POAS (Profit on Ad Spend)
Metrics & MeasurementDefinition
POAS (Profit on Ad Spend) is the gross profit your advertising generates for every euro you spend on ads. Unlike ROAS, which counts revenue, POAS counts what is left after cost of goods, shipping and other variable costs, so it shows whether a campaign actually makes money rather than just turnover.
POAS answers the question ROAS quietly ignores: did this campaign earn a profit or just move a lot of low-margin product? A 4x ROAS looks identical on the dashboard whether you sell jewellery at 70 percent margin or electronics at 8 percent margin, but the profit picture is completely different. POAS bridges that gap by replacing revenue with gross profit, so the number you optimise toward maps to the money that ends up in the bank.
Calculating POAS means feeding margin data into your measurement, ideally at the product level. Many shops do this by passing a profit value (or a margin-adjusted conversion value) into Google Ads and GA4 instead of, or alongside, raw revenue. Once profit values flow into the platform, Smart Bidding can target a profit goal directly. The harder part is data hygiene: cost of goods, returns, payment fees and shipping subsidies all need to be reflected, otherwise POAS is just a prettier guess.
In practice you build POAS by attaching a margin to every order. The simplest version applies one blended margin across the catalogue; the accurate version pulls real cost of goods per SKU, subtracts shipping and transaction fees, and accounts for return rates. That profit value is then sent as the conversion value, so a sale of a high-margin item is worth more to the bidding algorithm than an equally priced low-margin one. The campaign starts steering budget toward what is genuinely profitable.
POAS matters most for shops with mixed margins, frequent discounting or high return rates, where revenue-based ROAS gives a flattering but misleading read. Optimising to revenue can push spend toward bestsellers that barely break even after costs. Optimising to profit reallocates that budget toward products and audiences that actually contribute margin. For a CFO, POAS is the metric that connects paid media to the income statement instead of the top line.
Formula
POAS = Gross Profit from Ads / Ad Spend Example
A shop spends 5,000 euros on ads and generates 20,000 euros in revenue, so ROAS is 4x. But cost of goods, shipping and fees eat 14,000 euros, leaving 6,000 euros gross profit. POAS is 6,000 / 5,000 = 1.2, meaning every euro of ad spend returns 1.20 euros of profit. The campaign is profitable, but far less impressive than the 4x ROAS suggested.
A second campaign also shows 4x ROAS on 5,000 euros spend, but it pushes high-margin accessories: only 8,000 euros of costs, so 12,000 euros profit and a POAS of 2.4. Identical ROAS, double the profit. Bidding to POAS would shift budget toward this second campaign.
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Frequently Asked Questions
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ROAS measures revenue per euro of ad spend; POAS measures gross profit per euro of ad spend. ROAS can look strong while a campaign loses money on thin-margin products. POAS only counts what is left after cost of goods, shipping and fees, so it shows whether the campaign is actually profitable.
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Any POAS above 1 means ad spend returns more profit than it costs at the gross level. Whether that is healthy depends on your fixed costs and target net margin. Many shops aim for a POAS of 1.5 to 3 so there is room left for overheads, but the right floor is specific to your cost structure.
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Send a profit value instead of, or alongside, revenue as your conversion value. The simplest method applies a blended margin; the accurate method uses per-product cost of goods. Once profit values flow in, you can use value-based Smart Bidding to optimise toward profit directly.
Bid to profit, not just revenue
We feed real margin data into your campaigns so bidding optimises toward POAS. Talk to us about turning your ad spend into a profit lever instead of a turnover number.