What is POAS? Profit on ad spend explained
POAS, or profit on ad spend, measures the contribution profit your ads generate for every unit spent on them. Here is what POAS means, how to calculate it from ROAS and margin, a worked example and when to use it instead of ROAS.
POAS, or profit on ad spend, measures how much contribution profit your advertising generates for each unit of currency spent on it. It works like ROAS but uses profit after product, shipping, payment and return costs instead of revenue. A POAS above 1.0 means the ads more than paid for themselves, and below 1.0 they lost money.
How do you calculate POAS?
| Metric | Formula |
|---|---|
| POAS | Contribution profit from ad-driven sales ÷ ad spend |
| POAS from ROAS | ROAS × contribution margin |
| Break-even POAS | Always 1.0 |
Contribution profit is net revenue, after VAT, minus the variable costs of each order. Ad spend is not subtracted first, because ad spend is what POAS is measured against.
POAS example
Illustrative figures for two UAE product lines, each with AED 10,000 of ad spend and AED 30,000 of net revenue, so both show ROAS 3.0:
| Product line | Margin | Contribution | POAS |
|---|---|---|---|
| Perfume | 55% | AED 16,500 | 1.65 |
| Electronics | 20% | AED 6,000 | 0.60 |
Same ROAS, opposite outcomes. The perfume campaign keeps AED 6,500 after ads, while the electronics campaign loses AED 4,000. A ROAS-only view would fund both equally.
What is a good POAS?
Anything above 1.0 is profitable on the orders the ads drive, before fixed costs. How far above you need to be depends on your overheads, growth plans and repeat purchases: a first-order POAS below 1.0 can still pay off if customers come back. Because break-even is always 1.0, POAS lets you compare products and campaigns with different margins on one scale.
POAS vs ROAS
ROAS is easier to get, since ad platforms already receive revenue. POAS needs product costs per order, so most teams calculate it from ROAS and a contribution margin per product or category. Your break-even ROAS is simply the ROAS at which POAS equals 1.0.
How Grower helps
Grower's channels leaderboard shows ROAS, cost and conversions for every connected channel side by side. Multiply each channel's ROAS by your contribution margin to see which ones clear a POAS of 1.0.
Frequently asked questions
Is POAS better than ROAS?
POAS is a better guide to profit, because it accounts for margin. ROAS is easier to measure and is what ad platforms report by default. Many teams use both: ROAS for day-to-day platform management, POAS for budget decisions across products and channels with different margins. The two only agree when every product has the same margin.
How do you convert ROAS to POAS?
Multiply ROAS by your contribution margin. A ROAS of 4.0 with a 35% margin gives a POAS of 1.4, meaning every £1 of ad spend returned £1.40 of contribution, or £0.40 of profit after the ad cost. Use revenue net of VAT on both sides so the result is not inflated.
How do teams optimize ad bidding for POAS?
The usual approach is to send profit instead of revenue as the conversion value, then use value-based bidding such as target ROAS, so the platform optimizes toward margin. That needs reliable cost data per product, and it changes what every revenue report in the platform shows, so label the conversion action clearly.
Start with the floor: the free break-even ROAS calculator turns your margin into the ROAS at which POAS hits 1.0.