Most marketers optimize for ROAS.
But ROAS can be misleading.
Two products can show the same ROAS while having completely different profitability.
Example:
Product A
Price: $100
Cost: $80
Profit: $20
Ad spend: $20
ROAS = 5x
POAS = 1x (break-even)
Product B
Price: $100
Cost: $60
Profit: $40
Ad spend: $20
ROAS = 5x
POAS = 2x
Same ROAS.
Very different profit.
The takeaway:
• ROAS measures revenue from ad spend
• POAS measures actual profit from ad spend
ROAS works when products have similar margins.
But when margins vary across products, POAS shows the real performance.
Optimize for revenue → ROAS
Optimize for profitability → POAS
