What is a good RoAS on Amazon? (+ How to calculate it)

Amazon advertising can sometimes feel like throwing money at a wall and hoping some of it sticks. You’re bidding on keywords, watching competitors drive up costs, and trying to figure out if your campaigns are actually working.

RoAS (Return on Advertising Spend) cuts through the confusion. It tells you exactly how much revenue you generate for every dollar you spend on ads, giving you a clear way to measure advertising performance and compare campaigns.

But here’s where most sellers get stuck: knowing what RoAS to target, how to calculate your break-even point, and which strategies actually improve performance. This guide will walk you through everything.

What is RoAS, and how do you calculate it?

RoAS stands for Return on Advertising Spend, and it measures how much revenue you generate for every dollar you invest in ads. Think of it as your advertising efficiency scorecard.

The formula is straightforward: RoAS = Revenue from ads ÷ Ad spend. If you spend $100 on ads and generate $500 in attributed sales, your RoAS is 5. You can express this as “5:1” or simply “5x RoAS.”

Here’s where it gets interesting: RoAS has an inverse relationship with ACoS (Advertising Cost of Sales). A RoAS of 4 equals an ACoS of 25%, while a RoAS of 5 equals an ACoS of 20%. Amazon reports both metrics, but RoAS tends to be more useful for comparing performance across different platforms and campaigns.

The key difference between RoAS and ROI is scope. RoAS only considers your advertising spend, while ROI factors in all business costs, including overhead, inventory, and operational expenses.

What is a good RoAS on Amazon?

There’s no magic number that works for everyone. Your “good” RoAS depends on your profit margins, product price, category competitiveness, and business goals.

Industry benchmarks give us a starting point. The general average RoAS on Amazon sits around 3x to 4x, with data showing Sponsored Products typically delivering a 3.67x RoAS. Some also suggest that 4:1 or higher is considered good performance.

Category matters significantly. Electronics can reach 9x RoAS, while toys and games average around 4.5x. The more competitive your category, the more you’ll need to spend to stay visible, which typically drives down your RoAS.

Your business model also influences what constitutes “good.” If you’re focusing on growth and market share, you might accept lower RoAS in exchange for volume and visibility. If profitability is your priority, you’ll target higher ratios and tighter campaign management.

How to calculate your minimum RoAS

Your minimum RoAS is your personal break-even point. This calculation tells you the lowest RoAS you can accept without losing money on your advertising.

The formula is: Sale price ÷ Gross profit (before ads) = Minimum RoAS. Let’s walk through an example to make this concrete.

Say your product sells for $30. After accounting for the cost of goods sold and Amazon fees, you have $20 in total costs, leaving you with $10 in gross profit before advertising. Your minimum RoAS would be $30 ÷ $10 = 3.

Any RoAS below 3 means you’re operating at a loss after ad costs. Any RoAS above 3 contributes to your profit. This number becomes your baseline for all advertising decisions.

Factors that determine your target RoAS

Your target RoAS should reflect your specific business situation, not industry averages. Several factors influence what you should aim for.

Product margins and pricing strategy play the biggest role. Higher-priced items can tolerate higher ad costs and still maintain profitability. A $200 product with 50% margins has much more room for advertising spend than a $20 product with 20% margins.

Category competitiveness directly impacts your costs. Heavily saturated markets force more aggressive ad spending to maintain visibility. You might need to accept lower RoAS in competitive categories just to stay in the game.

Your business goals matter too. New product launches often operate at lower RoAS to gain initial traction and reviews. Mature products with established rankings can typically achieve higher RoAS through more efficient targeting and bidding.

Campaign types also perform differently, which affects your overall targets. You’ll want to set different expectations for each type based on their typical performance characteristics.

RoAS performance by Amazon ad type

Not all Amazon advertising performs the same way. Understanding the typical RoAS for each campaign type helps you set realistic expectations and allocate budget effectively.

Sponsored Products usually yield the highest RoAS because they target shoppers with clear purchase intent. These ads appear in search results and on product pages, capturing customers who are already looking for products like yours.

