POAS (Profit on Ad Spend)
POAS is the gross profit generated for every dollar of ad spend, giving a more accurate profitability measure than ROAS.
POAS replaces revenue with gross profit in the ROAS formula. This matters because two products can have identical ROAS but wildly different profitability if their margins differ.
A product with an 80% margin is profitable at 1.3x ROAS, while a product with a 20% margin needs 5x ROAS to break even. POAS normalises this by measuring profit directly: a POAS above 1.0 means the campaign is contributing positive gross profit.
Experienced ecommerce operators increasingly optimise toward POAS rather than ROAS, especially when running a mixed catalog of high-margin and low-margin SKUs.
Formula
POAS = (Revenue − Cost of goods sold) ÷ Ad spend
Example
Related terms
ROAS
ROAS is the revenue earned for every dollar spent on advertising, expressed as a multiple (4x means $4 back per $1 spent).
Break-Even ROAS
Break-even ROAS is the minimum ROAS needed to cover product costs and fees — anything above it is profit on the contribution margin.
AOV
AOV is the average dollar amount spent per order, calculated as total revenue divided by total number of orders.
MER
MER is total revenue divided by total marketing spend across all channels, giving a blended view of marketing efficiency.