POAS (Profit on Ad Spend) is gross profit divided by ad spend. In Google Ads you optimise for it by sending profit, not revenue, as the conversion value to Target ROAS bidding. A tool or a spreadsheet supplies the profit figures, and you switch in three phases over four weeks.
Start a conversationThere’s a version of Google Ads success that looks brilliant on paper and ruins your business in practice. Strong revenue numbers, healthy-looking ROAS, a dashboard full of green — and a bank account that tells a completely different story.
The problem is structural. ROAS treats all revenue as equal. It does not know that your £100 sale cost you £90 to fulfil, or that your £50 sale cost you £10. It sees two sales and calls both wins.
Here’s the same scenario made concrete:
Product A: Sells for £100, costs £90 to fulfil. Margin: £10. You spend £20 on ads to generate that sale. ROAS = 500%. Actual result: you lost £10.
Product B: Sells for £50, costs £10 to fulfil. Margin: £40. Same £20 ad spend. ROAS = 250%. Actual result: you made £20 profit.
Product B’s ROAS looks worse. Product B is the one keeping the lights on. ROAS cannot tell the difference — and that is why so many ecommerce businesses are scaling the wrong products.
If your business runs on a 20% margin, a ‘good’ ROAS of 400% still leaves you at 80% of break-even. You are losing money on every sale and calling it a win. POAS removes that ambiguity entirely by changing what you optimise for.
Google Ads does not have a POAS bidding button. What it does have is Target ROAS — and you can use that infrastructure to optimise for profit instead of revenue by changing what you report as the conversion value.
Instead of telling Google an order was worth £100, you tell it the order was worth £40 (after subtracting £60 in costs). Google’s bidding algorithm still runs Target ROAS. It just thinks ROAS means profit on ad spend now, because that is what the conversion values represent.
This is the whole method. You are not building new bidding infrastructure. You are changing the number you feed into existing infrastructure so it optimises for the right thing.
Google Ads does not calculate your profit. Something has to subtract your costs from each order and pass the result to Google as the conversion value. Several tools do that job. This is a neutral summary of what each says it does, taken from the vendors’ own sites in October 2026; check each site for current features and pricing, which I have not quoted.
What to compare: whether it supports your store platform, where it gets cost of goods from, how it handles refunds and cancellations, and whether it sends values server-side to Google Ads.
| Tool | What it does | Store platforms | Pricing |
|---|---|---|---|
| ProfitMetrics | Describes itself as profit bidding and POAS software. Tracks and reports profit and POAS, with server-side tracking for Google Ads, GA4 and Meta. | Native integrations with major ecommerce platforms (see its integrations page) | Free trial and demo; prices not on the homepage |
| Reaktion | Sends server-side order data to ad platforms and reports profit. Supports POAS bidding in Google Ads, including returns and refunds. | Shopify, WooCommerce, Magento, BigCommerce, PrestaShop, Shopware and others | Trial offered; pricing based on number of stores and order volume |
| Profit Bid | Calculates order-level profit from cost of goods, fees and VAT, and sends margin-weighted conversions to ad platforms. Labels products A, C or X by POAS and syncs the labels to Google Ads. | WooCommerce, Shopify, PrestaShop, Shopware, OpenCart, MerchantPro | Paid plans by store and order volume; see its site |
| Pixel Manager for WooCommerce (SweetCode) | A WooCommerce tracking plugin. Its “Profit Margin” value option sends order revenue minus cost of goods, discounts, refunds and fees (net of tax) to marketing pixels such as Google Ads. Needs a cost-of-goods source. | WooCommerce only | Free and Pro versions; see its site |
Sources: profitmetrics.io, reaktion.com, profit-bid.com, and SweetCode’s Pixel Manager shop settings documentation. I have not tested every tool on this list.