Sponsored Brands and Sponsored Display typically deliver lower RoAS but provide higher visibility and brand awareness. These campaigns serve different strategic purposes—they’re about building recognition and capturing customers earlier in their buying journey.

Sponsored Display shines in retargeting scenarios. You can reach customers who have already viewed your product or similar items, often resulting in better conversion rates than cold traffic campaigns.

The key is using each type strategically. Sponsored Products for immediate sales, Sponsored Brands for market share, and Sponsored Display for customer retention and cross-selling.

How to improve your Amazon RoAS

RoAS improvement comes down to increasing revenue per dollar spent or decreasing cost per conversion. Here are the strategies that actually move the needle.

Keyword optimization forms the foundation. Identify your highest-performing keywords and increase bids to capture more of that traffic. Add negative keywords aggressively to filter out irrelevant searches that waste budget without converting.

Your product listings directly impact conversion rates, which affects RoAS. High-quality images, clear bullet points, relevant keywords, and competitive pricing all contribute to better performance from the same advertising spend.

Audience refinement through Amazon’s targeting tools helps you reach more qualified prospects. Consider retargeting campaigns using Sponsored Display for customers who viewed your product but didn’t purchase. They’re already warm leads.

Campaign structure and segmentation allow for more precise optimization. Group products by performance and profit margins, then set different RoAS targets for each group. Your bestsellers might sustain higher ad spend, while newer products need more conservative targets.

Regular A/B testing of ad creatives, headlines, and targeting helps you find the most effective combinations. Dynamic bidding and bid adjustments let you increase spend on high-converting search terms while reducing investment in underperforming segments.

Monitor search term performance closely. Move converting search terms into Exact Match campaigns for better control, and negate them from Broad or Phrase campaigns to reduce inefficiency.

Why RoAS alone doesn’t tell the full story

However, it’s important to understand that RoAS only shows advertising efficiency, not business profitability. A campaign with 6x RoAS might still lose money once you factor in all your costs.

RoAS ignores crucial expenses like storage fees, return processing, customer service costs, and marketplace fees that eat into your margins. A product with high advertising RoAS but expensive fulfillment might be less profitable than one with moderate RoAS but lower operational costs.

True profitability requires seeing your complete cost structure. You need visibility into every expense that affects your bottom line, not just advertising spend. This includes Amazon fees, shipping costs, inventory carrying costs, and even the time you spend managing campaigns.

Consider Customer Lifetime Value in your calculations. Some sellers accept lower initial RoAS if products generate repeat purchases or lead to higher-value customer relationships. A loss on the first sale might be strategic if it builds long-term loyalty.

The most successful sellers track RoAS alongside other profitability metrics. They understand that optimizing for advertising efficiency alone can lead to decisions that hurt overall business performance.

Tools for tracking and optimizing RoAS

Amazon Seller Central provides basic RoAS tracking through Advertising > Campaign Manager. You can view RoAS per campaign, ad group, and keyword, plus see average performance across all campaigns.

Track RoAS alongside complementary metrics like ACoS, click-through rate, conversion rate, and cost per click. Amazon’s reporting tools allow bulk operations and performance comparison over time, giving you the data needed for optimization decisions.

For complete profitability analysis, you need tools that integrate advertising costs with all other business expenses. FeedbackWhiz Profits, part of Seller 365, connects your advertising spend with comprehensive cost tracking. 

Instead of optimizing RoAS in isolation, you can see how advertising efficiency impacts overall profitability across all your products and marketplaces. This integrated view helps you make smarter decisions about ad spend, targeting, and campaign strategy based on true profit potential rather than just advertising metrics.

Ready to optimize for real profitability?

RoAS is a useful metric, but it’s just one piece of your profitability puzzle. The most successful Amazon sellers track advertising efficiency alongside complete cost visibility to make decisions that actually grow their bottom line.

FeedbackWhiz Profits integrates your advertising costs with all other expenses, showing you the true profitability picture that RoAS alone can’t reveal. And the best part? It’s part of Seller 365—a complete toolkit for understanding and optimizing your Amazon business performance. 

Stop optimizing for vanity metrics and start building campaigns that deliver real profit. Try Seller 365 free and see how comprehensive profit tracking changes the way you think about Amazon advertising.