POAS vs ROAS? Which metric is best for optimizing ad campaigns?

Key Takeaways

• POAS vs ROAS: ROAS shows revenue from ads, while POAS focuses on actual profit after all costs, so it gives a clearer view of what’s really driving growth.
• POAS formula: Profit ÷ Ad Spend. This helps you see which products and campaigns deliver real profit, not just sales volume.
• Why POAS matters: It prevents wasted budget on low-margin products and helps you prioritize campaigns that increase net profit.
• Automation makes it easier: Channable helps you automatically calculate POAS, segment products by performance and keep data synced across campaigns.
  

What is POAS? The basics

ROAS vs POAS: The evolution of ad metrics

For years, Return on Ad Spend (ROAS) has been the go-to metric for advertisers because it's easy to understand, easy to track, and shows how your ad investment impacts sales. It's ideal for quickly tracking campaign performance checks and scaling revenue. But ROAS often overlooks what matters most to a business’s financial health: profit.

That’s where Profit on Ad Spend (POAS) comes in. This metric factors in total costs, including product expenses, shipping and payment fees, so you get a clear picture of your ad’s actual success.

Below, we’re covering key questions like what is POAS? What are the advantages of POAS vs ROAS? How can you use this metric to optimize campaigns? And how can Channable help?

POAS formula: A deeper dive

With CPCs reaching as high as US$2.69 for Google Ads this year, eCommerce advertising is more expensive than ever. New sales channels are popping up all the time, and competition among advertisers is fierce. Businesses need to be smarter about ad spending. Company leaders and finance teams also need a clear picture of how profitable marketing really is, not just how much sales volume it’s generating. That’s what makes POAS such an important part of PPC optimization.

So, how do you calculate how much profit your ad generates in relation to spending? Use this simple POAS formula:

The POAS formula looks beyond revenue generation and shows your actual profit margin. This helps you focus your resources on the campaigns that have the most impact.

Why choose POAS vs ROAS?

ROAS doesn’t tell the full story

ROAS metrics treat all products the same, no matter what their profit margin is. This may cause you to over-invest in seemingly high-performing campaigns that aren’t turning a profit or may even be losing your business money.

Say you’re selling two products with different profitability. ROAS may show that the first product is more performing well, no matter how much it’s actually cutting into your margin. The second product’s ROAS may suggest that it’s underperforming, when it’s actually bringing in a much better margin. Without tracking POAS, you won’t have any way of knowing.

Don’t get us wrong: ROAS has been a trusted metric for years. It’s still important to track. But if you want the full picture, you’ll only get it by tracking POAS too. It shows what truly impacts your business: your profit.

Bottom line: Optimizing purely for ROAS may mean you're backing unprofitable products. Optimizing for POAS guarantees you're getting the most out of your ad spend.

POAS advantages add up

Switching to a profit-based way of measuring results helps you see what’s really working in your ads. Here’s why using POAS can make a big difference:

• See true profit per product: POAS shows how much profit each product or category brings in after ad costs. You’ll know which items are worth promoting and which ones might not be paying off.
• Make smarter bid choices: With POAS data in your ad accounts, you can adjust bids automatically based on profit instead of just revenue. Your budget goes toward the products that actually earn money.
• Turn data into action: POAS takes what used to be complicated and makes it practical. You can use clear, real numbers to guide your daily ad decisions without endless spreadsheets.
• Spend more on what earns most: Segment your products by performance and give your budget to the ones that deliver the strongest profit. You’ll stop wasting money on low performers.
• Grow your bottom line: Instead of focusing on sales volume alone, you invest in what really matters: steady, healthy profit growth for your business.

How to use POAS in 3 steps

Step 1: Identify product performance

Analyze key metrics like conversion rate, CTR and ROAS to see which products are selling well. Also, consider factors like seasonality and competition to refine your strategy.

Step 2: Calculate per-product profit

Subtract costs, including production, shipping, fees and ad spend, from revenue to find each product’s true profitability. This helps prioritize high-margin items.

Step 3: Optimize for profit on ad spend (POAS)

Compare ad spend with profit per product to ensure a positive return. Focus on profitable products and adjust bids accordingly for a more effective ad strategy.

Benefits of a POAS strategy

Maximizing ROI with smarter segmentation

A POAS-driven strategy ensures that advertising efforts focus on high-margin products, leading to increased profitability and resource efficiency.

Real-Time performance insights

Using performance tracking and insights, advertisers gain access to real-time data, enabling informed decisions and immediate adjustments to campaign strategies.

How Channable simplifies your POAS strategy

With Channable’s multichannel eCommerce platform, you can easily import your cost data, including cost of goods, shipping or product-specific margins, and calculate POAS for every product or category. This allows you to see which items are really profitable, not just which ones are selling.

Channable’s Insights & Analytics then help you act on this data automatically. Products are grouped by performance into smart, ready-to-use categories such as Stars, Potentials, Invisibles and Underperformers. These labels show you exactly where to focus your budget and how to structure your campaigns for better returns.

Here’s what this means in practice:

• Automated product segmentation: Your products are automatically sorted based on profitability and ad performance.
• Smarter budget allocation: You can shift spend toward high-performing items and avoid wasting budget on products that don’t bring profit.
• Campaigns that adjust in real time: Because your data stays synced, your ads, bids, and feed updates follow what’s actually selling profitably.
• Balanced strategy: Even lower-margin or “loss leader” products stay visible when they help attract or retain customers.

In short, Channable Insights gives you a clear view of what drives real profit and the automation to act on it. Instead of manually crunching numbers, you can make informed decisions and fine-tune your campaigns to grow sustainably, product by product.

The future of ad metrics

Switching from ROAS to POAS is more than a trend. It's a strategic shift toward smarter, more profitable advertising. By focusing on profitability instead of just revenue, businesses can maximize returns, improve resource allocation, and stay competitive in an increasingly data-driven advertising landscape.

Optimizing PPC campaigns based on POAS does bring some challenges, especially for fast-scaling companies. The more you grow, the harder it is to keep performance sharp. That’s why top Google Ads specialists rely on automation. It saves time and drives smarter growth. With Channable’s Google Ads Growth Strategy, you can optimize, scale and grow profitably with less effort. Want to learn more? Book your free demo today!