7 Mistakes You're Making with POAS (and How to Fix Them Before Your Competitors Do)

Right, let's cut straight to the chase. POAS (Profit on Ad Spend) isn't just another shiny metric to add to your dashboard. It's the difference between actually making money and just looking busy with vanity metrics. Yet most e-commerce brands are absolutely butchering their POAS implementation.

While you're fumbling around with incorrect calculations, your competitors are quietly optimising for real profit and scaling the campaigns that actually matter. Here are the seven biggest POAS mistakes that are costing you money – and exactly how to fix them before your competition figures it out.

What Actually Is POAS?

Before we dive into the mistakes, let's get this straight. POAS measures the gross profit you generate for every pound you spend on ads. The formula is simple: POAS = (Profit from ad campaign) ÷ (Campaign ad spend).

Unlike ROAS, which typically focuses on revenue (and frankly, became a bit of a vanity metric), POAS cuts through the noise and shows you what's actually hitting your bottom line.

Mistake #1: Treating POAS Like It's Just ROAS in Disguise

The Problem: Half the marketers we speak to think POAS is just ROAS with a fancy new name. They're plugging in revenue figures and wondering why their "POAS" doesn't match their actual profitability.

The Reality: POAS requires actual profit calculations, not revenue. If you're selling £50 trainers with a £5 profit margin, a 10x ROAS campaign might only deliver a 1x POAS.

The Fix: • Calculate your true profit per product (selling price minus all costs) • Use profit figures, not revenue, in your POAS calculations • Train your team on the fundamental difference between profit and revenue metrics

Mistake #2: Ignoring Your True Cost of Goods Sold

The Problem: Most brands calculate POAS using only their basic product cost, completely ignoring fulfilment fees, payment processing, returns, customer service costs, and other hidden expenses.

The Reality: Your "profitable" campaigns might be losing money once you factor in the real costs of doing business.

The Fix: • Include ALL costs: manufacturing, shipping, payment processing, returns handling • Factor in customer service costs for ad-driven sales • Update your cost calculations quarterly to reflect changing expenses • Build a buffer for seasonal cost fluctuations

Mistake #3: Setting POAS Targets Without Context

The Problem: Teams often set arbitrary POAS targets like "we need 3x POAS across all campaigns" without considering business context, campaign types, or customer journey stages.

The Reality: A brand awareness campaign should have different POAS expectations than a retargeting campaign. Your target should reflect your specific business model and growth stage.

The Fix: • Set different POAS targets for different campaign types • Factor in customer lifetime value for new customer acquisition • Adjust targets based on profit margins and business objectives • Consider seasonal variations and business lifecycle stages

Mistake #4: Terrible Attribution and Data Tracking

The Problem: POAS requires accurate attribution of profit to specific campaigns. Most brands are using last-click attribution or haven't properly connected their ad platforms to their actual sales and profit data.

The Reality: Without proper attribution, you're optimising blind and potentially killing profitable campaigns while scaling losers.

The Fix: • Implement proper cross-platform tracking and attribution modelling • Connect your ad platforms directly to your profit data, not just revenue • Use data-driven attribution where possible • Regularly audit your tracking setup for accuracy

Mistake #5: Not Segmenting POAS by Audience and Product

The Problem: Looking at overall POAS without segmentation masks massive variations in profitability across different audiences, products, and campaign types.

The Reality: Your high-value customers might deliver 5x POAS while bargain hunters barely break even. Some products might be loss leaders while others drive massive profit.

The Fix: • Segment POAS by customer type, product category, and geographic region • Identify your most profitable audience segments and scale accordingly • Use POAS data to inform product mix and pricing strategies • Create separate campaigns for high and low profit margin products

Mistake #6: Forgetting About Customer Lifetime Value

The Problem: Calculating POAS based only on immediate purchase value ignores repeat purchases and long-term customer value, leading to underinvestment in customer acquisition.

The Reality: A customer acquisition campaign with 0.8x immediate POAS might be incredibly profitable when you factor in repeat purchases over 12 months.

The Fix: • Calculate POAS using 90-day, 180-day, and 12-month profit windows • Factor in repeat purchase rates and customer lifetime value • Adjust your acceptable POAS thresholds for new customer acquisition • Track cohort-based profitability over time

Mistake #7: Poor Data Infrastructure and Manual Calculations

The Problem: Many brands are still calculating POAS manually in spreadsheets, leading to delays, errors, and inability to optimise in real-time.

The Reality: By the time you've manually calculated last week's POAS, your competitors have already optimised their campaigns based on real-time profit data.

The Fix: • Invest in automated POAS tracking and reporting systems • Connect your ad platforms, e-commerce platform, and accounting systems • Set up real-time profit alerts and automated bid adjustments • Create automated reports that update stakeholders on POAS performance

The Competitive Advantage of Getting POAS Right

Here's what happens when you fix these mistakes: while your competitors are chasing vanity metrics like clicks, impressions, or even revenue-based ROAS, you're systematically identifying and scaling the campaigns that actually grow your business.

You'll spot profitable opportunities others miss, allocate budget more effectively, and build sustainable competitive advantages based on superior unit economics. Most importantly, you'll stop wasting money on campaigns that look good on paper but don't move the needle on actual profitability.

Your Next Steps

The brands winning in 2025 aren't just tracking POAS – they're using it strategically to outmanoeuvre competitors who are still stuck in the ROAS era. Every day you delay fixing these mistakes is another day your competition might pull ahead.

Start with mistake #2 – getting your true cost calculations right. Without accurate cost data, everything else is built on quicksand. Then move through the list systematically, fixing one mistake at a time.

If you're running significant Google Ads spend and want help implementing a proper POAS framework that actually drives profitable growth, we'd be happy to audit your current setup and show you what you might be missing. But honestly, half these fixes you can implement yourself with a bit of focus and proper data hygiene.

The question isn't whether POAS matters – it's whether you'll master it before your competitors do.