There are 3 main metrics that will help you accelerate the growth of your Amazon account. But first, you need to understand what your goal is. A profit goal, a sales goal, a growth goal...

 The numbers shared below are there to help you better understand the different performance indicators to develop your profit.

The ROAS ( Return On Ads Spend )

ROAS is used to evaluate the performance of an ad. 

The calculation is as follows: Revenue generated by advertising / Advertising expenditure

In other words, it will give you a ratio that will mean how much you will earn by investing $1 in advertising.

For example, if I invest $100 in an ad and it brings me $500

The calculation is as follows: 500/100 = 5

For 1$ invested in advertising, I earn 5$.

What is a good ROAS?

As explained above, there is no unanimously perfect ROAS. But if you want to make a profit with your ads, at Les Pitchous we advise you to keep your ROAS above $3.

The ACOS ( Advertising Cost Of Sales )

The ACOS also allows to evaluate the performance of an ad. Instead of calculating how much we get for 1$ invested, here we calculate how much we need to invest to have a revenue of 1$.

The calculation is as follows: (Advertising expenditure / Revenue generated by advertising) * 100

For example, if I invest $100 in an ad and it brings me $500

The calculation will therefore be: (100/500) *100 = 20%.

For $0.20 invested in advertising, I earn $1.

What is a good ACOS?

As with ROAS, there is no unanimously accepted perfect ACOS. We advise you to have an ACOS between 10% and 25% if you want to make a profit with your ads. The goal is to have an ACOS as low as possible (close to 0%).

The TACoS ( Total Advertising Cost of Sale )

TACOS highlights your advertising spend as a percentage of your total revenue.

The calculation is as follows: (Advertising expenses / Total sales) x 100

For example, if I invest $100 for an ad and my total revenue is $600

The calculation will therefore be: (100/600) *100 = 16.67%.

This means that my budget cost represents 16.67% of my turnover.

What is a good TACoS? 

A high TACoS indicates a high dependency on advertising. This is not necessarily a problem, but if one of your products is in this situation, you can try to optimize the product page or optimize your advertising campaigns on Amazon to improve the conversion rate. 

A low TACoS reflects a low dependency on ads, and possibly an underinvestment in advertising. If one of your products is in this situation, you can try to increase your advertising investments to increase its sales.

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Hugo Verdier

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I'm Hugo, Account Manager at Les Pitchous. Passionate about digital and marketing, I'm here to help you develop your business on Amazon.