Stop obsessing over ROAS: why POAS is the metric that actually pays your bills

If you’ve ever stared at an ad account thinking, “Everything looks green – so why is there no money left at the end of the month?” you’re not alone.

Most e-commerce teams are trained to chase a nice ROAS, celebrate “cheap” clicks, and screenshot dashboards when revenue spikes. But revenue screens don’t pay salaries. Profit does.

That’s where POAS comes in – profit on ad spend. Instead of asking “How much did we sell?” POAS asks a much more uncomfortable (and useful) question:

“How much did we actually earn after costs, for every dollar of ad spend?”

Once you start looking at POAS instead of just ROAS, some of your “best” campaigns suddenly don’t look so impressive anymore.

What POAS actually is (and why it hurts a bit at first)

Let’s keep it simple:

• ROAS = Revenue / Ad spend
  
• POAS = Profit / Ad spend
  

Revenue is what the ad platforms love to show you. Profit is what’s left after:

• product cost
  
• shipping and packaging
  
• payment fees
  
• discounts and coupon codes
  
• returns and refunds
  
• the ad spend itself
  

POAS takes all that into account. A campaign with a ROAS of 4 can still be a disaster if your margins are thin. On the other hand, a “boring” campaign with fewer sales can be a quiet hero if those orders carry high margin and low returns.

Once you see your campaigns ranked by POAS instead of ROAS, a few things usually happen:

1. Some of your “pet campaigns” drop down the list.
   
2. A couple of under-the-radar campaigns suddenly look amazing.
   
3. You realize how much budget is tied up in work that keeps your warehouse busy but doesn’t grow your bank balance.
   

That’s the point where POAS stops being a nice theory and becomes a management tool.

A simple example: the misleading “winner”

Imagine two campaigns in the same account:

• Campaign A
  
  • ROAS: 4.0
    
  • Lots of volume
    
  • Promotes low-margin products with frequent returns
    
• Campaign B
  
  • ROAS: 2.5
    
  • Less volume
    
  • Focuses on higher-margin products with fewer complaints
    

If you only look at ROAS, you’ll almost certainly push more budget into Campaign A. It “looks” better.

Now bring POAS into the picture:

• After product cost, shipping, fees and returns, Campaign A might barely break even – or even lose money on certain days.
  
• Campaign B, with its less impressive ROAS, might actually generate a solid profit per order.
  

POAS forces you to respect reality. It’s a filter for the vanity metrics we’ve all gotten used to.

What good POAS tracking software needs to do

You can calculate POAS manually in spreadsheets for a while, but at some point it gets messy. That’s why many e-commerce teams end up using profit tracking or POAS-focused software.

For that to be useful, the software has to do more than just show another dashboard. At minimum, it should:

1. Connect to your real data

That means:

• pulling order and product data from your e-commerce platform
  
• including product cost, VAT rules, shipping, payment fees and discounts
  
• matching that data with your ad platforms (Meta, Google, etc.)
  

If the tool doesn’t know your actual costs, it can’t give you a reliable POAS number.

2. Respect margins and business rules

Every shop has its own reality:

• Some categories have 60% margin, others have 10%.
  
• Certain brands can’t be discounted.
  
• Some products attract more returns than others.
  

Good POAS tracking lets you set rules like:

• “Never scale campaigns where POAS is below X for more than Y days.”
  
• “Bid more aggressively on products with margin above Z%.”
  
• “Exclude products that consistently generate negative POAS.”
  

This is where POAS becomes more than a report – it becomes part of how you run campaigns.

3. Show profit clearly (without needing a data team)

POAS reporting doesn’t need to be pretty. It needs to be clear. Ideally you get answers to very practical questions:

• Which campaigns are bringing in the most profit this week?
  
• Which products eat the budget without returning enough profit?
  
• Which audiences or devices deliver the healthiest POAS?
  

If you need a half-day analysis to answer that, the tool is too complicated.

How to actually use POAS in your day-to-day optimization

A lot of teams add POAS as another column in a report – and then keep optimizing on the same old metrics. That’s a waste.

Here’s how POAS can change your daily decisions.

1. Rebuild your “winners” and “losers” list

Take your campaigns and:

• Sort by total profit, not just revenue.
  
• Add a POAS column.
  
• Look at the last 30 days instead of only yesterday.
  

You’ll often find:

• a handful of campaigns with modest spend but great POAS – those deserve attention and testing
  
• a few “darlings” with solid ROAS but weak POAS – those might need new product mixes, higher prices or different offers
  

Use that list to decide where your time goes this week.

2. Clean up your product selection

POAS works extremely well with shopping and catalog campaigns. Once you see which products or collections consistently hurt your POAS, you can:

• exclude them from certain feeds
  
• move them into a separate, more conservative campaign
  
• test new pricing or bundling for those products instead of blindly pushing them with ads
  

This alone can reduce wasted spend without changing your total budget.

3. Test with a clear success metric

When you test:

• new creatives
  
• new audiences
  
• new channels
  
• new bidding strategies
  

decide upfront: “This test is only successful if POAS reaches at least X by day Y.”

That prevents you from keeping experiments alive just because CTR or ROAS look nice in the first few days.