ROAS, ACoS, TACoS and MER: which number should run your ad budget?
Every ad platform reports a different headline number. Google and Meta show ROAS, Amazon and noon show ACoS, and finance teams ask about total marketing return. They all measure the same relationship between spend and sales from a different angle. Choosing the right one for each decision avoids a lot of bad budget calls.
The four numbers in one table
| Metric | Formula | Used for |
|---|---|---|
| ROAS | Ad revenue ÷ ad spend | Google, Meta, TikTok campaigns |
| ACoS | Ad spend ÷ ad revenue × 100 | Amazon and marketplace ads |
| TACoS | Ad spend ÷ total revenue × 100 | Marketplace growth, including organic sales |
| MER | Total revenue ÷ total marketing spend | The whole business, across all channels |
ROAS and ACoS are the same ratio turned upside down. A ROAS of 4 is an ACoS of 25%. A ROAS of 5 is an ACoS of 20%.
Find your break-even point first
A ROAS of 4 sounds good, but whether it makes money depends on your margin. If your gross margin after product cost, shipping and payment fees is 40%, every 100 of sales leaves 40 to pay for advertising. Your break-even ROAS is therefore 100 ÷ 40 = 2.5, and your break-even ACoS is 40%.
- Above break-even ROAS (or below break-even ACoS), the sales pay for the ads and leave profit.
- Below break-even ROAS, every sale costs you money, unless you are deliberately buying new customers who will come back.
Which number for which decision
- Campaign and product decisions: ROAS or ACoS against your break-even point.
- Marketplace strategy: TACoS. If ad spend grows but TACoS falls, ads are helping organic sales grow too.
- Total budget and planning: MER, because it includes sales that platforms do not attribute to themselves and avoids double counting between channels.
Why platform numbers never add up
Google, Meta and TikTok each take credit for sales they touched, using their own attribution windows. When you add them up, the total is often higher than your real revenue. That is why we check platform figures against actual orders, and use MER to judge the overall budget.
Frequently asked questions
What is a good ROAS?
One that is above your break-even ROAS with room for profit. A ROAS of 3 can be excellent for a high-margin product and a loss for a low-margin one.
How do I convert ACoS to ROAS?
Divide 100 by the ACoS. An ACoS of 25% equals a ROAS of 4.
What is TACoS?
Total advertising cost of sales: ad spend divided by all sales, including organic. It shows whether advertising is growing the whole business.
