POAS vs ROAS: how to measure profit on Google Ads

ROAS (return on ad spend) divides the revenue your ads bring in by what you spent on them. POAS (profit on ad spend) divides the profit those sales leave after product costs by the same ad spend. A ROAS of 4.0 means every $1 of ads brought $4 of sales; a POAS of 1.0 means the profit from those sales just covered the ads, and anything above 1.0 means the ads paid for themselves.

That difference matters most in Google Shopping and Performance Max (PMax), where one target ROAS often covers products with very different margins. This guide explains both metrics, shows how to calculate POAS with a worked example, and covers the ways to track it in Google Ads.

What is ROAS?

ROAS is conversion value divided by ad cost. Google Ads uses it for Target ROAS bidding, where you tell Google the average return you want, and its help page gives this example: $5 in sales divided by $1 in ad spend, multiplied by 100%, is a 500% target ROAS (Google Ads Help). You will see ROAS written both ways: 5.0 and 500% mean the same thing.

In most online stores, the conversion value is the order revenue sent by the purchase tag. So ROAS answers one question: how much revenue did each dollar of ads bring in? It does not know what the products cost you.

What is POAS (profit on ad spend)?

POAS replaces revenue with profit in the same formula:

• ROAS = conversion value ÷ ad spend
• POAS = gross profit ÷ ad spend

Gross profit is revenue minus the cost of goods sold, often shortened to COGS. Google uses that definition in the help pages for Google Merchant Center (Merchant Center after this), the tool that holds your product feed: "Gross profit is the difference between your revenue and the cost of goods sold (COGS)" (Google Merchant Center Help).

There is no single official definition of POAS, so check which profit a tool uses before you compare numbers. As of November 2026, ProfitMetrics divides gross profit by ad spend, while Stape uses contribution profit, which also subtracts variable order costs such as shipping and payment fees. Both treat a POAS of 1.0 as the point where profit covers ad spend. Pick one definition and keep it for every report.

How do you calculate POAS?

You need three numbers for the same period and the same products:

1. Ad spend from Google Ads.
2. Revenue from the conversions those ads drove.
3. Cost of the products sold, from your store or your Merchant Center feed.

Subtract the cost from the revenue to get gross profit, then divide by ad spend. If you already know a product's gross margin (gross profit as a share of revenue), there is a shortcut: POAS = ROAS × gross margin.

A worked example

Two products each spent $100 on Google Ads in the last 30 days and each brought $400 in conversion value. Google Ads shows the same 4.0 ROAS for both. Their margins tell a different story:

Product A earns $140 after paying for its ads. Product B loses $40 on every $100 it spends, even though its ROAS looks identical. A single account-level target ROAS treats them the same.

If Product A's orders also cost $40 in shipping and payment fees, its contribution profit drops to $200 and its POAS to 2.0. Returns work the same way: if refunded orders stay in the conversion value you send to Google Ads, they inflate ROAS and POAS alike.

POAS vs ROAS: what is the difference?

The break-even row is the practical difference. With ROAS, every product has its own break-even point. Product A breaks even at a ROAS of 1 ÷ 0.60 = 1.67 (167%), while Product B needs 1 ÷ 0.15 = 6.67 (667%) just to cover its costs. With POAS, the line is 1.0 for everything, so one number tells you whether a product, a campaign or a whole account made money.

Why can a high ROAS still lose money?

ROAS only sees revenue. Three things it misses are common in online stores:

• Low-margin products. Products in price-competitive categories often sell at thin margins, so they can show a strong ROAS while leaving little profit.
• Discounts and promotions. A sale cuts margin much faster than it cuts revenue. A product priced at $90 that costs you $60 has a 33% margin and breaks even at a 300% ROAS. At 20% off it sells for $72, the margin falls to about 17%, and the break-even ROAS doubles to 600%. Our guide on which products to push on Google Ads for Black Friday applies this to sale periods.
• Shipping and returns. Free shipping and high return rates eat into profit but do not change the conversion value Google Ads reports.

Smart Bidding, Google's automated bidding, predicts and chases the conversion value you send it. If that value is revenue, it will happily spend on products that sell well but earn little.

When is ROAS still the right metric?

POAS is not always worth the extra setup. ROAS is enough when your products have similar margins, because a single target then means roughly the same profit for everything. It is also the metric Google Ads and most ad platforms report by default, so it is easier to compare campaigns and channels.

POAS is only as good as your cost data. If costs are missing or out of date, POAS can be more misleading than ROAS. Start by checking that every product you advertise has a cost recorded.

How do you track POAS on Google Ads?

There are three common ways, from simplest to most involved.

