Amazon Advertising ROAS, or Return on Ad Spend, shows how much revenue your ads generate for every dollar spent. This guide will explain how to measure ROAS for Amazon ads, why it’s important, and simple ways to improve it.
Ready to boost your ad success with our actionable tips? Well, let’s get started then.
Table of Contents
What is Amazon Advertising ROAS?
Amazon Advertising ROAS (Return on Ad Spend) measures how much revenue your ads generate compared to the money spent on them.
It’s an important metric to evaluate how effective your ad campaigns are. Unlike other metrics like Return On Investment (ROI) or ACoS (Advertising Cost of Sales), ROAS focuses specifically on individual ad campaigns and their impact on revenue.
You can calculate ROAS for a single campaign over a short time frame or for long-term analysis. It helps assess if a campaign is delivering good results and is worth continuing.
By comparing ad spend to revenue, ROAS provides clear insights into which campaigns perform well and where you might have to make adjustments to maximizeP returns.
| How Amazon’s Attribution Window Impacts ROAS? The Amazon Attribution window is the time period after a customer clicks or views an ad during which a sale is credited to that ad. This impacts your ROAS calculation. For sellers, the window is 7 days for Sponsored Products and 14 days for Sponsored Brands and Sponsored Display. For vendors, it is 14 days for all ad types. For example, if a customer clicks your Sponsored Products ad on January 1st and buys the product on January 5th, the sale is counted toward your ROAS. However, if the purchase happens on January 10th, it falls outside the 7-day window and won’t be included in the calculation. Knowing this helps you analyze your ad performance more accurately and adjust your strategies if needed. |
How to Calculate Amazon Advertising ROAS?
To calculate ROAS, divide the total revenue generated by your ad campaigns by the total amount you spent on those ads. This gives a clear number to track the effectiveness of your advertising efforts. Let’s break it down:
- Step 1: Find the total revenue generated from your Amazon ads.
- Step 2: Find the total ad spend for the same period.
- Step 3: Divide the revenue by the ad spend.
For example, if your ad campaign generated $1,000 in sales and you spent $200 on ads, the ROAS is:
$1,000 ÷ $200 = 5
This means you earned $5 for every dollar spent on ads.
| Note: In Amazon Campaign Manager, ROAS is visible in your campaign reports, so you can easily track it without performing manual calculations. Read more about where to check your Amazon advertising ROAS in this section. |
Why Should You Calculate Amazon Advertising ROAS?
There are some specific reasons why you should calculate ROAS on Amazon. These include:
- Measure Campaign Performance: As we have already discussed, ROAS helps evaluate how much revenue your Amazon ads generate compared to their cost. It highlights successful campaigns and those needing changes.
For example, if you run a Sponsored Products ad that costs $500 and generates $2,500 in sales, the ROAS is 5. This shows the campaign is performing well.
2. Optimize Budget and Ensure Cost-Effectiveness: ROAS helps you allocate your budget to campaigns with better returns while assessing if your ad spend is generating sufficient revenue.
A low ROAS highlights the need to rethink strategies, such as focusing on high-performing keywords or retargeting audiences.
3. Track Campaign Progress: Use ROAS to monitor how your ad performance changes over time. Tracking trends helps you adjust strategies and maintain profitability as market conditions shift.
Difference Between ROAS, ACOS, TACoS, ROI, and Other Metrics
We have already discussed what ROAS is. But it’s important to understand how it differs from other metrics like ACoS, TACoS, and ROI. Each serves a unique purpose in tracking and improving your ad and overall business performance.
