What is POAS?
Nicklas Segatz Mortensen · Growth Hacker · Fractional CMO · Meta Ads Nerd · 4 July 2026 · updated 8 July 2026 · 5 min.
Definition
POAS (Profit on Ad Spend) is your gross profit divided by ad spend. Where ROAS measures revenue per ad euro, POAS measures what you actually keep — after cost of goods, shipping and fees.
Also called: Profit on Ad Spend, Profit ROAS
Sådan virker det
ROAS ser hele omsætnings-stolpen. POAS regner kun det grønne med — det du faktisk tjener, når vareforbrug, fragt, gebyrer og annoncekroner er betalt.
01Why POAS beats ROAS
ROAS is the most-used — and most-misleading — metric in performance marketing. A ROAS of 4 sounds healthy, but if the product carries a thin margin, heavy shipping or a lot of returns, the campaign can easily lose money while the dashboard glows green.
POAS fixes that by counting the profit. Two campaigns with identical ROAS can have wildly different POAS — and that difference is what decides which one deserves more budget.
02How POAS is calculated
POAS = gross profit / ad spend. Gross profit is revenue minus the variable costs: cost of goods, shipping, packaging, payment fees and expected returns.
A POAS above 1 means advertising pays for itself at the gross level. How far above 1 it needs to be depends on your fixed costs and growth targets — and that's the conversation an audit starts with.
03POAS in practice
Tools like Profitmetrics feed profit data straight back to Meta and Google, so the platforms bid toward profit instead of revenue. It's one of the most underrated technical levers in scaling: same budget, same campaigns — but suddenly the algorithm chases the right orders.
In practice POAS shifts the decision from “what sells most” to “what earns most”. That changes which products get budget, which campaigns get scaled, and when a seemingly expensive channel is in fact your most profitable one.
04A worked example — and how to set the target
Take a brand that sells €13k worth of goods at a 45% margin: gross profit is about €6k. Spend €4k on ads and POAS is 1.5 (6,000 / 4,000). It sounds healthy — but the ~€2k left in gross profit still has to cover rent, salaries and software. If fixed costs are €1.5k for the period, the bottom line lands around €500. A POAS just above 1 is a long way from a healthy business.
That's why your target POAS isn't in a table — it's in your own P&L: it has to be high enough that gross profit after ads also covers fixed costs and leaves the bottom line you're after. Two brands selling identical products can have wildly different POAS targets if one carries a heavy fixed-cost base and the other runs lean.
It's also where aggressive scaling gets its logic: if your CLTV is strong, you can deliberately run a lower POAS on first purchases — even below 1 — because repeat orders pull it back. POAS at the order level and POAS at the customer level are two different conversations, and it's the second that decides how hard you can push the accelerator.
Frequently asked questions
What is a good POAS?+
A POAS above 1 means the ad spend pays for itself at the gross level. What counts as “good” depends on your margin and fixed costs — a low-margin business needs a higher POAS to turn a profit than a high-margin one.
What's the difference between POAS and ROAS?+
ROAS measures revenue per ad euro. POAS measures gross profit per ad euro. Two campaigns can share an identical ROAS but have wildly different POAS, because they sell products with different margins.
Related terms
Glossary
What is ROAS?
ROAS (Return on Ad Spend) is the revenue generated by ads divided by ad spend. A ROAS of 4 means €4 in revenue for every ad euro — but says nothing about what you actually keep.
Read the entry →Glossary
What is MER?
MER (Marketing Efficiency Ratio) is your total revenue divided by your total marketing spend across every channel. It ignores the platforms' own attribution and shows how efficiently the whole marketing machine is working.
Read the entry →Glossary
What is contribution margin?
Contribution margin is revenue minus the variable costs (cost of goods, shipping, fees, returns). It's the amount each order contributes toward covering fixed costs and creating profit.
Read the entry →Profit Forge runs the entire setup toward POAS — from tracking to bid management.
See Profit Forge →
Nicklas Segatz Mortensen
Growth Hacker · Fractional CMO · Meta Ads Nerd at Oaksmond
Growth hacker and fractional CMO with 10+ years' experience and hundreds of millions in managed ad spend behind him. Background from larger Danish and international scale-ups, and from the agency world.
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