20 Feb What Is ROAS on Amazon and How Can It Help You?

Are you already launching your advertising campaigns within Amazon to raise awareness of your brand and product? Do you know precisely what ROAS is and other metrics necessary to optimize your campaigns on the platform? Amazon Ads campaigns are a great tool that is helping many sellers on Amazon today, because their function is to make their products known by reaching more users within the marketplace. But advertising within Amazon, as simple as it may seem, is not only a matter of “defining a budget” for advertising campaigns and then seeing if our product is having impressions in the search results we want, the truth is that there is much more behind all this.

Surely when you have entered the Amazon advertising campaign management panel, you have found a lot of metrics that you have no idea what they are, what they are for, or if they will be useful to you at some point. Today we are going to focus on ROAS, do you know what ROAS is on Amazon?

What Is ROAS and How Can It Help You?

ROAS is a metric used in digital marketing, which can not only work with Amazon campaigns, but it is a metric that can help in any digital marketing ad campaign on and off Amazon. ROAS (Return on Advertising Spend) is the return on ad spend, an indicator that helps you know if the marketing strategy you’re using is working. ROAS is a basic indicator or KPI of all advertising campaigns on the Internet.

How ROAS Is Calculated

To calculate the return on ad spend (ROAS), we do this by using a formula that consists of dividing the revenue by the investment and then multiplying the result by 100 to obtain our ROAS.

Formula for calculating return on ad spend: ROAS = Sales Revenue / Expenses

Let’s make an example to see the result much clearer, let’s suppose that we have an Advertising campaign active to advertise our products within Amazon right now. Let’s imagine that in a campaign for our products we have obtained a total sales revenue of €10,000 per month, and to have earned that amount we had to invest around €2,000 per month. If you calculate the ROAS with this data, you get this result: 10,000 (revenue)/2,000 (advertising investment), which means that for every euro spent the ROAS is 5 euros.

Why It’s Important to Understand ROAS

If you have an online store business, it is imperative that you understand the importance of this indicator, because although it is one of the most basic marketing metrics, it is one of the data that can help you identify if your marketing strategy is working or not, and based on that data you will be able to determine if you need to make changes to that strategy you are using to improve your profitability.

With ROAS, you’ll be able to make accurate decisions about where and how you can invest your money to be more efficient in your Amazon advertising campaigns. A good understanding of the return on ad spend of our campaigns can help us to:

• Define and set a better budget for future campaigns.
• Create more effective strategies that cause a positive response from customers.
• Have knowledge of where to invest the advertising budget and how to do it.

Although ROAS is a basic metric in e-commerce, it is the one that can provide us with this quantitative data on the performance of advertising campaigns on Amazon or any other digital platform. Knowing how to control the ROAS of each campaign, it is completely logical that we decide where to invest the budget to make our campaigns more efficient. For this reason, it is essential to know how to detect opportunities to improve the advertising campaigns of our products in time, since this way we will know where and how to inject the money to get the most out of them.

Do you need to optimize your campaigns to have a much higher and favorable performance for your business? Then ROAS is one of the metrics that you should know and know how to manage. If you have more questions about how to improve the performance of campaigns in Amazon Advertising, just contact us and we will help you with everything you need, because we have the best team specialized in Amazon to manage your Advertising campaigns and much more. Don’t worry about managing your campaigns, leave everything in the hands of the best Amazon agency in Spain, Nozama Soluciones.

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