Amazon sellers face constant pressure with rising ad costs and tough competition. Every dollar spent on advertising needs to show real results. Yet, many brands still wonder what counts as a good Return on Ad Spend (ROAS) on Amazon. Amazon reported $56.21 billion in global ad revenue in 2024, up over 20% from the previous year, highlighting the need to understand and improve your Amazon ROAS. Knowing this metric helps you decide whether your business will grow profitably or fall behind. Below, weโll explain what ROAS means, how you can calculate it, and how to use this information to make smarter, more profitable advertising decisions.
Amazon ROAS Explained: What It Means for Your Ad Strategy
What is ROAS on Amazon?
Amazon ROAS (Return on Ad Spend) tells you how much money you earn from every dollar you spend on Amazon ads. The formula is simple: ROAS = Total Revenue divided by Total Ad Spend. For example, if you invest $50 in ads and make $300 in sales, your ROAS is 6. This metric helps you quickly see how well your Amazon PPC campaigns are performing and guides you to make better decisions to improve profits.
ROAS vs ROI vs ACOS: Key Differences for Amazon Sellers
Many sellers confuse ROAS, ROI, and ACoS, but each metric measures something a bit different:
- ROAS (Return on Ad Spend): Tells you how much revenue your ads generate per dollar spent, showing ad efficiency.
- ROI (Return on Investment): Takes all costs into account, including product, shipping, and overhead, to show your total profit.
- ACoS (Advertising Cost of Sales): A percentage showing what share of your sales income goes to advertising. For instance, if your ACoS is 20%, you spend $20 on ads for every $100 in sales.
Knowing the difference between these helps you set better ad strategies based on your profit margins and business goals.
Why ROAS is Critical for Amazon Advertising Success
ROAS is crucial because it shows exactly how much income your ads generate from each dollar spent. A high ROAS means your campaigns are profitable and running well. A low ROAS means you may be losing money and need to improve your approach. By tracking ROAS, you can spot which campaigns help your business grow and which need adjustment. Return on Ad Spend (ROAS) refers to the revenue earned per dollar spent on Amazon ads, making it a clear measurement of campaign efficiency.
How to Calculate ROAS on Amazon (Step-by-Step Guide)
Calculating your ROAS on Amazon is easy:
- Collect your data: Get your total ad-attributed sales and total ad spend for a specific time frame from Amazon Seller Central.
- Use the formula: ROAS = Total Revenue from Ads divided by Total Ad Spend.
- Example: Spend $200 on ads and generate $800 in sales, your ROAS is 4.0.
- Understand the result: If ROAS is more than 1, your ads are generating more money than you spend. If it's below 1, you're losing money on ads.
Do you want to go deeper into metrics? Explore our Amazon Full Account Management services.
Understanding ACoS and Its Relationship to ROAS
ACoS (Advertising Cost of Sales) is closely related to ROAS. ROAS shows how much revenue you make from each dollar spent. ACoS shows what percent of your sales is spent on ads. For example, with an ACoS of 10-15%, your ROAS usually falls between $7-$10 โ this means your campaigns are running very efficiently. Tracking both helps you get a clear view of how well you manage your ad budget. You can learn more about improving these metrics with our Amazon PPC Management Agency.
Industry Benchmarks: What is a Good ROAS on Amazon?
What counts as a good ROAS on Amazon depends on your product category and business goals. Most brands aim for a ROAS of at least 3:1. Recent data shows declining ROAS is a trend as ad costs rise, but top-performing brands still reach ROAS benchmarks above 3 for Sponsored Products and even higher for Sponsored Brands. Always compare your results to benchmarks in your category and keep adjusting your strategy to grow sustainably. For more details, check out our Advertising Benchmark.
How to Calculate Minimum and Break-even ROAS
To make sure your Amazon ads make money, you should calculate your minimum and break-even ROAS. The calculation is simple: Minimum ROAS = Sale Price divided by Total Costs. For example, if your item sells for $40 but your total cost (including product, shipping, and fees) is $20, then your minimum ROAS is 2.0. Anything less means your ads are not profitable. Knowing your break-even ROAS helps you avoid unprofitable campaigns and focus on what actually brings in revenue.
How to Find Your ROAS in Amazon Seller Central
You can easily check your ROAS in Amazon Seller Central. Simply go to the Advertising tab, then select Campaign Manager. The ROAS is shown alongside your other key metrics for each campaign. You can also download thorough reports for deeper insight. Amazonโs dashboard updates ROAS metrics for Sponsored Products and Sponsored Brands, but the latest data may take up to 48 hours to show recent sales. For a full view of performance, consider using AI-driven sales reporting.
Factors That Impact ROAS: Category, Goals & Margins
Many things can influence your Amazon ROAS, including:
- Product Category: Some categories, like electronics, require a higher ROAS to be profitable due to thinner margins. Others can work with a lower ROAS.
- Business Goals: If your goal is to build brand awareness, you might accept a lower ROAS. If you need strong profits, you'll want a higher one.
- Profit Margins: The bigger your margin, the more freedom you have to spend on ads.
- Ad Type and Placement: Sponsored Brands can often deliver higher ROAS than Sponsored Products.
