What is POAS?
Profit on Ad Spend
Profit on Ad Spend (POAS) is ad spend measured against gross profit, not revenue. Shows actual dollars kept.
POAS = Gross profit from ads ÷ Ad spendHealthy DTC: 1.5-2.5x · Scaling: 1.0-1.5x · Below 1x = losing money
Why POAS matters
More honest than ROAS. 4x ROAS on 20% margin = 0.8x POAS (losing money). 3x ROAS on 60% margin = 1.8x POAS (profitable). Use POAS for strategic decisions.
Worked example
Plug a real number into the formula to see POAS in action:
Numbers are illustrative. Try our Customer LTV Calculator for your real numbers.
Common mistakes with POAS
- 1
Looking at single-channel ROAS in isolation instead of blended MER. Last-click attribution overweights bottom-funnel channels and starves top-of-funnel.
- 2
Setting a uniform target across products with different margins. A 2× ROAS is profitable on 80% margin and unprofitable on 20%.
- 3
Optimizing CAC without measuring LTV. Cheap customers with bad retention destroy unit economics.
How to improve POAS
Run incrementality tests every quarter to validate which channels actually drive new revenue vs steal credit.
Build a unit economics dashboard separating CAC, LTV, contribution margin, and payback by channel and cohort.
Establish a contribution margin floor for each channel — pause spend when margin drops below threshold for 14 days.
Common questions about POAS
What is POAS?▾
How is POAS calculated?▾
What is a good POAS benchmark?▾
Why does POAS matter for marketing teams?▾
Related terms
Need help applying POAS to your business?
Book a free 30-min audit. We will benchmark your POAS against your industry and flag what to fix first.
Book a free audit