Understanding Amazon ROAS and Turning Ads into Huge Profits

What does a good Amazon ROAS look like and how to get there? This guide from Megaficus explains what Amazon ROAS is, how to calculate it with ROAS calculators, benchmarks across industries, as well as strategies to improve Amazon ROAS sustainably.

Amazon ROAS, or Return on Ad Spend, is the metric that tells you how much revenue your ads bring in for every dollar you spend.

This number is critical because it reflects profitability. Unlike vanity metrics such as impressions or clicks, ROAS ties performance directly to dollars earned.

For instance, a skincare brand running Sponsored Products ads used ROAS to identify that its $1,000 ad budget on moisturizers produced $4,800 in sales. Without looking at ROAS, they would have celebrated clicks while ignoring profitability.

Advertisers also rely on ROAS to compare campaigns. Some reports (from Amazon’s Seller Forums, Saras Analytics, etc.) indicate that Sponsored Products usually deliver higher conversion rates and better ROAS than Sponsored Brands, while Sponsored Brands are more for visibility or top-of-funnel. This allows sellers to shift budgets intelligently rather than guessing.

How is Amazon ROAS calculated in practice?

The formula is:

Amazon ROAS = Total Ad Revenue ÷ Total Ad Spend

For example, if you invest $200 in Amazon Sponsored Products ads and generate $800 in attributed sales, your ROAS is 4.0. This means every $1 you spend returns $4.

An Amazon ROAS calculator simplifies the math. Tools like Helium 10 and Jungle Scout allow you to enter spend and sales data, and they automatically show your ROAS along with other metrics (like ACoS, CPC, etc.). Using an ROAS calculator helps you quickly decide which ad groups to pause, saving millions of dollars in wasted ad spend per month.

Try calculating your Amazon ROAS here:

What is a good Amazon ROAS?

Determining what counts as a good Amazon ROAS isn’t always straightforward. Sellers in different industries face varying costs, margins, and competition, which means the “right” number can shift significantly. To make it clearer, let’s look at the general benchmarks most advertisers use as reference points.

A “good” Amazon ROAS depends heavily on product margins and categories. In general, most sellers consider anything above 3.0 as profitable. That means each $1 in ad spend brings back $3 in revenue. Especially, there are brands that usually achieve gross margins of 50-70%, meaning their ROAS targets must be higher to cover expensive packaging and returns.

Understanding these Amazon ROAS benchmarks helps sellers measure performance in context. But there is also one more important thing to remember: “good” varies by niche. The right target is always one that clears your break-even point while aligning with your product category and long-term growth goals.

Ad strategies also matter when defining what a good Amazon ROAS is. A Sponsored Brands campaign may have a lower immediate ROAS but contribute to long-term growth, and vice versa. So how “good” the Amazon ROAS is must depend on your current business activities and whether your priority is quick cash flow or sustainable brand awareness over time.

What factors affect Amazon ROAS the most?

There are several interconnected elements that determine whether your ROAS is strong or weak, including:

Ad targeting and bidding strategies

Inefficient keyword choices often burn budgets. For instance, a broad keyword like “shoes” may attract irrelevant clicks, while shifting to phrase match, such as “men’s running shoes,” can double conversions and lift ROAS significantly.

Product pricing and profit margins

Strong sales don’t always mean strong profits. A $30 kitchen gadget that costs $20 to produce and $7 to advertise leaves almost nothing. You should start by finding your break-even point, then test small price changes (about 5% up or down) to see where conversions stay steady while margins grow.

Customer reviews and ratings

Positive ratings directly improve ad performance. Items with 4.5 stars or more typically generate stronger ROAS. In particular, if your brand can improve its score by only 0.5 (from 3.9 to 4.4 stars, for example), you will see the ROAS jump by 1.0 or even more (from 2.2 to 3.7, for example) in just two months.

Category demand and competition

ROAS expectations vary by niche. Competitive categories like electronics often suffer from high CPCs, which drag down returns. In contrast, specialized markets such as pet grooming tools often see higher ROAS with lower ad spend.

How to improve Amazon ROAS with proven strategies

Improving Amazon ROAS requires more than just reducing ad spend. It’s also about balancing efficiency with long-term growth, ensuring that every advertising dollar not only drives immediate conversions but also supports sustainable profitability over time.

Optimizing product listings and ad copy

Strong product titles, bullet points, and high-quality images increase conversions, directly boosting ROAS. Based on Megaficus’s experience working with many brands, sellers who optimize listings report 15 – 20% better conversion, leading to higher ROAS.

A strong product title must have the primary keyword, key attributes such as material, size, color, or compatibility, and primary benefit or use case so buyers instantly understand why it’s valuable. For example, instead of “Laptop Stand,” use “Adjustable Aluminum Laptop Stand, Ergonomic and Lightweight.”