| Metric | Definition | Formula | Purpose | Example |
| ROAS (Return on Ad Spend) | Measures revenue generated for every dollar spent on ads. | ROAS = Revenue ÷ Ad Spend | Evaluates ad performance. In most cases, higher ROAS may indicate better results. | A Sponsored Products ad with $1,000 revenue and $200 ad spend has a ROAS of 5. |
| ACoS (Advertising Cost of Sale) | Percentage of ad spend compared to ad revenue. | ACoS = (Ad Spend ÷ Ad Revenue) × 100 | ACoS helps you to understand and evaluate ad efficiency. Generally, lower ACoS indicates better cost control. | $200 ad spend with $1,000 ad revenue equals 20% ACoS. |
| TACoS (Total Advertising Cost of Sale) | Measures ad spend against total sales, including organic sales. | TACoS = (Ad Spend ÷ Total Sales) × 100 | Gives a broad view of overall sales efficiency. | If total sales are $5,000 and ad spend is $200, TACoS is 4%. |
| ROI (Return on Investment) | Compares net profit to total investment costs. | ROI = (Net Profit ÷ Investment Cost) × 100 | Shows overall profitability, not limited to ads. | If net profit is $1,000 with a $500 investment, ROI is 200%. |
| Note: You can access key metrics like ROAS, TACoS, and ACoS directly in the Campaign Manager interface. Additionally, these metrics are available in downloadable reports. |
Where to Check ROAS on Amazon?
You can easily find your ROAS in Amazon Seller Central. Follow these steps:
- Go to Campaign Manager: Log in to Seller Central and navigate to Advertising > Campaign Manager.
2. View Campaign Data: On the dashboard, you’ll see the ROAS for all your active campaigns. You can also check the average ROAS for all campaigns combined.
3. Analyze Individual Campaigns: If you want, you can also select a specific campaign to see its ROAS and identify underperforming keywords. This helps you decide if adjustments are needed.
| Note: Campaigns with a ROAS below your break-even point can still be useful. For example, if a campaign generates good traffic and some sales, it might help your product rank higher organically on Amazon. Use this information to decide whether to keep running such campaigns or adjust them for better results. |
Factors Affecting Amazon Advertising ROAS
Several factors influence Amazon Advertising ROAS by directly impacting the relationship between ad spend and revenue. Understanding these factors helps identify why campaigns perform well or poorly.
Bidding Strategies
The bidding strategy you choose affects your ad spend and how your ads compete in auctions.
Let’s try to understand this with the help of bidding strategies for Sponsored Products.
- Dynamic Bids – Down Only: Amazon lowers your bid for clicks that are less likely to lead to a sale.
For example, if your ad shows on a less relevant search, Amazon might reduce your bid to save your budget and maintain a steady ROAS.
- Dynamic Bids – Up and Down: Amazon adjusts your bid up or down based on how likely the click is to convert into a sale.
For instance, if your ad shows on a highly relevant search query, Amazon could increase your $1 bid to $2 for top-of-page placements. If the ad is less likely to convert, the bid will be lowered to save costs. This strategy may lead to more conversions but can make ROAS fluctuate.
- Fixed Bids: Your bid stays the same for all opportunities, regardless of conversion chances.
For example, if you set a $1 bid, Amazon uses that amount even if the ad appears on a poorly performing placement. This might give more impressions but fewer sales, potentially lowering ROAS.
| Note: These strategies are specific to Sponsored Products. Other ad types, like Sponsored Brands or Sponsored Display, have different bidding options depending on their campaign objectives and format. |
Ad Relevance and Quality
Relevant ads and strong headlines are key to attracting the right audience and improving click-through rates. Misaligned or vague headlines often lead to lower conversions, ultimately affecting Amazon ROAS.
For example:
An average headline, like the one on the right (“amika blockade heat defense serum, 1.69 Fl Oz”), provides basic information but lacks an engaging or benefit-focused element, which may contribute to its placement lower in search results.
A good headline, like the one on the left (“divi Moisturizing Shampoo for Women and Men – Gently Cleanses and Removes Scalp Buildup”), is clear, detailed, and highlights the product’s benefits. This could be one of the factors why this ad appears higher in search results.
Targeting Options
Targeting affects how well ads reach the right audience:
- Automatic Targeting: Automatic targeting matches your ads with related keywords and products based on your product details. While it helps you quickly reach a broad audience, it may show ads for less relevant searches, potentially lowering ROAS.
- Manual Targeting: Precise targeting improves relevance but requires constant monitoring and adjustment. In Sponsored Display, audience remarketing can positively affect ROAS by reaching users already interested in your products.
