Glossary
Profit on ad spend (POAS)
The profit from the orders an ad drove, divided by what the ad cost. Unlike ROAS it counts cost of goods, tax and fees, so it can fall while ROAS rises.
Formula
POAS = (conversion value minus cost of goods, tax and payment fees) ÷ ad spend
Worked example
An ad spends £1,000 and drives £4,000 of sales, a ROAS of 4. The goods cost £1,600 and tax and fees come to £700, so profit before the ad is £1,700 and POAS is 1.7.
In fashion, footwear and sportswear
Discounted and low-margin lines can post a good ROAS and still lose money on every order. Read POAS by product, not only by campaign, before you scale a best seller on sale.
Where it misleads
A POAS above 1 pays for the ad but not for returns, so take those off too. And a platform's conversion value is the platform's claim, not your orders.