to higher)

5. Recent review/ negative review

6. Change on image

Following changes in Conversion can cause a decrease in TACOS:

1. Increasing the number of orders with maintaining sessions

2. Decreasing sessions with maintaining the number of orders

3. Both happening simultaneously

Why it happens:

1. Product detail page is optimized

2. Recent Good reviews

3. Ability to build connection & trust of customers

4. Changing of price (Price changed to lower)

5. Starting new discount

Understanding these factors can help you optimize your advertising strategy and improve your TACOS performance.