Ad Type Performance
Different ad types perform differently:
- Sponsored Products often yield higher ROAS by targeting shoppers with strong purchase intent.
- Sponsored Brands and Sponsored Display focus on awareness and engagement, which might lead to lower ROAS but support long-term business goals.
| As per JungleScout’s research and industry benchmarks, Sponsored Product Ads have better ROAS compared to Sponsored Brands and Display ads. |
Placement Adjustments
Ad placements influence visibility and conversion rates:
- Ads placed at the top of search results (again, we can take the example of Sponsored Product ads as these do appear at the top of search results) tend to perform better but may have higher costs.
- Lower-performing placements, such as rest-of-search or product detail pages, might reduce overall ROAS.
Campaign Goals and Budget
Campaign objectives shape ROAS outcomes:
- Sales-Focused Campaigns:
- The goal is to maximize revenue from ad spend.
- A low ROAS signals inefficiency, meaning your ads aren’t converting well into sales.
- This might require adjustments like better targeting, improved creatives, or optimized bids.
- Brand-Awareness Campaigns:
- The focus is on building visibility and recognition, not immediate sales.
- These campaigns often have a lower ROAS because their impact is measured over time.
- Success is reflected in increased brand visibility, traffic, and trust, rather than direct revenue.
Cannibalization of Organic Sales
Cannibalization happens when ads replace organic sales instead of creating new ones. This means you’re paying for sales that would have happened without the ad, increasing ad costs without adding value.
For example: If your ad generates 40 sales, but 30 of those would have happened naturally, only 10 are truly new.
This impacts ROAS because you’re spending money on ads that don’t drive extra revenue. To improve ROAS, focus on campaigns that generate incremental growth, meaning sales that wouldn’t happen without the ad. This ensures your ad spend creates new traffic and revenue, leading to better results and sustainable growth.
What is a Good Amazon ROAS?
A good Amazon ROAS depends on your profit margin and advertising goals. For many advertisers, 2x ROAS (earning $2 in revenue for every $1 spent) is considered a baseline. However, what qualifies as “good” can vary:
- Low-margin products require higher ROAS to remain profitable.
- High-margin products can sustain lower ROAS while still making a profit.
To determine if your campaigns are profitable, it’s important to calculate your minimum ROAS, which represents the break-even point for your ads.
How to Calculate Break-Even ROAS
Your break-even ROAS is the revenue you need to generate for every dollar spent on ads to avoid losing money. It includes your cost of goods sold (COGS), Amazon fees, and other related expenses.
Formula:
Sale Price ÷ Gross Profit (before ad spend) = Minimum ROAS
Example:
- Sale Price: $50
- COGS: $20
- Amazon Fees: $15
Gross Profit = $50 – ($20 + $15) = $15
Break-Even ROAS = $50 ÷ $15 = 3.33x
In this example, you need a ROAS of 3.33x to break even. Ads with ROAS above this value are profitable, while those below indicate a loss.
Amazon Advertising ROAS Benchmarks by Ad Type
| Ad Type | 2022 ROAS |
| Sponsored Products | $3.67 |
| Sponsored Brands | $3.29 |
| Sponsored Display | $1.60 |
Insights:
- Sponsored Products provide the highest ROAS, making them ideal for campaigns focused on driving sales.
- Sponsored Brands perform well for brand-building but may yield slightly lower ROAS.
- Sponsored Display offers the lowest ROAS but excels at retargeting and driving awareness.
Amazon Advertising ROAS Benchmarks by Targeting Strategy
| Targeting Type | ROAS |
| Close Match | $4.47 |
| Loose Match | $3.11 |
| ASIN Targeting | $3.42 |
| Substitutes | $2.54 |
| Category Targeting | $2.78 |
| Complements | $1.43 |
| Views (Remarketing) | $1.70 |
Insights:
- Close Match Targeting (showing ads for search terms closely related to your product) delivers the highest ROAS of $4.47. It focuses on highly relevant searches, ensuring better conversions.
- ASIN Targeting (displaying ads on specific product detail pages) achieves a ROAS of $3.42. It works well for targeting competitor or complementary products directly.
