TACOS Calculator

How the number is derived

Total advertising cost of sale is ad spend divided by total revenue, paid and organic combined: TACOS = spend ÷ total revenue × 100.

Where ACOS measures campaign efficiency, TACOS measures what proportion of the whole business the advertising consumes.

The two moving in different directions is the most informative signal either produces.

An example

$4,000 of spend, $10,000 of attributed revenue and $32,000 of total revenue. ACOS is 40% and TACOS is 12.5%.

Two thirds of revenue arrives without being directly bought, so the advertising is supporting a business rather than constituting it.

Now the same $4,000 producing $10,000 attributed out of $11,500 total. ACOS is still 40% and TACOS is 34.8%, almost everything is paid.

Identical campaign efficiency, completely different businesses. The first survives an advertising pause; the second stops trading.

What the number hides

TACOS falls both when organic revenue grows and when advertising is cut, which are opposite situations. Reading a falling TACOS as progress without checking whether total revenue is rising gets it backwards.

It is also meaningless over short windows, since promotional spikes and stockouts distort both terms. Monthly is the shortest useful interval and a rolling quarter is better.

What this changes

Track it alongside total revenue, and treat the pair as the measure rather than either alone. Falling TACOS with rising revenue is compounding; falling TACOS with flat revenue is retreat.

Then set a trajectory rather than a level. A new product might run at 30% TACOS falling to 10% over two quarters, and managing the shape of that curve is more useful than hitting a number.

What the trend tells you about the business

A steadily falling TACOS with growing revenue means advertising is building something durable: brand recognition, search rank, repeat customers. Each dollar spent leaves behind demand that does not need to be bought again.

A flat TACOS with growing revenue means the business is buying every increment. It can be profitable, and it has no compounding and no defensibility, a competitor with deeper pockets can outbid it at any moment.

A rising TACOS means ground is being lost, either to competition or to a deteriorating listing or offer. It is the earliest warning signal in the whole set of advertising metrics and it appears months before revenue declines, which is why it is worth tracking even when everything looks fine.

One further comparison worth making: TACOS against the same figure a year earlier rather than a month earlier. Seasonality moves both terms, and a month-on-month reading in a seasonal business describes the season rather than the trend.

Year-on-year comparison at the same point in the cycle is the only version that isolates whether the advertising's role in the business is genuinely growing or shrinking.

Plotting it against total revenue on the same chart makes the distinction between growth and retreat immediately visible without any further analysis.

Where a business sells across several channels, calculating it per channel rather than in aggregate shows which ones are building organic demand and which are purely rented.