ROAS (Return On Ad Spend) is an important metric to track because it gives brands clear insight into sales returns on marketing investments. For Amazon specifically, brands want to see ROAS improve over time as advertising campaigns focus more on the most relevant, cost-effective keywords.
Typically, increasing an advertising budget will cause ROAS to drop, whereas decreasing a budget will cause the ROAS to improve, due to diminishing returns. A very high ROAS likely indicates that a brand is leaving money on the table and could benefit from a moderate budget increase.
While it is not the only metric used to measure campaign success, it is crucial to track and observe ROAS to help get a better understanding of whether a brand has good margins, as well as observe the growth potential of the brand compared to the overall market.
– Andrew Messinger, Advertising Specialist at Witz Group