The ROAS Lie

Every agency report leads with ROAS.

"Your ROAS is 5x."
"We've improved ROAS by 40%."
"The campaign is hitting target ROAS."

Here's what they're not saying:

ROAS is revenue divided by ad spend. That's it.

It doesn't account for:

• Cost of goods sold
• Shipping costs
• Payment processing fees
• Returns and refunds
• VAT (which you don't keep)
• Discounts applied at checkout

A 5x ROAS on a 25% margin product after a 20% discount, 15% returns, and 3% payment fees is not profitable.

But it looks great in the report.

The maths that matters:

If you spend £100 on ads and generate £500 in revenue, congratulations on your 5x ROAS.

Now subtract:
£100 VAT (you don't keep this)
£125 COGS (25% margin)
£30 shipping
£15 payment fees
£75 returns (15% of orders)
£100 discount (applied at checkout)

You're left with £55.

You spent £100 to make £55.

That's not a 5x return. That's a loss.

This is why we measure POAS.

Profit on Ad Spend. The money you actually keep.

It's harder to calculate. It requires real data from your business. It doesn't look as impressive on a slide.

But it's the truth.

And truth is what we trade in.