POAS vs. ROAS: The Meta Ads Metric That Actually Drives Growth

Most advertisers live and die by ROAS.

And small business owners are no exception.

It’s the one metric everyone knows, and it’s often the only one that gets tracked.

But here’s the thing—most don’t know their break-even ROAS.

They just chase “higher and higher” numbers without understanding what those numbers mean.

A ROAS of 7x sounds great—until you realize your margins only support a break-even ROAS of 6.7x.

Or worse—your costs have crept up, and that 7x is no longer profitable at all.

What’s even more misunderstood?

ROAS almost always drops as you scale. 

More spend = more reach, but also more inefficiency.

That’s the cost of growth.

And if you’re running a small business with thin margins, limited budget, or multiple products, that gap between revenue and profit becomes critical.

That’s why it’s time to focus on a better metric: POAS—Profit on Ad Spend.

Why ROAS Falls Short for Small Business Advertisers

Before we dive into POAS, let’s look at why ROAS often falls short—especially for small businesses.

ROAS (Return on Ad Spend) tells you how much revenue you’re generating per dollar spent on ads.

Sounds great, right?

Until you realize it tells you nothing about what you actually keep.

A campaign might show a 5x ROAS—but if your costs are high, your profit could be negative.

That’s the problem: ROAS hides reality.

Especially if you’re:

• Running low-margin products

• Testing multiple offers

• Testing different product categories

• Trying to scale responsibly

I covered this in more depth in DAS #10 – Why Facebook Ads ROAS Is a Misleading Metric.

If you missed that one, go back and give it a read—it’s the foundation for everything in this post.

What Is POAS in Meta Ads (and Why It Matters More)

So if ROAS isn’t telling you the full story, what should you be looking at instead?

That’s where POAS—Profit on Ad Spend—comes in.

POAS gives you a clearer, more practical view of your ad performance by showing how much gross profit you’re earning after ad spend—not just how much revenue you brought in.

The formula is simple:

POAS = (Revenue – Ad Spend) ÷ Ad Spend

It’s not perfect (it doesn’t account for COGS or other costs), but it moves you one step closer to understanding whether your ads are actually helping you grow—or just spinning your wheels.

For small businesses with limited budgets and tight margins, that extra layer of insight makes all the difference.

How to Calculate Gross POAS in Facebook Ads

Before we dive into Net POAS, let’s break down how to calculate standard POAS—also known as Gross POAS.

Let’s say you’re selling a T-shirt for €30, and your average Cost Per Purchase (CPA) from Meta Ads is €10.

Here’s the formula:

POAS = (Revenue – Ad Spend) ÷ Ad Spend = (30 – 10) ÷ 10 = 2.

This tells you you’re generating €2 in gross profit for every €1 you spend on ads—before factoring in product or fulfilment costs.

It’s already a much more useful signal than ROAS, because it gives you visibility into ad spend profitability, not just revenue volume.

But if you want to get the full financial picture—especially for product-level decisions—you’ll want to factor in your Cost of Goods Sold (COGS).

Let’s look at how to do that with Net POAS 👇

Net POAS: Example for Facebook Product Ads

To really understand the difference between POAS and Net POAS, let’s walk through the same simple product-level example.

Say you’re selling that same T-shirt for €30, and your Meta Ads campaign is generating purchases at a €10 CPA.

That means you're earning €2 in gross profit for every €1 spent on ads.

Not bad—but we’re not done.

Now let’s factor in your COGS, which in this case, let’s say is €6.

Net POAS = (Revenue – Ad Spend – COGS) ÷ Ad Spend = (30 – 10 – 6) ÷ 10 = 1.4

Now you know your true profit margin per euro spent—and whether the campaign is actually worth scaling.

So, you’re making €0.40 in profit for every €1 you spend.

IIt might not sound like much—but at scale, say with a €10,000 ad budget, that adds up to €4000 in net profit.

👉 If you’re selling a single product or promote individual offers separately, Net POAS is one of the most useful metrics to keep in front of you.

It lets you make smart, product-level decisions fast—without needing to guess whether the scale is worth it.

This added layer of visibility is crucial if you want to avoid scaling campaigns that look good (high ROAS), but quietly bleed money behind the scenes.

Use POAS to Think Like a CFO

When you're running lean, you can’t afford to make guesses.

POAS gives you a profit-based lens to evaluate what's truly working—not just what looks good on the surface.

Here’s the rule of thumb:

• Use Gross POAS when testing product categories, creatives, or scaling budgets

• Use Net POAS when optimizing for single products, bundle offers, considering you also know the COGS for the specific product and offer

It shows you exactly which products are getting spend—and whether they deserve it.

POAS helps you answer:

✅ Which campaigns are actually profitable?

✅ Are we scaling the right products—or just chasing high ROAS?

✅ What’s our minimum acceptable profit to keep campaigns live?

Bottom line: 

POAS helps you think like a CFO—not just a media buyer.

It gives you the clarity you need to scale sustainably and profitably, not just aggressively.

🍩 Snackable Challenge

This week, make the shift:

✅ Add Gross POAS and Net POAS as custom metrics in Ads Manager

(If you don’t know how to add metrics, read DAS #1 - Facebook Ads Metrics: What Matters and What Doesn't)

✅ Evaluate at least one active campaign using POAS—not ROAS (Good news is, that any new custom metric you add now, will be calculated retrospectively)

✅ Identify a product or offer where ROAS looked great, but POAS tells a different story

Then hit reply and tell me what you find.

Let’s stop chasing vanity—and start tracking what actually drives growth.