- Views (Remarketing) (re-engaging shoppers who previously viewed your product) has a ROAS of $1.70. It’s better for brand awareness and customer retention than direct sales.
Amazon Advertising ROAS Benchmarks by Product Pricing
| Price Range | ROAS |
| $0-$10 | $1.79 |
| $11-$20 | $2.10 |
| $21-$30 | $2.26 |
| $31-$40 | $2.50 |
| $41-$50 | $3.10 |
| >$50 | $4.76 |
Insights:
- Lower-priced products (<$20) achieve higher ROAS due to impulse buying behavior.
- Mid-range products ($21-$30) provide a balance of affordability and profitability.
- High-priced items (>$50) typically show strong ROAS but require more ad clicks to convert.
Amazon Advertising ROAS by Product Categories
There is limited data available for Amazon Advertising ROAS by product categories. For instance, Consumer Electronics often achieves a 9x ROAS, while Toys and Games typically see around 4.5x ROAS.
For other categories, advertisers can either aim for the general ideal benchmark of 3x ROAS or refer to benchmarks based on ad types (e.g., Sponsored Products or Sponsored Brands) or targeting strategies like category audiences or dynamic segments.
Adjusting expectations based on these metrics ensures better campaign planning and performance.
| Note: We sourced this data for Amazon advertising ROAS benchmarks from JungleScout. |
How to Improve Amazon Advertising ROAS? (Experts Tips with Examples)
Let’s now look at some actionable tips that can help you improve your Amazon advertising ROAS.
Leverage Data-Driven Insights Across Channels
To improve ROAS, use data from both Amazon and non-Amazon campaigns to make better decisions.
- Example: MidWest Homes for Pets used Amazon Attribution (helps to measure the impact of non-Amazon marketing channels on Amazon sales and shopping activity) to find the best-performing publishers and product categories, like pet beds.
- They tracked Amazon metrics such as sales, product detail page views, and Add to Carts.
- They also analyzed non-Amazon metrics like CPC (Cost Per Click) and ad spend to get a full picture of performance.
- Results: This helped them shift their budget to the channels that worked best, increasing their ROAS by 32%.
Using insights from multiple platforms can help you adjust bids and focus your ads on the best-performing placements, such as top search results or relevant product pages, for better results.
Use Sponsored Brands for Awareness
Sponsored Brands are excellent for promoting new product lines or boosting visibility. These ads appear prominently at the top of search results, driving both awareness and clicks.
L’Oréal used Sponsored Brands to promote their Men’s Barber Club range, allocating 40% of their budget to this ad type. This strategy not only increased sales but also exceeded their target ROAS of 280%.
Sponsored Brands work well for both brand-building and generating traffic to product catalogs or Stores.
Optimize Product Listings
An optimized Amazon product listing improves conversions, directly increasing ROAS without requiring additional ad spend. Focus on:
- High-quality images that adhere to Amazon’s guidelines.
- Keyword-rich titles and bullet points to align with customer searches.
- Detailed product descriptions that answer shopper questions and build trust.
For example, clear images and well-written descriptions can turn clicks into purchases, boosting ROAS.
Pro tip: Use Amazon A+ Content to optimize your product pages and drive more conversions!
Target Long-Tail Keywords
Long-tail keywords help you target Amazon shoppers with specific intent while keeping cost-per-click (CPC) low. Instead of broad terms like “headphones,” focus on precise terms like “wireless noise-canceling headphones under $100.”
These keywords reduce competition and attract highly relevant traffic, which improves conversions and ROAS. Testing different keyword combinations can also help you identify hidden opportunities for better performance.
Retarget Engaged Shoppers During Sponsored Display Ads
Sponsored Display ads, one of the most popular Amazon PPC ads, are great for re-engaging customers who viewed your products or similar ones.
Use Views Remarketing (which lets you engage audiences who viewed specific product pages within a lookback window) with a 7-90 day lookback window to target high-intent audiences. Refine by price, category, or ratings to ensure precise targeting and improved ROAS.
Use Manual and Negative Targeting
Manual targeting gives you precise control over ad placements and allows you to focus on high-performing keywords. Pair this with negative keywords to filter out irrelevant search terms, reducing wasted ad spend.
