Maximizing ROAS and Minimizing TACoS with Amazon Advertising

When it comes to running profitable Amazon ad campaigns, two metrics consistently rise to the top: ROAS (Return on Ad Spend) and TACoS (Total Advertising Cost of Sales). Though related, they offer different insights into your campaign health. ROAS tells you how much revenue you’re generating for every dollar you spend on ads, while TACoS shows the percentage of total sales (including organic sales) consumed by your ad spend. Together, they reveal how efficiently your ads drive sales and how much they contribute to sustainable growth. Whether you’re scaling or protecting margins, learning how to influence both is key to successful Amazon advertising.

Maximizing ROAS: How to Get More Return from Every Dollar Spent

ROAS stands for Return on Ad Spend. It tells you how much money you earn from every dollar you spend on Amazon ads. For example, a ROAS of 4.0 means you made $4 in sales for every $1 you spent.

The higher your ROAS, the more efficient your ads are. But boosting ROAS isn’t just about spending less money — it’s about spending it smarter. That means putting your budget into the right products, using the right keywords, and making sure your ads are leading to sales.

Four Ways to Improve ROAS

1. Focus on Your Best Products
   Not every product in your catalog should get the same ad budget. Some products naturally sell better because they already have more reviews, better images, or stronger rankings on Amazon. These are the products most likely to turn ad clicks into sales.

Tip: Create a campaign just for your top-selling products. Give them a bigger share of your ad budget, and reduce or pause ads for items that aren’t performing as well.

2. Organize Keywords by Intent
   Not all keyword types are equal. Some bring in curious shoppers. Others bring in buyers who already know what they want. To get better results, structure your campaigns like a funnel:

• Auto Campaigns: Let Amazon automatically test and find new search terms for you.
• Broad & Phrase Match: Use these to explore keyword ideas related to your product.
• Exact Match: Use only high-performing keywords that already convert well.

Move high-performing keywords from your Auto or Broad campaigns into Exact Match campaigns. Then increase your bids on those keywords to win more of that valuable traffic.

3. Aim for the Right Ad Placement
   Ads that show up at the top of the search results page usually get the most attention. These placements can cost more, but they’re often worth it — especially if your product already converts well. Only increase bids for top-of-search placement on proven, high-converting keywords. If a keyword is still new or untested, keep bids more conservative until you have data.
4. Block Irrelevant Traffic with Negative Keywords
   You don’t want your ad to show up in searches that won’t lead to a sale. For example, if you sell premium dog food, you don’t want people searching for “cheap dog food” clicking your ad — because they probably won’t buy. Use negative keywords to stop your ad from appearing in the wrong searches. This protects your budget and helps you focus on the shoppers most likely to buy.

Lowering TACoS: Spend Smarter While Driving Overall Growth

TACoS tells you how much you’re spending on ads to drive total sales—including both paid and organic. For example, a TACoS of 10% means you spent 10 cents on ads for every $1 of total sales generated.

A lower TACoS usually means your ads are supporting healthy organic sales and efficient spend. But lowering TACoS doesn’t mean cutting back on ads altogether. It means ensuring your ad dollars contribute to growing both attributed and organic sales over time.

Four Ways to Lower TACoS Without Slowing Growth

1. Make Sure Your Listing Converts
   If your product page doesn’t convince shoppers to buy, your TACoS will rise — no matter how well your ad is built. Before putting more money into ads, make sure your listing is doing its job.

Checklist:

• Is your main image clear and high quality?
• Are your bullets easy to read and benefit-driven?
• Is your price competitive?
• Do you have enough reviews, and are they mostly positive?

2. Set TACoS Goals by Product Type
   Some products — like top sellers or high-margin items — can afford more ad spend. Others — like newer or lower-margin products — need stricter TACoS limits.

Tip: Group products in your campaigns by profit margin. 

For example:

• High-margin ASINs → target TACoS of 10–15%
• Low-margin ASINs → target TACoS of 5–10%

This helps you spend wisely based on what each product can handle.

3. Use Budget Caps to Stay in Control
   Daily budget caps help control costs and prevent overspend. Start small, then raise budgets gradually for campaigns that hit your target TACoS. For high-TACoS campaigns, reduce budgets or pause until you’ve optimized them.
4. Refine Targeting to Attract Buyers, Not Browsers
   Clicks from the wrong audience drive up TACoS without boosting sales. Tighten targeting with exact match keywords, negative keywords, and regular search term report reviews.

Conclusion: Key Takeaways for Smarter Amazon Advertising

ROAS and TACoS aren’t just numbers—they’re signals. When interpreted correctly and acted upon, they reveal exactly where your Amazon ad strategy is working and where it’s leaking money.

Key Takeaways:

• ROAS is a measure of efficiency — maximize it by prioritizing top performers and refining keyword targeting.
• TACoS is a measure of overall cost control — minimize it by improving conversion rates and managing bids intelligently.
• Campaign structure matters — clean segmentation helps you scale without chaos.
• Success starts with fundamentals — before scaling ad spend, optimize listings, product pricing, and keyword strategy.