I know a founder running an appliance store in Cluj who spent eight months working with an agency on 3.8× ROAS. The weekly report looked clean. His business account never grew. One day he walked into the bank, asked for a statement, sat down with it. He'd lost 42,000 lei across those eight months. The ROAS had climbed. The business was quietly dying.
That's the reason POAS exists. Because ROAS measures what you billed, not what you kept. Everything important lives in the gap between the two.
The formula. Plain.
ROAS is the easier cousin. Revenue divided by ad spend. It doesn't care whether the product you sell for €50 costs you €5 or €48. It only counts transactions.
Why ROAS lies to you without meaning to
Take two online stores. Both spend €10,000 a month on Meta. Both bring in €40,000. ROAS 4×. Identical report.
| Store A | Store B | |
|---|---|---|
| Ad revenue | €40,000 | €40,000 |
| Ad spend | €10,000 | €10,000 |
| ROAS | 4.0× | 4.0× |
| Product net margin | 15% | 45% |
| Gross profit after margin | €6,000 | €18,000 |
| Real POAS | 0.6× | 1.8× |
| Profit after ads | −€4,000 | +€8,000 |
Store A bleeds €4,000 every month to grow top-line. Store B banks €8,000 in clean profit. Same ROAS. Different movie.
How to calculate POAS on your business
- 1Take the ad-attributed revenue for last month, straight from Meta Ads Manager or GA4. No estimates.
- 2Calculate net margin on your dominant product. Sale price minus cost of goods, shipping, packaging, platform fees, payment processing. Divided by sale price.
- 3Multiply revenue by margin. That's the gross profit your ads produced.
- 4Divide by ad spend. What comes out is POAS.
Where POAS becomes another excuse
One warning. POAS can also be weaponized. If an agency tells you „POAS 3×" without showing you the sheet where they calculated margin, they've probably used a round number that sounds good. Margin has to be net of every variable cost. Not gross, not optimistic, not rounded up.
What goes into variable cost, non-negotiable:
- Cost of goods. The real price at which the product lands in your warehouse, transport from supplier included.
- Shipping to customer. If you offer free shipping, the cost still comes out of margin, it doesn't disappear.
- Packaging plus estimated returns on that category.
- Platform commission, if you sell on Amazon, eMAG, Allegro.
- Payment processing. Stripe, PayU, bank fees, all of it.
Skip even one, you're lying to yourself. POAS comes out higher than it is. A few months in, at year-end, you wonder where the money went.
POAS varies per campaign
In the same account you can run a cold-audience campaign at 2.5× POAS on premium products, and a retargeting campaign at 0.4× POAS on cheap accessories. ROAS blends them into a pleasant average. POAS separates them and shows you exactly what to scale and what to kill today.
Short recap
- ROAS. Gross revenue divided by ad spend. The number on the report.
- POAS. Profit after margin divided by ad spend. The number in the bank.
- Two campaigns with identical ROAS can have opposite POAS.
- Net margin is calculated honestly, with every variable cost included.
- Healthy e-commerce POAS sits between 1.5 and 2.5, sustainable over six months.