What is POAS and why is it better than ROAS?

POAS (Profit On Ad Spend) is a natural evolution of ROAS that fixes its main flaw: only measuring revenue. While ROAS tells you how much revenue you generate per ad euro, POAS tells you how much net profit you actually generate. It's the difference between measuring volume and measuring profitability.

The formula is: POAS = Net profit / Ad spend. Net profit is calculated by deducting all variable costs from ad-generated revenue: COGS (cost of goods sold), shipping fees, transaction fees (Stripe, PayPal), and of course the ad spend itself. A POAS above 1 indicates the campaign is profitable, a POAS below 1 means you are losing money.

POAS is critical because two campaigns with the same ROAS can have very different POAS values. For example, a campaign selling products with a 60% gross margin will be far more profitable than one with 20% gross margin, even at identical ROAS. Optimizing for POAS favors products and audiences that actually generate profit.

To calculate POAS, you need reliable revenue attribution to your campaigns, to know each product's gross margin, and to have integrated all variable costs. Tools like Fullmetrix automate this calculation by connecting your ad platforms and store and applying configured costs to produce accurate POAS per campaign, product or audience.