Paid media metrics
ROAS divides attributed revenue by ad spend. ACoS divides ad spend by attributed revenue. They describe the same ratio in opposite directions.
Converter
Relationship
ROAS = 100 / ACoS%. ACoS% = 100 / ROAS.
60-second answer
| ROAS | ROAS as % | ACoS |
|---|---|---|
| 1.25x | 125% | 80% |
| 2.00x | 200% | 50% |
| 2.50x | 250% | 40% |
| 4.00x | 400% | 25% |
| 5.00x | 500% | 20% |
A metric conversion does not create a profitable target. The target comes from the contribution available for advertising after product, fulfillment, fees, returns, and retained profit.
Profit thresholds
At break-even, every contribution dollar before advertising can be spent on ads. If an order leaves 40% contribution before ads, break-even ACoS is 40% and break-even ROAS is 2.50x.
If the business must retain 10% of revenue as contribution after ads, only 30% remains for acquisition. Target ACoS becomes 30%, and target ROAS becomes 3.33x.
Target ACoS % = contribution margin % - retained profit %
Target ROAS = 100 / target ACoS %
Open the 40% contribution exampleRead Amazon correctly
Amazon Ads defines ACoS as ad spend divided by ad revenue and ROAS as the inverse. Seller economics still need product cost, referral and fulfillment fees, storage or handling when variable, returns, and the profit the business plans to keep.