ROAS measures how much revenue you get from sales for every dollar you spend on ads, allowing sellers to see if their ad campaigns are working.
ROAS is one of the essential concepts that Amazon sellers need to know. Understanding ROAS is important for every product sold. Once you know how to calculate this metric, you can measure the performance of your ad campaign, see if you’re generating revenue, and understand when to make changes to make your campaign profitable.
ROAS on Amazon has the same meaning as on Google or any other platform. Amazon ROAS is essentially the return on all the capital you spend on Sponsored Brand, Product, Display Network and different Amazon ads. Amazon considers ROAS as a good performance indicator for their ad campaigns. That’s why ROAS is one of the key points of analytics in the Campaign Manager section of your Seller Central account.
See if you are making a profit with ROAS!
Running sponsored ads, PPC campaigns is a great way to boost your business on Amazon. This way you can increase brand awareness, improve conversion and make it possible to increase your rankings. But how do we know what amount is worth investing for new businesses or new product launches and how can we measure success? Clicks and impressions can determine whether a campaign or keywords are gaining traction. Sales are one of the best indicators of a successful campaign, but to make sure you’re making a profit on the money spent on advertising campaigns, you need to look closely at ROAS.
When testing various strategies, campaign types and keywords, ROAS values in Amazon Advertising can tell advertisers which marketing efforts are ineffective and which are working (or at least more effective). These insights can then allow advertisers to adjust bids or investments based on the results, so that ad spend is sustainable. This allows them to increase their revenue more confidently.
What are ROAS performance tactics?
While it can be difficult to determine a good ROAS for your business, there are many tactics you can implement to improve it. Let’s take a look at them to improve your ROAS.
- Focus on the Right Keywords
Before investing in PPC ads, a thorough keyword research is worthwhile. Focusing on less competitive search terms can provide a smart advantage.
- Optimize Listings
When optimizing listings, focus on high-quality content interspersed with relevant keywords. An engaging and informative product description will increase shoppers’ motivation to buy your product.
- Optimize Your Titles
Amazon is very selective when it comes to titles. For PPC success, make sure you use the right keywords in your titles and avoid restricted words.
- Determine the Right Bid Amount
At this point, you need to take your average order value, multiply it by your conversion rate and divide it by your target ROAS. The resulting number will be the bid amount you should set for your campaign. If your product has a higher conversion rate, you can increase your spend.
How is ROAS calculated?
There is a relatively simple formula to calculate ROAS.
ROAS = Total Revenue / Total Ad Spend
Roas equals total revenue divided by total advertising spend.
