When it comes to Etsy ads, understanding the performance of your advertising spend is critical. But here’s the catch - Etsy doesn’t make it easy to track the real profitability of your ads. That’s where TACoS comes in. No, we’re not talking about the delicious Mexican food. TACoS stands for Total Advertising Cost of Sale, a metric that helps sellers understand how much they’re spending on ads compared to the total sales generated.

If you’ve ever felt lost trying to figure out whether your Etsy ads are truly worth it, don’t worry - you’re not alone. Let’s break it all down.

Discover how to measure your Etsy ad profitability with TACoS

What Is TACoS, and Why Does It Matter?

TACoS (Total Advertising Cost of Sale) measures how much of your revenue is being eaten up by advertising costs. It’s calculated by dividing your total ad spend by your total sales, and this percentage gives you a clearer picture of how effective your ads really are.

But here’s the problem: On platforms like Amazon, TACoS is readily available. On Etsy? Not so much. Etsy doesn’t offer this metric, nor does it provide all the data you’d need to calculate TACoS manually.

What Counts as Total Sales?

For TACoS, total sales include:

•  Revenue from organic sales of a listing.

•  Revenue from sales directly linked to ad clicks on that listing.

•  Revenue from buyers who clicked your ad but ended up purchasing a different product in your shop.

This holistic approach ensures that all revenue tied to your ad spending is accounted for, including indirect sales that stem from the quality of your listings clicks.

Learn how TACoS tracks all sales tied to your Etsy ads

How TACoS Helps You Make Smarter Decisions

By focusing on your TACoS percentage, you can decide which listings are worth advertising and which ones aren’t. For instance, let’s say your shop’s overall TACoS is 14.8%. 

If you aim to reduce your ad spend to 10% of total revenue to boost profit margins, the solution is clear: turn off ads for any listing with a TACoS above 10%.

This approach removes the guesswork. Listings that don’t meet the target profit percentage aren’t worth the spend, even if they’re generating some sales.

Why ROAS and Break-Even Points Can Be Misleading

You’ve probably looked at ROAS (Return on Ad Spend) or break-even ROAS as a way to gauge ad performance. But while these metrics are helpful, they don’t paint the full picture.

Here’s why: A listing might have a low ROAS but still generate a strong overall profit when factoring in indirect sales or organic traction. Relying on ROAS alone could lead to turning off ads on listings that are actually driving healthy profits in the big picture. Historically, if a listing is performing organically, and it still makes sense in terms of profit goals, you would not want to turn it off even if the ROAS looks bad.

Should You Turn Off Ads on a High-Performing Organic Listing?

The short answer is no. if the numbers make sense. Ads don’t just boost immediate sales; they also help build momentum. Ads also contribute to things like more “add-to-carts” and five-star reviews which also boost organic SEO for your listings. That snowball effect is invaluable. Not to mention when you put your hand up and say you are willing to invest in your listings when your competitors are not, this makes you a more well-rounded shop overall.

For example, an ad click may lead to a purchase that earns you a glowing review. That review then increases your organic conversion rate, attracting future buyers who see the added credibility.

How ProfitTree Simplifies Ad Decisions

To address these challenges, we’ve built a solution. Our new advertising feature, launching by November end, provides the key metrics Etsy doesn’t show:

1. Ad Cost Percentage (TACoS) for your entire shop.

2. ROAS alongside your break-even ROAS.

You can even calculate your break-even point directly in ProfitTree. Simply input your product costs for each variation, and our system does the rest.

Whether you value TACoS or prefer focusing on ROAS, we’ve made it easy to evaluate whether an ad is pulling its weight.

Why This Feature Will Change the Game for Your Etsy Ads

By analyzing your TACoS and profit margins, you gain a crystal-clear view of what’s working and what’s not. This isn’t about spending less on ads as it’s about spending smarter. If a listing continues to generate strong profits, even after factoring in ad costs, there’s no reason to turn off ads for that product.

However, if a listing’s ad spend outweighs its contributions to overall sales, it’s time to cut it loose. This clarity transforms Etsy ads from a guessing game to a calculated strategy.

Ready to Take Control of Your Etsy Ads?

Our new advertising feature will be available by the first week December. Start making informed decisions about your ad spend today.

Etsy ads don’t have to be confusing. By focusing on metrics that matter: TACoS, profit percentages, and organic growth, you can ensure your ads are contributing to your success, not cutting into it.

We’re here to help you make every dollar count. Let’s make your ads profitable together!