Amazon ads can either scale your business or eat up your budget with little to show for it. Many brands launch campaigns, set daily budgets, and hope for sales, but optimizing ACoS and ROAS takes much more than that.
A professional Amazon ads agency approaches this very differently. They use structured systems, real-time data, and ongoing campaign management to push down wasted spend and increase profitability.
Here’s a breakdown of exactly how an agency can improve ACoS and ROAS.
What’s ACoS and ROAS?
ACoS (Advertising Cost of Sales): Your ad spend compared to the sales you make. For instance, if you invest $100 and generate sales of $400, your ACoS will be 25%. In general, lower ACoS shows your ads are more efficient.
ACoS (%) = (Ad Spend ÷ Sales Revenue) × 100
ROAS (Return on Ad Spend) is the opposite. All it does is let you know how much cash you make on every dollar spent. Again, using the same example; 400 in sales / 100 spend = 4x ROAS. That’s $4 of sales for every dollar spent on ads.
ROAS = Sales Revenue ÷ Ad Spend
If your ACoS is low, your ROAS is usually high, and vice versa. The ideal target depends on your product margins, competition, and business goals.
Step 1: Setting Clear Profit Targets Before Spending
The first thing a good agency does is set realistic ACoS and ROAS targets based on your margins.
Most sellers don’t calculate their true breakeven ACoS. They pick a “good number” they read in a blog (like 20%) and chase it blindly without knowing whether that number makes sense for their product. In reality, every product has a unique cost structure. What’s profitable for one may be unprofitable for another.
To get this right, agencies break down your costs first:
- Selling price
- Amazon fees (Includes referral fees (usually 8–15% depending on category), FBA fulfillment fees, storage fees, and any other Amazon charges)
- Cost of goods
- Shipping & prep costs
- Desired profit margin
Once you have these, you can calculate Breakeven ACoS and Target ACoS:
- Breakeven ACoS – tells you the maximum ACoS you can afford before you start losing money. Formula is: Breakeven ACoS (%) = (Net Profit per Unit before ads ÷ Selling Price) × 100
- Target ACoS – usually lower than breakeven to leave room for net profit.
- Target ROAS – ROAS is simply the inverse of ACoS (e.g., if breakeven ACoS is 30%, breakeven ROAS is 3.33).
Step 2: Auditing Your Existing Campaign Structure
Most ad accounts we’ve seen have messy structures like campaigns with mixed match types, duplicate keywords, irrelevant targeting, or broken budgets. This kills both ACoS and ROAS.
An agency starts with a full account audit, including:
- How campaigns are grouped (e.g., one ad group per product vs. dumping everything into one)
- Keyword match types used
- Negative keyword setup
- Overlapping keywords across campaigns
- Bidding strategies used (dynamic, fixed, placement modifiers, etc.)
- Budget distribution across branded vs. non-branded campaigns
- Auto vs. manual campaign ratio
- Ad placements and performance by placement
They document every inefficiency, then rebuild or restructure campaigns to make performance trackable and controllable.
This alone often improves ACoS significantly, because many wasted clicks come from sloppy structures and not bad products.
Step 3: Refining Targeting Through Keyword Segmentation
Advertisers don’t just dump all of their keywords into a single ad group and hope for the best; instead, they sort them into narrow groups. It gives them the ability to manage bids in exactly the way that they want, report performance exactly as they would like to see it, and scale what truly works.
Typical segments include:
- Branded keywords – These are searches that include your own brand name. Agencies give these campaigns higher budgets and strong bids to ensure your competitors don’t hijack your branded traffic. The goal is to dominate your own brand space and secure maximum ROAS.
- Category keywords – These are broad, generic product terms that describe what you sell. These keywords are often expensive and competitive, which can increase ACoS if not managed carefully. Agencies typically test these with conservative bids and watch performance closely. Winning here can drive significant traffic, but it must be balanced against profitability.
- Long-tail keywords – These are specific, detailed search phrases. They usually have lower search volume but much higher buying intent. Shoppers typing long-tail queries already know what they want. Agencies focus on finding these through search term reports and keyword tools. They usually have lower CPCs and bring strong ROAS.
- Competitor keywords – These are your rivals’ brand names. CPCs are usually higher, and conversion rates can be lower since people searching for a competitor may already be loyal. This can push up ACoS. Agencies treat competitor campaigns like calculated bets. They monitor performance closely, set lower bids to control costs, and use compelling creatives to win over shoppers.
- Product targeting ASINs – Instead of targeting keywords, agencies can target competitor product pages directly using ASINs. Agencies pick competitor ASINs where your product has a clear advantage like better price, more reviews, or unique features. They avoid irrelevant ASINs that would waste spend.
Step 4: Optimizing Match Types and Search Term Control
Most sellers stick to broad or phrase match and never dig into search term reports. This leads to their ads showing up for irrelevant queries.
An agency systematically:
- Uses exact match for proven high-performing keywords.
- Uses phrase and broad match carefully to discover new search terms.
- Regularly checks search term reports to find what’s converting vs. what’s wasting spend.
- Adds negative keywords to block irrelevant traffic.
This level of control is what pushes ACoS down steadily over time.
Step 5: Controlling Bids Based on Real Performance Data
Bidding is where most money is lost. Many sellers simply raise bids to get more impressions, not realizing they’re overspending on low-converting keywords.
An Amazon ads agency uses structured bid optimization rules, such as:
- Lowering bids on keywords with high spend and no sales.
- Gradually raising bids on keywords with strong conversion rates.
- Using different bids for different placements (top of search vs. product pages).
- Altering bids according to the performance on certain periods of time (such as, weekdays / weekends).
They do so on the basis of CTR, CVR (conversion), CPC and impact on total sales to understand how each bid needs to change.
Step 6: Balancing Auto and Manual Campaigns for Discovery and Control
Auto campaigns help discover new search terms Amazon thinks are relevant, while manual campaigns let you control exactly where your ads show.
An agency typically:
- Runs auto campaigns with controlled bids to collect data.
- Regularly harvests converting search terms from auto and moves them into manual exact campaigns.
- Negatives out poor-performing terms in auto to reduce wasted spend.
- Builds structured manual campaigns with segmented match types for better control.
This “harvest and refine” system ensures you keep finding new profitable keywords without letting auto campaigns burn money unchecked.
Step 7: Leveraging Dayparting and Seasonal Adjustments
Dayparting is adjusting bids based on time of day. It is up to agencies to investigate when your ads yield the most conversions and when they are primarily responsible for wasted clicks. For instance, if data shows your core audience hardly ever makes a purchase in the wee hours of the night or morning, then an agency can scale back bids or even halt ads during that period.
Agencies also have a large influence on seasonality. While most products experience seasonal demand for at least one time of year. For example, ice packs and cooler bags sell well in summer whereas cookware or gifting items will peak throughout Q4 and Holiday season. Agencies prepare for these sorts of spikes months ahead. They tinker with budgets, bids and keyword strategies in the run-up to events like Prime Day, Black Friday and Christmas. If a product is off-season, agencies might discount the bids or shift those budgets to better-performing items.
Final Thoughts
Improving ACoS and ROAS involves setting clear goals, establishing a smart structure, and maintaining steady management. A strong agency brings the systems and experience to make your ad spend count.
If you’re tired of wasting money on ads that don’t perform, it’s time to work with an Amazon ads agency and Amazon account management services that know Amazon inside out. At Enso Brands, we give you guaranteed results. Contact us today for more information about our services.
