POAS vs ROAS in Google Ads: Which Should E-commerce Brands Bid To?

By Jacob Thyssen, Founder of Thyssen Ads

4 Nov 2026

Short answer: ROAS (return on ad spend) measures revenue per unit of ad spend. POAS (profit on ad spend) measures gross profit per unit of ad spend. ROAS tells you how much you sold. POAS tells you whether the sales made you money. For e-commerce brands with different margins across products, bidding to POAS in Google Ads usually moves budget towards profitable products, while bidding to ROAS can scale revenue that loses money. Use ROAS when you have no reliable margin data. Move to POAS once you have it.

Most Google Ads accounts are optimised to one number: ROAS. It's the default in the interface, it's what most agencies report, and it looks great in a slide. The problem is that revenue isn't profit. A 6x ROAS on a product with a 10% margin can lose money. A 3x ROAS on a product with a 60% margin can be your best campaign.

That's why, where margin data is available, we bid to profit, not just ROAS. Here's how it works.

What is ROAS?

ROAS is the revenue generated by your ads divided by what you spent on them.

ROAS = conversion value (revenue) ÷ ad spend

If you spend €1,000 and Google Ads reports €5,000 in revenue, your ROAS is 5 (or 500%).

Why ROAS is still useful

• It's simple and every platform reports it.
• It works as a target for Smart Bidding (Target ROAS).
• It's a fair comparison when all your products have similar margins.

Where ROAS breaks

ROAS treats every euro of revenue as equal. It isn't. Google's algorithm, told to maximise revenue at a target ROAS, will happily push low-margin, high-price products because they generate revenue fast. Your dashboard goes up. Your bank account doesn't.

What is POAS?

POAS is the gross profit generated by your ads divided by ad spend.

POAS = (revenue − cost of goods sold) ÷ ad spend

Some brands also subtract shipping, payment fees and expected returns. The more complete the profit figure, the more honest the number.

How to read POAS

• POAS above 1.0: the ads paid for themselves and made gross profit on top.
• POAS of 1.0: break-even. Every euro of profit went back to Google.
• POAS below 1.0: you're paying Google more than you earn from the sale.

POAS vs ROAS: a simple example

Two products, same ad spend of €1,000 each:

On ROAS, Product A looks twice as good. On POAS, Product A is losing money and Product B is doubling it. A ROAS-optimised account scales A. A POAS-optimised account scales B.

This is the most common leak we find in accounts. Not bad ads. Budget following revenue instead of profit.

When should you bid to POAS instead of ROAS?

Move to POAS when:

1. Margins vary a lot across your catalogue. Mixed margins are where ROAS misleads the most.
2. You have reliable cost data per product. Cost of goods in your shop platform or a product feed.
3. Your tracking is clean. POAS on bad conversion data is just a more confident wrong answer. We treat tracking as infrastructure and fix it before we scale anything.
4. You're planning to scale. Scaling on ROAS amplifies whatever margin mix you already have.

Stay on ROAS (for now) when:

• You don't have product-level cost data yet.
• Your margins are very similar across products.
• The account doesn't have enough conversion volume for a new bidding signal to learn.

How to implement POAS in Google Ads

Google Ads doesn't have a "Target POAS" button. You get there by changing what Google sees as conversion value.

Option 1: Send profit as conversion value

Instead of passing order revenue to Google Ads, pass gross profit (revenue minus product cost). Then a Target ROAS bid strategy effectively becomes a Target POAS strategy. A tROAS of 150% now means "€1.50 of profit per €1 of spend". This is usually done with server-side tracking, so cost data never sits in the browser.

Option 2: Segment the feed by margin

If you can't send profit yet, split products into campaigns or listing groups by margin band (for example high, medium and low). Give each band its own ROAS target that reflects its margin. That's what we mean by Shopping first, feed segmented: products split by margin, price and performance index, so budget follows profit.

Option 3: Combine both

The strongest setups send profit as value and segment by performance. Profit tells Google what each sale is worth. Segmentation stops a handful of best-sellers hiding hundreds of products that never sell.

Setting your break-even target

Your break-even ROAS is 1 ÷ margin. A 40% margin means break-even ROAS of 2.5. With profit as conversion value, break-even is simply a POAS of 1.0. Set targets above that, then decide how much profit you want to reinvest into growth.

What results look like in practice

For Unsolved, a Swedish e-commerce brand, we applied one structure across six European markets in six months: Sweden, the Netherlands, Norway, Finland, Denmark and Belgium. All six markets became profitable, and Q1 2026 delivered a record 2.06x POAS, alongside +32% revenue and +21% orders versus the previous period. Budgets were increased only where performance justified it. Read the Unsolved case study.

For Becker.dk, a Danish auto parts retailer with 800,000+ products, we structured the catalogue by profitability, demand and performance. Google Ads revenue went from €100K to €400K+ per month while ROAS rose from 6.0 to 9.35. Read the Becker case study.

The pattern is the same: control what deserves budget, and profit follows.

Common POAS mistakes

• Using list margin instead of real margin. Discounts, shipping and returns eat margin. Use the real number.
• Switching value overnight on a mature account. Changing conversion value resets what Smart Bidding has learned. Plan the transition.
• Ignoring brand vs non-brand. Brand campaigns inflate both ROAS and POAS. Keep brand and non-brand separated so you can see what the rest of the account really does.
• Forgetting lifetime value. For brands with strong repeat purchase, a low first-order POAS can still be a good investment. Decide that on purpose, not by accident.

The bottom line

ROAS is a revenue metric. POAS is a business metric. If you sell products with different margins, POAS is the number that tells you whether Google Ads is actually growing the business. Fix tracking first, get product costs into the data, and let budget follow profit.

Want to know what your account looks like on profit instead of revenue? Get your free Google Ads audit.

FAQ

What is a good POAS in Google Ads?

Anything above 1.0 means your ads generate more gross profit than they cost. What counts as "good" depends on your other costs and growth goals. Many brands accept a lower POAS on new customers if repeat purchase is strong.

Is POAS better than ROAS?

For e-commerce brands with mixed margins, yes, because it measures profit rather than revenue. ROAS is still fine when margins are similar across products or when cost data isn't available.

How do I calculate break-even ROAS?

Divide 1 by your gross margin. A 25% margin gives a break-even ROAS of 4.0. Below that, every sale from ads loses money.

Can Google Ads bid to profit directly?

Not with a dedicated setting. You do it by sending gross profit instead of revenue as conversion value, then using Target ROAS. This is usually set up with server-side tracking.

Does POAS work with Performance Max?

Yes. Performance Max optimises to whatever conversion value you send. Sending profit makes it optimise to profit. Feed segmentation still matters so a few products don't take the whole budget.

Should I report POAS or ROAS to my team?

Report both. ROAS is useful for comparing with platform benchmarks. POAS is what tells leadership whether the channel makes money.