Benefit-driven bullet copy also rounds out the listing. Opening with the core benefit before describing features, weaving in relevant keywords, and highlighting unique selling points such as warranty or eco-friendly materials gives shoppers the confidence to purchase (like the images below).

High-quality images play a crucial role, too. Listings with five to seven photos covering multiple angles and lifestyle scenes, using zoom-ready resolution (1,000 pixels or more) and consistent lighting, and one infographic (if available) to let shoppers examine details and understand features at a glance.

Using negative keywords

Negative keywords, which are words or phrases that you don’t want to show up in your product searching results, help cut wasted clicks, boost the performance of your ads, and reduce the overall cost of your campaigns.

For example, a seller advertising a premium leather laptop bag might add negative keywords like “cheap,” “faux leather,” or “DIY bag pattern,” which attract shoppers unlikely to buy a high-end product. By blocking them, the campaign focuses on searches such as “genuine leather laptop bag” or “luxury work tote,” improving ROAS and lowering cost.

Apply bid adjustments

Adjusting bids by placement, including Top of Search, Product Pages, or Rest of Search, lets advertisers focus their budget where shoppers are most likely to buy, directly helping improve Amazon ROAS.

Data from Amazon Advertising shows that ads appearing at the Top of Search often generate the highest click-through and conversion rates because buyers see them first when intent is strongest.

For example, if Top of Search shows a 6.2 ROAS at $1.20 CPC while Product Pages sit at 2.8 ROAS and $0.95 CPC, raise Top of Search bids by about 20–25 % (to around $1.45) and cut Product Page bids by 10–15 % (to roughly $0.80). This keeps the total budget steady while shifting money toward the most profitable clicks.

Leveraging A/B testing, reviews, and external traffic

Amazon’s “Manage Your Experiments” tool is excellent for running A/B tests on ad creatives that show which images or headlines convert better. Test two versions of a product listing or at the same time on the tool, then review clear performance data to see which option can possibly boost more conversions for your brand.

You should also build campaigns that actively drive external traffic. We suggest you run TikTok ads with shoppable links, collaborate with Instagram creators to post product demos, or launch timed influencer promotions with trackable discount codes, etc., to spark immediate purchases and feed Amazon’s algorithm, helping listings climb in organic rank for long-term gains.

Actively Requesting Customer Reviews

Encouraging genuine post-purchase reviews is one of the most persuasive ways to lift both conversion rates and advertising returns. Amazon’s own data shows products with 50+ verified reviews convert about 20 % better, which means every advertising dollar drives more revenue and raises overall ROAS.

You can use the “Request a Review” button in Seller Central, automated follow-up emails, or inserts that politely invite feedback. As review volume grows, your listing earns higher visibility in Amazon search, creating a cycle of stronger organic sales and steadily improving ROAS.

Common mistakes to avoid when working with Amazon ROAS

Many advertisers make the mistake of treating ROAS as a straightforward number, but without proper context, it can be misleading and result in poor campaign decisions.

Focusing only on short-term ROAS

A campaign that reports a 6.0 ROAS might seem like a dream, but if it’s driven almost entirely by branded keywords, it’s not bringing in new customers. You may simply be paying for sales you would have earned organically.

Sellers must balance short-term profitability with long-term customer acquisition. Test non-branded keywords, product-category terms, and Sponsored Display campaigns to reach fresh audiences.

Also, remember to track new-to-brand metrics in Amazon’s dashboard to confirm that your investment is actually expanding your customer base.

Ignoring organic sales impact

Advertising doesn’t just drive paid clicks because it improves organic ranking. Even if a campaign shows a low 2.4 ROAS in the ad console, the visibility boost can push your product to the first page of search results, increasing organic sales long after the ads stop.

For example, a brand wanted to stop advertising on these 10 ASIN (Amazon Standard Identification Number) below to reduce spend on low margin items. And as you can see clearly, both the organic and all sales decreased considerably. This proved that advertisement stopping can impact strongly on sales revenue, which then affected the Amazon ROAS of the brand.

In order to prevent this, you should evaluate Total Advertising Cost of Sales (TACoS), which incorporates organic sales, then understand how the two metrics connect to each other to support your business activities. If your overall revenue and organic share rise while TACoS falls, the campaign is profitable despite a low ad-only ROAS.

Comparing ROAS across unrelated categories

A 3.0 ROAS in electronics might be excellent, while in beauty it could signal underperformance. Sellers must compare only within relevant categories and profit structures. For more clarity, you can also visit Amazon’s Advertising learning console, which explains how to interpret different ad metrics.

FAQ about Amazon ROAS