For example, excluding terms unrelated to your product ensures clicks are more likely to result in sales, directly improving ROAS.
Increase Average Order Value (AOV)
Higher AOV means more revenue per transaction, which boosts ROAS. Use strategies like:
- Bundling products (e.g., combining a pet crate with bedding).
- Offering discounts on complementary items.
Amazon’s “Frequently Bought Together” feature is an effective way to encourage shoppers to buy multiple items. This approach increases profitability without requiring additional ad spend.
Use Ad Types Strategically
Each Amazon ad type has a specific purpose:
- Sponsored Products: Best for driving direct sales with high-intent shoppers.
- Sponsored Brands: Ideal for increasing awareness and promoting product collections.
- Sponsored Display: Great for retargeting and reaching shoppers who visited your product pages.
For example, L’Oréal used Sponsored Brands to build awareness for a new product line while maintaining profitability. Using the right mix of ad types ensures a balanced approach to driving sales and building visibility.
Common Mistakes to Avoid While Measuring Amazon ROAS
Measuring ROAS on Amazon Ads is critical to understanding ad performance and making informed decisions. However, mistakes can lead to poor insights and wasted budgets. Here are the common pitfalls to avoid:
Setting Unrealistic Goals
Unrealistic ROAS targets can mislead your strategy. For example, expecting a 10x ROAS in a competitive product category may not align with industry norms or your profit margins. Set achievable goals based on your product’s profitability and Amazon’s ad benchmarks.
Ignoring Data Discrepancies
Amazon’s reporting may differ from other tools like Google Analytics due to different attribution models or tracking methods.
For instance, Amazon tracks sales over a 14-day attribution window, while other tools might use different timeframes. Always reconcile these differences before evaluating your ROAS.
Focusing Only on ROAS
Focusing solely on ROAS can limit growth. Other key Amazon seller metrics like ACoS (ad spend vs. ad-driven sales), TACoS (ad spend vs. total sales), CTR (click-through rate), and conversion rate provide a fuller picture. For example, a high ROAS with a low CTR may suggest your ads aren’t engaging enough, highlighting areas for improvement.
Miscalculating Ad Spend and Revenue
Errors in calculating ad spend or revenue can inflate your Amazon ROAS.
For example, including VAT in revenue or forgetting to account for Amazon fees can lead to incorrect numbers.
To avoid this, always double-check your calculations to ensure accurate results.
Over-Focusing on Short-Term Performance
Focusing too much on short-term ROAS can harm long-term growth.
For instance, targeting only high-intent customers may give quick results but misses out on building broader audiences. Balance short-term gains with campaigns aimed at scaling sales over time.
Misjudging Ad Performance
Amazon Ads can involve multiple touchpoints in a customer’s journey. For example, an ad may drive awareness, but the purchase happens later via an organic search. Ignoring how ads contribute to indirect sales can undervalue their impact and skew ROAS calculations.
Ignoring Data Quality Issues
Poor data quality, such as missing tracking tags or incorrect campaign settings, can lead to unreliable Amazon ROAS. Regularly check that your campaign data and reports are accurate and complete to avoid making decisions based on faulty information.
Overlooking Ad Fatigue
Ad fatigue happens when customers repeatedly see the same Amazon ad, which leads to less engagement over time. For example, a Sponsored Display ad shown too often may stop getting clicks. Update your creatives and refine your targeting to keep ads fresh and effective.
Tools That Can Help Track and Analyze Amazon ROAS
Now that we know what Amazon advertising ROAS is, let’s also take a look at some tools that can help you track ROAS on Amazon.
Amazon Campaign Manager
Amazon Campaign Manager is a built-in tool in Seller Central that helps sellers manage their advertising campaigns. It provides real-time insights into campaign performance and allows sellers to adjust bids, pause ads, and update targeting easily. It also tracks key metrics like ROAS, CTR, and ACoS, with downloadable reports for deeper analysis.
Pricing: Included with your Amazon Seller Central account.
