POAS: The Metric That Actually Cares If You're Making Money
Let me guess: you're running ads, your ROAS looks fine, but you still feel like your profit's gone walkabout. You might even be hitting that magical 3x return, but your accountant looks unhappy. Welcome to the world where ROAS is not enough and POAS is introduced.
What is POAS?
POAS stands for Profit on Ad Spend, it’s like ROAS’s more grounded, financially responsible sibling. Where ROAS (Return on Ad Spend) tells you how much revenue you made from every dollar you spent on ads, POAS cuts through the fluff and asks the real question: How much actual profit did we make? (ProfitMetrics).
Think of it like this: ROAS is your friend who only tells half the story. “I sold $10k last week!” Cool, but did you spend $9.5k to do it? Did your shipping costs eat half your margins? Did your fancy packaging cost more than the product itself? POAS answers that (Funnel.io).
It calculates: Profit / Ad Spend = POAS
So if you made $1,000 profit on $500 ad spend, your POAS is 2.0. Meaning you doubled your money in actual profit terms, not just revenue (Channable).
Should You Be Using POAS?
Short answer? Yep. Especially if you're running eCommerce, or any business that actually needs to make money, not just look good on a Google Ads dashboard. POAS shines because it factors in your cost of goods sold (COGS), transaction fees, shipping, and all the boring but crucial bits that make or break your profit margins (Adcore).
Marketing and merchandising teams are now leaning into POAS because it allows for smarter decisions on which products to scale, promote, or kill entirely. Running ads on a best-seller that secretly earns you 2 bucks per sale? POAS will call that out (ROI Hunter).
And when you're using platforms like Google Ads or Meta Ads where algorithmic bidding is a beast of its own, POAS can help refine bidding strategies toward profitable growth instead of expensive vanity metrics (LinkedIn).
Is POAS the Full Picture?
Look, POAS is brilliant, but it’s not a magic wand. It’s part of the story, not the whole book. If you only look at POAS and ignore long-term customer value (LTV), email funnel contribution, or brand equity, you might cut campaigns that could be profitable (ClickGuard).
Also, POAS relies on clean data. You’ll need accurate tracking, dynamic cost input, and often server-side logic or integrations to calculate profit in real-time, tools like ProfitMetrics, Channable, and a solid GA4/GTM setup will definitely help (Channable Help Center).
The trick is to use POAS alongside ROAS, not instead of it. Together, they help answer: “What’s working now?” and “What’s sustainable?”. Because let’s be honest, you want a business that runs profitable (Adzooma).
Why POAS Deserves a Seat at Your Strategy Table
POAS is the metric for marketers who want to grow. It focuses on actual profit, not revenue, and gives a clearer picture of whether your ads are actually moving the needle. But it’s not a silver bullet. Use it with ROAS, and make sure your tracking setup is airtight.
At Dadek Digital, we don't just chase ROAS rainbows. We help clients install, interpret and action POAS data to run profitable ads. Whether you're scaling your Shopify store or trying to make Meta ads finally pull their weight, we’re here to help you turn data into dollars.