1. Report gross profit with conversions with cart data

Conversions with cart data is an extension of Google Ads conversion tracking that reports which products were sold in each order. When you also send cost of goods sold in your Merchant Center feed, Google Ads can report gross profit next to revenue (Google Ads Help). The item IDs in your purchase tag must exactly match the id attribute in your feed, and only items from a Merchant Center account linked to Google Ads are counted.

The cost goes in the cost_of_goods_sold attribute, as a number plus currency, for example 290.00 USD (Google Merchant Center Help). Google says the value is used for reporting and can be an estimate, and its setup guide suggests 80% of the product price as one way to estimate it when exact costs are not available (Google Ads Help). You can add it in your product feed, through the Content API or with a supplemental feed. If you are setting up Merchant Center for the first time, start with our guide to Google Merchant Center account setup.

At Google Marketing Live on May 21, 2024, Google also announced a profit optimization goal for Smart Bidding in Performance Max and Standard Shopping that uses "data from your cart-level conversions and cost of goods sold in Merchant Center" (Google Ads Help). Setting up cart data and cost_of_goods_sold now covers both the reporting and that goal.

2. Send profit as the conversion value

The more direct route is to send each order's profit, instead of its revenue, as the value of your purchase conversion. Target ROAS then bids toward a profit target: a target of 150% on profit means $1.50 of gross profit for each $1 of ads, which is a POAS of 1.5.

A common setup keeps two conversion actions. Google Ads uses primary conversion actions for bidding and treats secondary actions as observation only (Google Ads Help). Make the profit conversion primary and keep the revenue conversion as secondary, so you can still see revenue without it steering bids. Search Engine Land notes one risk: profit values placed in the page's data layer can be read by anyone, including competitors, so some advertisers multiply profit by a fixed factor before sending it.

3. Split campaigns by margin

If you cannot change your conversion values, you can still bid by margin. Group products into margin bands with a custom label in Merchant Center, then give each band its own campaign or asset group and its own target ROAS, based on that band's break-even point. Our guide on how to segment Shopify products in Google Shopping by margin walks through the setup, and our explainer on what a labelizer is covers keeping those labels up to date.

Where Shopify fits

Shopify can already hold the cost data. Its profit reports calculate gross profit by subtracting cost from net sales, using the cost per item field on each product and variant. Shopify notes that profit is reported only for products and variants that had a cost recorded when they were sold (Shopify Help Center).

The gap is that Shopify knows the profit but not the ad spend, and Google Ads knows the ad spend but not the profit. The Clarmix Shopify app brings orders, returns and cost of goods sold from Shopify together with Google Ads and Merchant Center data, so you can track POAS product by product. If you prefer to ask questions in Claude or ChatGPT, our guide to the Shopify MCP server shows how to connect the same data to an AI assistant.

Frequently asked questions

Is POAS better than ROAS?

POAS is closer to what a store cares about, because it shows whether ads made money after product costs. ROAS is simpler and available everywhere by default. Many advertisers keep ROAS for quick comparisons and use POAS to set targets and decide where to spend.

What is a good POAS?

A POAS of 1.0 means gross profit exactly covers ad spend, so the ads broke even. Anything above 1.0 is profit before your fixed costs such as staff, rent and software. There is no universal benchmark: your target should be high enough to cover those fixed costs and leave the profit you need.

How do I convert a ROAS target into POAS?

Multiply ROAS by your gross margin. A 400% ROAS (4.0) on a product with a 30% margin is a POAS of 1.2. To find the ROAS you need to break even, divide 1 by the margin: with a 30% margin, that is a ROAS of 3.33 (333%).

Can Google Ads bid on POAS?

Yes, indirectly. If you send profit instead of revenue as your conversion value, Target ROAS and Maximize conversion value bid on profit, and your target ROAS becomes a target POAS. Google also announced a profit optimization goal for Performance Max and Standard Shopping in May 2024 that uses cart data and cost of goods sold.

Does POAS include ad spend in the profit?

Usually not. Most definitions use profit before ad spend in the top of the formula and ad spend at the bottom, which is why 1.0 is the break-even point. To get profit after ads, subtract ad spend from gross profit, as in the last row of the example table.

Sources

• Google Ads Help: About Target ROAS bidding
• Google Merchant Center Help: Cost of goods sold [cost_of_goods_sold]
• Google Ads Help: About conversions with cart data
• Google Ads Help: Set up and test reporting with conversions with cart data
• Google Ads Help: About primary and secondary conversion actions
• Google Ads Help: Google Marketing Live 2024 announcements (May 21, 2024)
• Shopify Help Center: Profit reports
• Search Engine Land: Margin-based tracking for Google Shopping profitability
• ProfitMetrics: ROAS vs POAS
• Stape: ROAS vs POAS
• Clarmix Shopify app

Cover photo by Aaron Lefler on Unsplash.