Amazon ROAS: How to Calculate and Maximise It (2025)

In the world of e-commerce, especially on Amazon, advertising plays a pivotal role in driving sales and ensuring the profitability of campaigns. One of the most critical metrics for measuring the success of Amazon ads is Amazon ROAS (Return on Ad Spend). Understanding and optimizing this metric is essential for brands looking to make the most of their advertising budget. In this article, we will dive deep into what Amazon ROAS is, how to calculate it, why it’s important, and strategies to improve it. 

What is Amazon ROAS?

Amazon ROAS is a metric used to measure the revenue generated for every dollar spent on Amazon advertising. It is calculated by dividing the revenue generated from the ads by the cost of the ads. Simply put, it answers the question: How much revenue are you earning for each dollar you spend on ads?

ROAS is a fundamental indicator of ad profitability. If a brand is running Amazon ads but not seeing a high ROAS, it may indicate that their ads aren’t driving enough sales relative to the amount spent. A low ROAS suggests inefficiencies in ad spend, while a high ROAS reflects effective ad campaigns that contribute significantly to revenue generation.

Importance of Amazon ROAS

Helps Measure Ad Profitability and Effectiveness

Tracking Amazon ROAS is crucial because it directly measures the profitability of your ad campaigns. Without tracking this metric, it would be impossible to know whether your ad spend is being used effectively. Brands can compare their ROAS across different campaigns to evaluate which ones are most profitable.

Guides Budget Allocation for Different Ad Campaigns

By understanding the ROAS of various campaigns, brands can make informed decisions about budget allocation. If a particular campaign or ad type is delivering a high ROAS, you can choose to allocate more budget toward it, scaling up successful campaigns while reducing or pausing underperforming ones.

Enables Data-Driven Decision-Making for Scaling Ads

ROAS helps brands make data-driven decisions when scaling their ads. Instead of guessing or relying on intuition, brands can analyze their ROAS and determine the most effective approach for scaling ad campaigns. This ensures that money is spent efficiently, increasing sales without overspending on underperforming ads.

Amazon ROAS vs. Amazon ACOS

While ROAS is an essential metric, it's also important to understand how it compares with another key metric—Amazon ACOS (Advertising Cost of Sale).

Which One Matters More?

The choice between focusing on ROAS or ACOS largely depends on your business goals and product margins:

• ROAS is typically more important for brands aiming to maximize profitability. If you are selling high-margin products, a high ROAS means your ads are driving significant revenue, making your ad spend worthwhile.
• ACOS is more relevant for cost-efficient campaigns, especially if you’re selling low-margin products or aiming to keep ad spend as low as possible to maintain profitability.

Ultimately, both metrics offer valuable insights into your ad performance, and understanding when to prioritize each can help you optimize your ad campaigns effectively.

How to Calculate Your Amazon ROAS 

Calculating Amazon ROAS is a straightforward process. Here’s a step-by-step guide:

Step 1: Collect Revenue Data from Amazon Ads

The first step in calculating ROAS is gathering the revenue generated from your Amazon ads. This data can typically be found in your Amazon advertising reports, which detail the sales attributed to your ads.

Step 2: Track Total Ad Spend

Next, track the total amount you have spent on your Amazon ads. This information will also be available in your advertising reports.

Step 3: Apply the ROAS Formula

Once you have the revenue and ad spend data, you can apply the following formula to calculate ROAS:

ROAS = Revenue / Ad Spend

For example, if you generated $10,000 in sales from your Amazon ads and spent $2,000 on ads, your ROAS would be:

ROAS = $10,000 / $2,000 = 5

This means that for every dollar spent on ads, you generated $5 in revenue.

Step 4: Use Historical Data to Compare Trends

It’s important to track and compare your ROAS over time. Historical data will help you understand whether your ROAS is improving, staying the same, or declining, allowing you to make informed adjustments to your strategy.

Saras Pulse can help here by providing real-time data analysis and historical performance tracking in a centralized dashboard. This allows you to quickly identify trends, track the effectiveness of your ad strategies, and make adjustments on the fly to improve your ROAS continuously.

How Much ROAS is Good in Amazon?

Industry Benchmarks for Different Categories

While Amazon ROAS can vary significantly by product category, some general industry benchmarks can provide guidance. For instance:

• Electronics may typically have a ROAS between 3-4x.
  
  
• Apparel and fashion may have a slightly lower ROAS, ranging from 2-3x.
  
  

However, these are broad ranges. The key is to consider your specific business goals and profit margins when determining whether your ROAS is "good."

Why a Good ROAS Varies Based on Profit Margins

A good ROAS will vary based on the product’s profit margin. For instance, a high-margin product can afford a lower ROAS while still being profitable, whereas a low-margin product may require a higher ROAS to cover the cost of the product and advertising.

ROAS Targets for Small vs. Large Brands

Small brands or startups may aim for a higher ROAS as they try to maximize the efficiency of their ad spend. Larger brands with established revenue streams may have more flexibility and can afford to scale their ads even if the ROAS is somewhat lower.

Understanding what constitutes a good ROAS can vary based on your industry, product margins, and business goals. By setting realistic ROAS targets and comparing them to industry benchmarks, you can gauge whether your campaigns are performing effectively.

To help you track and optimize your ROAS more efficiently, Saras Analytics provides real-time insights and powerful tools to ensure your ad spend is always working toward maximizing returns. Start leveraging Saras Pulse today and optimize your ad strategy with data-driven decisions.

