The Usual Story (and Where it Goes Wrong)
Most Amazon brands buy into the same story: to grow fast, you have to spend big. So budgets rise, bids increase, SKUs multiply, and yes, sales go up. But so do ad costs, COGS, and inventory risk. Before long, your P&L starts whispering, “Hey… I’m hurting.”
Here’s the catch: in that story, growth and profitability are positioned as opposites. If revenue climbs but margin per sale shrinks, you’re not growing smarter, you’re just spending more to earn less.
The truth is, not every SKU, campaign, or dollar drives the same value. Real growth comes from efficient spend, strategic conversion, and momentum-building tactics. That’s where profitability and scale stop competing, and start working together.
The 3 Metrics That Make or Break Profitability
To grow profitably, you need to understand (and act on) three critical metrics: ROAS, TACoS, and SKU profitability. Knowing how they interplay is what sets sustainable scaling apart.
- ROAS (Return on Ad Spend): This tells you how much revenue you earned for every dollar you spent on ads. It’s a core metric for campaign-level profitability.
- TACoS (Total Advertising Cost of Sales): This is the percentage of total sales (paid + organic) that you’re spending on ads. In other words: how much of your total revenue is eaten by ad spend. Unlike ACoS (ad spend vs ad-revenue only), TACoS gives you the bigger picture.
- SKU-level Profitability / Margin: This one often gets ignored. A high ROAS campaign might still be unprofitable if your product margin is thin, shipping is heavy, or cost of goods sold (COGS) is high. So you need to layer in margin into the decision matrix.
When you monitor ROAS and TACoS and tie them into margin-aware SKUs, you get the formula for “growth that doesn’t kill profit.”
How to Lean into ROAS-Positive SKUs
Here’s where you move from theory to action, from analyzing numbers to making them work for you. This is where you stop chasing “growth at all costs” and start scaling the products that actually pay you back. The goal: double down on what performs, cut what drains, and let your most profitable SKUs lead the charge.
Identify your ROAS winners: Go through your catalog and find SKUs where your ROAS is strong. These are the products that convert, generate sales, and make money with ad support. Prioritize them. For example, if you spend $100 and get $500 in revenue, your ROAS is 5x. That’s a (strong!) signal.
Allocate budget to those winners: Rather than treating all SKUs equally, focus ad budgets on your best performers. This doesn’t mean you abandon the rest, but consciously decide where to push for growth.
Optimize listings for conversion: Good campaigns don’t fix bad listings. If click → conversion is weak, you’ll pay higher cost for less return. So make sure product titles, images, bullets and reviews are optimized. This reduces wasted ad spend and improves ROAS.
Scale carefully (not blindly): Growth isn’t a switch, it’s a dial. When you’ve got a SKU that’s ROAS positive and has a healthy margin, you can (and should!) increase budget. But monitor TACoS, margin erosion and inventory cost. If you scale too fast without margin control, you risk growth without profit.
How to Apply Low-TACoS Strategies for Sustainable Growth
TACoS is your sustainability gauge. If your ad spend is growing faster than your total sales (paid + organic), your TACoS will rise, signalling risk. If your total sales are growing faster, TACoS falls or stays flat, signalling upside.
Here’s how you lean into low-TACoS strategies:
- Prioritize organic lift: Use ads not just to drive paid sales, but to improve organic ranking, reviews, brand discovery. Over time, a growing organic base means ads don’t have to work as hard (i.e., TACoS falls).
- Segment SKUs by lifecycle: New products may accept higher TACoS (because you’re building traction), but mature SKUs should aim for lower TACoS.
- Cap and monitor budget: Just because you could spend more doesn’t mean you should. Set budget caps or pacing to ensure TACoS doesn’t creep up uncontrollably.
- Focus targeting on buying intent: If you drive clicks from browsers who won’t buy, you raise spend without corresponding revenue and TACoS creep up. Refine keywords, use negative keywords and focus on high-intent traffic.
By doing this, you shift ad spend from “just get as many sales as possible” into “get profitable sales and build the organic flywheel.”
Media Efficiency: Making Every Ad Dollar Work Harder
Growth often demands more ad spend, but the smarter move is more efficient ad spend. Here’s how:
- Bid smarter: Increase bids for high-converting keywords/placements and reduce bids for low ROI. Target top-of-search only when you know it converts.
- Negative keywords and exclusions: Stop paying for clicks that won’t convert. This will raise your ROAS and help keep TACoS down.
- Leverage external traffic if appropriate: Sometimes driving traffic from off-Amazon sources (e.g., social, influencers) can improve your organic lift and reduce ad spend dependency. (Note: depends on your brand model).
- Monitor the “halo” effect: Ads can drive organic as much as direct sales. Track how ad spend affects overall sales, not just attributed ad sales. That’s why TACoS matters.
- Optimize continuously: Because market conditions change (competition, bid costs, seasonality), static strategies break. Keep iterating.
Why This Mindset Matters for Brands
In the world of Amazon, growth for growth’s sake can be a trap. You might hit big revenue numbers, but if your margins are gone, you’re not building a business, you’re building a treadmill.
By treating profitability and growth as partners, you can build something sustainable. You’re not just chasing “top line”, you’re aligning spend, conversion, margin and scale. That means when an external shock hits (competition, ad cost inflation, algorithm change), you have resilience.
Also: brands that master this mindset are more attractive, whether to investors, acquirers, or when branching into new categories, because they show they know how to scale with discipline. You end up with a machine that knows which products to push, which to pause, how to spend efficiently, and how to let organic momentum do some of the heavy lifting.
One Reality Check
Of course: your category, product margin, competition level, and lifecycle stage will affect how aggressive you can be. What’s achievable for a high-margin niche product may differ from a low-margin commodity. Benchmarks are just that: benchmarks.
Also, this isn’t a “set it and forget it” strategy. You still need to monitor, test, optimize. The metrics will shift, consumer behavior will shift, ad costs will shift. If you ignore that, you’ll still fall into the trap.
Finally: this requires time, data, and discipline. If you’re just blitzing ads without tracking TACoS or linking it to profit, you may be setting yourself up for growth that leads to losses.
Profitability and growth don’t have to be opposites on Amazon. They can work together. By leaning into ROAS-positive ASINs, mastering TACoS so your ad spend supports total business health, and being ultra-efficient with your media spend, you can grow and keep your margins intact.