1. Keep the denominators separate

ROAS = attributed ad sales / ad spend. ACoS = ad spend / attributed ad sales × 100. TACoS = ad spend / total sales × 100. Total sales includes sales outside advertising, so an advertising report alone is insufficient for TACoS.

2. Work through an illustrative example

With £100 ad spend, £400 attributed sales, and £800 total sales, ROAS is 4, ACoS is 25%, and TACoS is 12.5%. These are teaching numbers, not customer results. ROAS is undefined when spend is zero; ACoS is undefined when attributed sales is zero. Do not replace a missing report with a zero value.

3. Set a target from contribution margin

A £30 selling price and £21 non-ad variable cost leaves £9 before ads, or 30% of revenue. Under these assumptions, break-even ACoS is 30%. To retain £3 per order, allow £6 for ads, giving a 20% target ACoS. Include the relevant treatment of returns, taxes, and fixed costs in your own profitability calculation.

4. Compare like with like

Keep currency, products, reporting dates, ad type, and attribution definitions consistent. Recent attributed sales may update later. Lower ACoS is not automatically success if total sales or profit falls. ROAS alone does not establish profit or the incremental sales caused by advertising.

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