How to Find Your Target Amazon ROAS

Setting a target ROAS is crucial for aligning your ad goals with your business objectives. Here are a few considerations for setting your ROAS target:

Align ROAS Goals with:

• Profit Margins: Low-margin products may require a higher ROAS to remain profitable, while high-margin products can tolerate a lower ROAS.
  
• Business Model: Direct-to-consumer (DTC) brands may prioritize a higher ROAS, while resellers may have different goals based on their cost structures.
• Growth Stage: Brands focused on scaling may be willing to accept a lower ROAS in exchange for increased visibility, while profitability-focused brands might require a higher ROAS to sustain long-term growth.

Factors Impacting Amazon ROAS

Several factors can influence your Amazon ROAS. Understanding these factors can help you optimize your ads.

1. Bidding Strategy – Manual vs. Automated Bidding and Its Effect on ROAS

A manual bidding strategy allows you to control your bids on specific keywords, but it requires more time and attention. Automated bidding, on the other hand, uses Amazon's algorithms to optimize bids for you. Depending on your goals, automated bidding can either boost or reduce your ROAS.

2. Audience Targeting – How Precise Targeting Improves Conversion Rates

The more precise your audience targeting, the higher your chances of reaching potential customers who are likely to convert. Well-targeted ads improve ROAS by reducing waste and ensuring that your budget is spent on the most relevant audience.

3. Ad Creative & Copy – The Role of Compelling Visuals and Messaging

Effective ad copy and visuals play a significant role in improving ROAS. Engaging, clear, and relevant messaging will help increase conversions and, therefore, maximize ROAS.

4. Ad Spend Optimization – Ensuring Budget is Allocated to the Highest-Performing Ads

Ad Spend Optimization is crucial for improving Amazon ROAS. If your budget is not allocated to the highest-performing ads, you risk overspending on low-converting campaigns. Optimizing your ad spend ensures that every dollar is used effectively to generate sales. Saras Pulse can help by providing real-time insights, allowing you to track ad performance and quickly reallocate your budget to the best-performing campaigns, ultimately boosting your ROAS.

5. Data Visibility & Performance Tracking – Tracking ROAS Across Multiple Ad Sources

Data Visibility & Performance Tracking becomes challenging when you're managing ads across multiple platforms. Without a comprehensive view of your ad performance, it’s hard to make informed decisions on where to optimize. Saras Daton solves this by integrating data from all your advertising channels into one centralized platform, enabling you to track ROAS across multiple sources and adjust your strategy for better overall performance.

5 Tips to Increase Your Amazon ROAS

1. Optimize Product Listings

Start by ensuring your product titles are clear, keyword-rich, and easy to understand. Combine them with detailed, benefit-driven descriptions that highlight key features and value propositions. Use high-resolution images and enhanced content to build trust and drive engagement. A fully optimized listing increases your chances of converting clicks into purchases, directly improving your Return on Ad Spend (ROAS).

2. Improve Keyword Targeting

Refine your keyword strategy by incorporating long-tail keywords that capture specific search intent. These keywords often have lower competition and higher conversion potential. Additionally, make strategic use of negative keywords to prevent your ads from showing up in irrelevant searches. This not only boosts click-through and conversion rates but also ensures your ad budget is spent efficiently—resulting in better ROAS.

3. Use Sponsored Display Ads

Leverage Sponsored Display Ads to reach high-intent shoppers both on and off Amazon. These ads are particularly effective for retargeting users who have viewed your products or similar items but haven’t made a purchase. By keeping your products visible across the buyer’s journey, Sponsored Display Ads increase the likelihood of conversions, helping you get more value from your ad spend.

4. Leverage Data for Smart Decision-Making

Regularly analyze your ad performance to identify trends, opportunities, and areas that need improvement. Look at metrics like click-through rate, conversion rate, and ACOS to understand what’s working. With a tool like Saras Pulse, you can dive deep into campaign-level insights, spot patterns, and make data-driven adjustments that fine-tune your strategy and boost ROAS over time.

5. Automate Data Pipelines for Holistic Optimization

Integrating data from multiple ad platforms ensures you have a complete view of campaign performance. Saras Daton automates the ingestion of Amazon ad data and integrates it with other marketing platforms, allowing you to track and optimize your ROAS across all channels efficiently.

Streamline Your Amazon ROAS with Saras Analytics

In this blog, we've delved into the significance of Amazon ROAS, exploring its definition, calculation methods, and the factors influencing it. By understanding and optimizing your ROAS, you can enhance the profitability and effectiveness of your advertising campaigns.

To help streamline this process and enhance your ad performance, Saras Analytics provides powerful tools with the following features:

• Unified Data Reporting: Consolidate all your data into a single, easy-to-read format, ensuring consistency and reducing manual reporting efforts.
  
• Customizable Dashboards: Tailor dashboards to track the metrics that matter most to your business, providing actionable insights to improve ROAS.
  
• Scalable Infrastructure: Grow your business with an infrastructure that adapts as your data and needs expand, ensuring long-term efficiency.
  
• 200+ Pre-Built Connectors: Integrate seamlessly with over 200 data sources, making it easy to aggregate data from various platforms and streamline your ad analytics.
  
• Custom Data Transformations: Customize your data processing to ensure accurate and relevant insights that align with your business objectives.
• Omnichannel Data Integration: Track performance across multiple channels, giving you a complete view of your ad spend and ROI, and allowing for holistic optimization.

By leveraging these features, you'll be able to optimize your Amazon advertising campaigns, track performance more effectively, and ultimately, maximize your Amazon ROAS.

Ready to take your Amazon ads to the next level? Start using Saras Analytics today and unlock smarter, data-driven ad strategies for better ROAS. Book a Demo Now and see how we can transform your ad performance!