# What is POAS (profit on ad spend)?

> POAS divides the profit your ads bring in by what you spent on them. It shows if ads make money, not just sales. Formula and worked example inside.
- **Author**: Marxx
- **Published**: 2026-10-25
- **Category**: Metrics
- **URL**: https://marxx.ai/library-glossary/poas

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POAS (profit on ad spend) is the gross profit your ads bring in for every rupee spent on them. A POAS above 1 means the ads made money. Below 1, they lost money.

## The formula

POAS = gross profit from ad-driven sales / ad spend

Gross profit is revenue minus the cost of the products sold.

## A worked example

Two campaigns each spend INR 40,000 and each bring in INR 1,20,000 in sales. So both show a ROAS of 3.

- Campaign A sells phone cases with a 70% margin. Gross profit = INR 84,000. POAS = 84,000 / 40,000 = **2.1**
- Campaign B sells headphones with a 25% margin. Gross profit = INR 30,000. POAS = 30,000 / 40,000 = **0.75**

Same ROAS, opposite result. Campaign A earns INR 2.10 of profit per INR 1 spent. Campaign B loses INR 0.25 per INR 1.

## Why teams switch to POAS

- **ROAS treats every rupee of sales the same.** A low-margin bestseller can look great on ROAS and still lose money.
- **It points bids at profit.** Meta and Google can both bid for the highest conversion value. Google's guidance gives profit margin as an example of a value to maximise. Send profit instead of revenue and bidding should chase the products that earn more.
- **It is easy to read.** Above 1 is good. Below 1 is a loss.

## How to set it up

1. Work out margin per product, or per category if that is simpler.
2. Send profit, not price, as the purchase value through your pixel or [Conversions API](/glossary/conversions-api).
3. Keep a separate report of revenue, so finance still has its numbers.

## FAQ

### What is a good POAS?

Above 1 means the ad paid for itself and made profit. Most teams aim higher to cover fixed costs like salaries and rent.

### Is POAS better than ROAS?

It is more honest about profit. ROAS is simpler and every platform reports it by default. Many teams report both.

### Can I use POAS for lead generation?

Yes, if you know the profit of a closed deal. Multiply it by your lead-to-sale rate to get a profit value per lead.

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