## Understanding ROAS
**Return on Ad Spend (ROAS)** measures how much revenue you make for every dollar spent on advertising. The formula is simple:
ROAS = Total Revenue / Total Ad Spend
**Example:** If you spend $1,000 on ads and generate $5,000 in revenue, your ROAS is 5:1 (or 5x).
**Healthy Benchmarks:** Most Amazon sellers aim for ROAS of 2.5x to 5x, depending on:
Product margins
Market competition
Business goals
A 3:1 ROAS means you're making $3 for every $1 spent, leaving room for costs and profit.## Advertising Cost of Sales (ACoS)
**ACoS** is the inverse of ROAS and shows what percentage of sales revenue goes toward advertising.
ACoS % = (Total Ad Spend / Total Sales) × 100
**Example:** $1,000 in ad spend with $5,000 in revenue = 20% ACoS
**Target ACoS:** Ranges from 15-40% depending on margins. Lower is better, but must be sustainable for growth.
## Click-Through Rate (CTR)
**CTR** measures how many people click your ad versus impressions.
CTR % = (Clicks / Impressions) × 100
Typical Amazon PPC CTR ranges from 0.2% to 2.0%. A declining CTR may indicate:
Stale ad creative
Poor keyword relevance
Increased competition
## Conversion Rate**Conversion Rate** shows what percentage of clicks result in purchases.
Conversion Rate % = (Purchases / Clicks) × 100
Average Amazon conversion rates are 10-15% for PPC. If yours is lower:
Review product quality/pricing
Improve product listing
Check for technical issues
## Cost Per Click (CPC)**CPC** is what Amazon charges per ad click.
CPC = Total Ad Spend / Total Clicks
Factors affecting CPC:
Keyword competition
Product category
Bid amount
Quality Score
## Key Metrics SummaryTrack these together for comprehensive campaign analysis:- **ROAS:** Profitability (higher is better)
**ACoS:** Cost efficiency (lower is better)
**CTR:** Ad appeal (higher is better)
**Conversion Rate:** Product appeal (higher is better)
**CPC:** Cost efficiency (lower is better)