The one-line difference
ROAS is revenue divided by ad spend. POAS is profit divided by ad spend. Everything else in this guide follows from that sentence. ROAS asks how much money came in. POAS asks how much of it you got to keep.
POAS = (revenue − returns) × gross margin − shipping, fulfilment & fees ÷ ad spend
Gross margin is what is left after cost of goods. Shipping, fulfilment and payment fees are the per-order costs that the platform never sees. Returns are revenue that came back. Every one of those is invisible to Meta and Google, and every one of them is real.
The same campaign, two verdicts
A campaign reports £100,000 of revenue on £20,000 of spend. That is a 5.0x ROAS, and on most dashboards it is green.
| Step | Calculation | Result |
|---|---|---|
| Revenue after returns | £100,000 × (1 − 8%) | £92,000 |
| Gross profit | £92,000 × 60% margin | £55,200 |
| Less shipping, fulfilment & fees | £92,000 × 10% | −£9,200 |
| Contribution before ads | £46,000 | |
| POAS | £46,000 ÷ £20,000 | 2.3x |
A 5.0x ROAS became a 2.3x POAS. The campaign is still profitable. But the dashboard overstated it by 117%, and every scaling decision built on 5.0x is built on a number that does not exist.
Now run the same campaign on a 25% margin product. Gross profit is £23,000, fees are still £9,200, contribution is £13,800, and POAS is 0.7x. The dashboard still says 5.0x. The business lost £6,200 on the month and the platform called it a win. Try your own numbers in the POAS calculator.
Why ROAS flatters you
It is blind to margin
Two products with the same ROAS can sit either side of break-even. The algorithm cannot tell them apart, so it buys whichever converts cheapest. Cheap converters are usually discounted, low-margin or heavily returned. Scaling on ROAS is a machine for finding your least profitable orders.
It is blind to returns and fees
Apparel brands see return rates of 20% to 40%. A 3.5x ROAS with a 30% return rate is a 2.45x ROAS on kept revenue before you have paid for the return shipping. None of that appears in Ads Manager.
It counts revenue more than once
Meta, Google and TikTok each claim the orders they touched. Add up the revenue they report and the total routinely exceeds what the company banked. That is a different problem, and MER is the tool for it, but it compounds the first two.
When ROAS is still the right number
Inside one channel, comparing one ad to another, ROAS is fine, provided the products behind the ads carry similar margins. It is a creative-testing metric. It was never designed to be a business metric, and the trouble starts when a finance director is shown one.
How to move from ROAS to POAS
- Build a margin table per SKU. Cost of goods, average shipping and fulfilment cost, payment fee rate, return rate. A spreadsheet is enough to start.
- Recalculate last month. Take each campaign's reported revenue, apply the margin table, and compare POAS to ROAS. The gap between them is the size of the story you have been telling yourself.
- Set a POAS floor. Anything above 1.0x produced more gross profit than it cost. Whether that is enough depends on your overheads, and most brands land on 1.5x to 2.5x as the line where paid media funds growth rather than just covering itself.
- Feed profit back to the platforms. Send gross profit as the conversion value instead of revenue, or set target ROAS per product from its margin. That is POAS bidding, and it is the point at which the algorithm starts working for you.
Frequently asked
Is POAS the same as profit ROAS or net ROAS?
Near enough. All three divide profit by ad spend rather than revenue by ad spend. The difference is in what gets deducted first. Our definition takes off returns, shipping, fulfilment and payment fees; some only apply gross margin.
What is a good POAS?
Above 1.0x means paid media produced more gross profit than it cost. Most brands need 1.5x to 2.5x for advertising to fund growth once overheads are covered. Below 1.0x, more spend means more loss, whatever the ROAS says.
Can I see POAS in Meta Ads Manager or Google Ads?
Not natively. Both platforms only know the conversion value you send them. If you send gross profit as the value instead of revenue, the ROAS column becomes a POAS column. Otherwise you calculate it outside the platform.
Does POAS include agency fees and creative costs?
Usually not. POAS is a media metric: profit from the orders divided by the media spent to get them. Agency, creative and tooling costs belong in a fully loaded MER, which is the number for the whole marketing operation.
Why does my ROAS look great while cash is tight?
Because ROAS is revenue and cash is profit. Low margins, high returns and per-order costs can turn a 5x ROAS into a POAS below 1.0x. Run the numbers through a POAS calculator before assuming the ads are working.