ACoS vs ROAS: Understanding Amazon Advertising Metrics
Amazon sellers often fixate on one metric and ignore the other. Both ACoS and ROAS matter, and understanding the difference can mean the difference between scaling profitably or bleeding cash.
What is ACoS?
Advertising Cost of Sales (ACoS) = Ad Spend ÷ Ad-Attributed Sales
Example: You spend $500 on ads and get $2,000 in sales. ACoS = 500 ÷ 2000 = 25%
ACoS tells you what percentage of revenue goes to advertising. Lower is generally better, but the target depends on your profit margin.
What is ROAS?
Return on Ad Spend (ROAS) = Ad-Attributed Sales ÷ Ad Spend
Using the same example: ROAS = 2000 ÷ 500 = 4x
ROAS tells you how much revenue each advertising dollar generates. Higher is better.
The Relationship
ACoS and ROAS are inversely related:
- ACoS of 20% = ROAS of 5x
- ACoS of 25% = ROAS of 4x
- ACoS of 50% = ROAS of 2x
Which Metric Should You Use?
| Stage | Best Metric | Why |
|---|---|---|
| Launch | ROAS | You need to see if ads generate enough revenue to cover costs |
| Growth | ACoS | You're optimizing for profitability, not just revenue |
| Mature | Both | Balance revenue goals with profit targets |
Setting Targets
Your break-even ACoS depends on your margins:
Break-Even ACoS = Profit Margin
If your net margin after all fees is 25%, your maximum sustainable ACoS is 25%. Anything higher and you're losing money on every advertised sale.
Practical Tips
- Don't chase low ACoS blindly — a 10% ACoS with low sales volume may be worse than 25% ACoS with high volume
- Track both metrics — they reveal different aspects of campaign health
- Use ROAS for scaling decisions — if ROAS > 4x, you can likely increase spend
- Use ACoS for optimization — if ACoS is too high, improve listing quality or adjust bids
Use our ACoS Calculator and ROAS Calculator to analyze your campaigns.