Zonbase
Zonbase is a tool for Amazon sellers that helps with product research, keyword tracking, and managing ads. Its PPC tool, ZonPPC, automates tasks like optimizing bids and finding keywords.
It also helps sellers and advertisers track important metrics like ROAS, etc., which helps to improve campaigns, and get better results.
Pricing:
- Standard Plan: $30/month ($354 annually).
- Legendary Plan: $83/month ($994 annually).
- Diamond Plan: $200/month ($2,394 annually).
Jungle Scout
Jungle Scout is a popular Amazon marketing tool known for its robust features in product research, keyword tracking, and advertising analytics.
It does provide its Amazon PPC Analytics tool, that helps a seller track ROAS, ACoS, and other ad metrics with ease.
Pricing:
- Starter Plan: $29/month ($348 annually).
- Growth Accelerator Plan: $49/month ($588 annually).
- Competitive Intelligence Plan: $299/month ($3,588 annually).
SellerApp
SellerApp is an AI-driven platform that provides Amazon sellers with insights and automation tools focused on PPC management and listing optimization.
SellerApp’s PPC Analyzer offers an in-depth overview of advertising performance, tracking metrics such as ROAS, ACoS, and ad revenue. It enables sellers to set targets and monitor progress easily.
Pricing:
- Freemium: Free for basic features like PPC insights and campaign management.
- Professional Plan: Starts at $99/month.
- Smart Plan: Starts at $149/month, including ads automation and dedicated account management.
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Conclusion
To conclude, Amazon Advertising ROAS is important for evaluating ad performance. It helps you measure revenue against ad spend and guides budget decisions. With the right strategies, you can improve ROAS and achieve better campaign results.
FAQs
- What is considered a good ROAS on Amazon?
A good ROAS on Amazon is usually 2x to 3x. This means earning $2-$3 in revenue for every $1 spent on ads. Low-margin products need a higher ROAS to stay profitable, while high-margin products can work with slightly lower ROAS.
- How does ROAS differ from ACoS in Amazon advertising?
ROAS measures how much revenue you generate for every dollar spent on ads. A higher ROAS means better revenue efficiency. ACoS calculates the percentage of ad spend compared to ad revenue. A lower ACoS is better for cost control, while ROAS focuses on overall campaign performance.
- How to increase ROAS on Amazon?
To increase ROAS, start by optimizing Amazon product listings with clear images and strong keywords. Use long-tail keywords to attract specific shoppers and reduce ad costs. Adjust bids for high-performing and low-performing keywords.
Use retargeting ads to re-engage interested customers. Regularly monitor campaign performance to make necessary adjustments.
- Does ROAS take profit margins into account?
ROAS does not consider profit margins. It only measures revenue compared to ad spend. To check profitability, calculate your break-even ROAS, including costs like production, Amazon fees, and shipping.
- How does product pricing affect ROAS?
Higher-priced products can result in better ROAS since they generate more revenue per sale. However, they may need more clicks to convert. Lower-priced products often achieve higher ROAS more easily but may bring less profit per sale.
- Can different ad types on Amazon yield different ROAS?
Yes, the type of ad campaign influences ROAS.
For example, Sponsored Products generally deliver the highest ROAS as they target shoppers with strong purchase intent. On the other hand, Sponsored Brands often have slightly lower ROAS because they focus on building brand awareness. And, Sponsored Display ads generally yield the lowest ROAS but are valuable for retargeting and engaging audiences who previously viewed your products.
- How often should I monitor my ROAS?
Monitor ROAS weekly or bi-weekly to track trends and optimize campaigns. For new campaigns, daily checks during the first few weeks can help improve performance faster.
- Is a high ROAS always indicative of a successful campaign?
A high ROAS reflects how effectively your ads generate revenue, but it doesn’t guarantee overall success. It overlooks factors like profit margins, brand awareness, and long-term customer growth.
Campaigns with a lower ROAS may still contribute through organic sales or customer acquisition.
- What is a good ROAS for eCommerce?
For eCommerce, a ROAS of 3x-5x is considered good. Low-margin products need higher ROAS to remain profitable, while high-margin products can work with slightly lower ROAS. The ideal ROAS depends on your business goals and profit margins.