For strategies tailored to your category and business, explore our Amazon Listing Optimization services.
Branded vs Non-Branded Campaigns: ROAS Breakdown
Branded campaigns usually bring a higher ROAS because youโre reaching shoppers who already know your brand, making them more likely to buy. Non-branded campaigns might not show as high a ROAS, but are crucial for attracting new customers and increasing your market share. The most successful brands balance both to achieve long-term growth and strong profits.
Device-Level Strategy: ROAS on Desktop, Mobile & Tablet
ROAS is not the same across all devices. Desktop users often have higher conversion rates, especially when shopping for expensive items, which can produce a stronger ROAS. Mobile tends to drive more exploration and volume but may show lower ROAS, especially for pricier products. Tablets account for fewer sales but work well in some categories. Adjusting your ad bids and creatives for each device can help you get the best results from your budget.
How Customer Lifetime Value (CLV) Affects ROAS Decisions
Customer Lifetime Value (CLV) changes how you look at your ROAS goals. If your product brings repeat buyers, you can accept a lower initial ROAS, knowing youโll earn more over time. Factoring in CLV allows you to invest more up front in customer acquisition, especially in crowded categories, while still keeping long-term profits healthy.
How to Improve Your Amazon ROAS: Actionable Tips
Here are some ways to boost Amazon ROAS:
- Keyword Optimization: Keep your keyword list fresh and focus on those that convert.
- Product Listing Optimization: Use compelling titles, great images, and keyword-rich descriptions. See our Amazon SEO Services for help.
- Bid Adjustments: Raise bids for top-performing keywords and lower spending on those that don't work.
- Negative Keywords: Block irrelevant search terms to avoid wasting your budget.
- Campaign Structure: Organize campaigns by product and goal for better insight and control.
- Monitor and Adjust: Review your results every week and change tactics based on current data.
Let us help you make this process easier. Check out our Amazon Advertising Agency.
Advanced Tactics: Keyword, Bid, and Listing Optimization
To maximize your Amazon ROAS, you'll need to try more advanced approaches:
- Improve Keyword Targeting: Mix broad, phrase, and exact match keywords. Regularly review which search terms lead to sales and update your targeting. Keyword targeting is fundamental for reaching high-intent shoppers and improving ROAS.
- Optimize Your Bidding: Test fixed, dynamic, and rule-based bids to control costs and boost your adโs visibility. Adjust your bids based on placement and device for better control. Learn more in our Bidding Strategies.
- Boost Product Listings: Use high-quality images, clear and attractive titles, and A+ Content to raise conversion rates and organic rankings.
Want to see faster results? Book a one-on-one growth call with our team today!
Common ROAS Mistakes (And How to Avoid Them)
Watch out for these common issues that can lower your Amazon ROAS:
- Setting Unrealistic ROAS Goals: Aiming too high might keep you from getting new customers.
- Poor Listings: Weak images or missing details can stop sales and waste your ad money.
- Forgetting Negative Keywords: Without excluding irrelevant terms, your budget goes to waste.
- Relying Only on Branded Campaigns: This can look good for ROAS but limits how many new people you reach.
- Ignoring CLV: Not considering a customerโs lifetime value can mean losing out in the long run.
For more advice, check out our Amazon SEO Best Practices.
What to Do if You Canโt Optimize ROAS Further
If your Amazon ROAS seems stuck, donโt worry. Sometimes ROAS dips due to higher competition or seasonal changes. A ROAS of 3 or more is usually a good starting point, though it may shift depending on your market and campaign timing. If you hit a wall, focus more on organic growth, try out new marketing channels, or re-evaluate your pricing and bundling. For comprehensive support, explore our Amazon Full Account Management.
Real-World Case Studies: Brands Boosting Amazon ROAS
Brands that invest in expert Amazon advertising strategies often see real gains. For example, using smarter keyword targeting and bidding can increase sales by as much as 50% during sales events like Prime Day. Refining product listings and campaign structure can boost ROAS by 20% or more. These examples show that the right strategy and expert help can make a big difference in your results.
Key Takeaways for Amazon Sellers
- Amazon ROAS is essential for measuring ad success and overall profitability.
- A solid ROAS is usually 3:1 or more, but can vary depending on your goals and category.
- Keep optimizing your keywords, bids, and listings for the best results.
- Pay attention to customer lifetime value and balance both branded and non-branded campaigns to keep growing.
- Get expert help from SalesDuoโs Amazon Advertising Agency to grow quickly and smartly.
Conclusion: Setting and Achieving Your ROAS Goals
Amazon is constantly evolving, so brands need real performance, not just visibility. At SalesDuo, we use data, smart strategies, creativity, and advanced tools to drive your growth. With 85% of our team coming from Amazon and our own AI-powered dashboard, we've helped more than 250 eCommerce brands make Amazon their top channel for success. Ready for the next step? Book your 1:1 growth call today!
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About the Author
Navleen Kour is a seasoned professional dedicated to helping brands succeed on Amazon. Known for her strategic thinking and problem-solving skills, she excels at creating scalable solutions that drive growth. Outside of work, she enjoys exploring new ideas and diving into insightful reads.
