Product economics should decide where Google Ads money goes
Google optimises to the value it is given. The commercial decisions behind that value, which products to fund, why and for how long, belong to the business.
Last updated: September 2026
Contribution and POAS
Contribution =
Revenue (excluding VAT)
− cost of goods
− fulfilment and shipping
− returns
− payment fees
POAS = Contribution ÷ Ad spend
Try it with your own numbers in the POAS calculator, or read why gross margin is not contribution margin.
The commercial questions we work through
What does each product actually contribute?
Contribution after cost of goods, fulfilment, returns and payment fees, before advertising. Blended gross margin hides the products that lose money on every order.
What does the business need right now?
Growth, profit, cash, new customers or protecting a position. The answer changes by season, by stock position and by the stage the business is at.
Which job should each product do?
Some products earn profit, some build the customer base, some defend demand you already own, and some need to turn ageing stock into cash within agreed limits.
Is extra spend buying extra sales?
Platform attribution is not incrementality. Rising cost per extra order and branded demand can make spend look more effective than it is.
Can the business carry the result?
Stock depth, fulfilment capacity and cash timing all decide whether more orders help or hurt.
Five jobs, reviewed by people
Each product has one primary job at a time: Scale, Profit, Protect, Recovery or Gateway. The principle is set out in Every SKU has a job™, and the buyer questions in BOI® for ecommerce teams. The rules we use to assign and change jobs are specific to each business and are not published.
Frequently asked questions
What does POAS measure?
Profit on ad spend divides contribution by advertising cost. Contribution here means revenue minus cost of goods, fulfilment and shipping, returns and payment fees, before advertising. It shows whether sales are paying for the advertising behind them, which ROAS alone cannot.
Is POAS the only number that matters?
No. POAS is a useful check on first-order economics, but decisions also depend on cash position, stock, customer acquisition and whether the sales are incremental. A product with modest POAS can still be the right investment if it brings in valuable new customers or clears stock the business needs to turn into cash.
What are SKU jobs?
Each product has one primary job at a time: Scale, Profit, Protect, Recovery or Gateway. The job reflects what the business needs from that product now. People review and change jobs as the evidence changes; they are never switched automatically.
Do you publish your decision rules?
No. The questions on this page are the ones we work through with clients. The thresholds, rules and tools we use to answer them are specific to each business and stay part of our working method.