POAS

POAS stands for Profit on Ad Spend and measures how much profit is generated per euro of ad spend. Unlike the widely used ROAS metric, which only looks at revenue per euro of advertising, POAS takes product margin, shipping costs, returns and other costs into account. This gives a more realistic view of true advertising profitability.

Calculation and example values

POAS is calculated by dividing profit by ad spend, written as POAS equals contribution margin after variable costs divided by ad spend. A POAS of 2.0 means that every euro of advertising generates two euros of profit. Values above 1.0 show profitable growth, values below 1.0 mean that ad spend is eating into profit.

When POAS becomes important

Especially in e commerce with varying product margins, POAS is more valuable than ROAS, since a high ROAS on a low margin product can mean an operating loss. Advertisers with broad assortments ideally optimise their Google Shopping or Meta campaigns by POAS, which requires connecting the tracking system to product margin data.

Practical use

In day to day marketing, POAS requires a data flow from the ERP or shop system into the ad accounts, so that per order margins feed into the ad auction. Once that runs, ad budgets can be directed at highly profitable products and low margin bestsellers can deliberately be promoted less. Tools like Google Ads allow passing conversion values based on margin instead of revenue.