A tool is only as good as the cost data you give it. If cost of goods is missing for a product, some tools treat it as zero. Pixel Manager’s documentation, for example, says a product without cost of goods is given a value of zero, which silently reports that product’s full revenue as profit and makes Google bid too high on it. Check cost of goods for every product before you switch, and check how refunds are handled.
None of these tools knows your fixed overheads, and you should not add them to the conversion value (see the overhead section below). If you only have a small catalogue or low order volume, the manual spreadsheet route is a legitimate alternative. If you want help choosing or setting one up, that is part of what I do for ecommerce accounts.
POAS = gross profit ÷ ad spend. Gross profit here is revenue minus cost of goods and direct fulfilment costs such as shipping. If you spend £1,000 on ads and the orders they drove made £1,500 of gross profit, your POAS is 1.5 (150%). Break-even is always 1.0 (100%), because at that point the ads have returned exactly what they cost.
The difference between ROAS and POAS is the numerator. ROAS divides revenue by ad spend, so a 20% margin business needs 5x ROAS to break even. POAS divides profit by ad spend, so break-even is 1.0 whatever the margin. Google’s own definition of Target ROAS is the average conversion value you want for each unit of currency spent, which is why feeding it profit values works.
Here is where most people stumble: they try to account for rent, wages, software subscriptions, and other fixed overheads inside the conversion value they send to Google. Do not do this.
Your fixed overheads exist whether you sell one unit or a thousand. Your Google Ads bid should not change based on costs that are unaffected by volume. Subtract fixed costs from your conversion values and you will underbid on every order.
What to send Google: Gross profit — Revenue minus Cost of Goods and direct fulfilment costs like shipping. This is the contribution margin: the money available to cover your fixed costs and, beyond that, generate actual profit.
How to account for fixed costs: Adjust your Target POAS instead. If fixed costs consume roughly 30% of your gross profit, you need a POAS of at least 1 ÷ (1 − 0.30) = 1.43, or 143%, just to break even. Set your target above that to generate real profit.
POAS stands for Profit on Ad Spend: gross profit divided by ad spend. Instead of reporting order revenue as the conversion value, you report profit, and Target ROAS bidding then optimises for profit. You scale what makes money, not what turns over the most.
POAS = gross profit ÷ ad spend, where gross profit is revenue minus cost of goods and direct fulfilment costs. £1,000 of ad spend that drives £1,500 of gross profit is a POAS of 1.5 (150%). Break-even is always 1.0.
ROAS is revenue ÷ ad spend. POAS is gross profit ÷ ad spend. Two £100 orders look identical in ROAS even if one costs £90 to fulfil and the other £10. POAS reports the profit, so Google bids more on high-margin orders and less on low-margin ones.
Tools that send profit to Google Ads include ProfitMetrics, Reaktion, Profit Bid and, for WooCommerce, the Pixel Manager plugin’s Profit Margin option. The best one depends on your store platform, your cost-of-goods data and how you handle refunds. See the comparison table above.
No. The manual route is to export orders, calculate profit in a spreadsheet and upload it to Google Ads as conversion values on a regular schedule. Software automates it and sends values in near real time, which matters more as order volume grows.
It depends on your goal and data. For ecommerce with enough conversions, Target ROAS is common, and POAS is the same strategy fed profit values instead of revenue. For lead generation, Target CPA or Maximise conversions are common. There is no single best strategy.
Calculate your actual POAS from last month’s data and start there. If your campaigns were achieving 150%, set the target at 150%. Do not carry across your old ROAS percentage, because the numbers mean different things and campaigns can stop spending.
No. Include only variable costs: cost of goods and direct fulfilment such as shipping. Fixed costs are the same whether you sell one unit or a thousand, so including them causes underbidding. Cover fixed costs by setting a higher Target POAS.
Allow about four weeks. Run the profit conversion as secondary for two to three weeks and check the values against your backend, make it primary in week four, then reset the target from your actual historical POAS.
Moving to profit-based bidding takes careful setup. Get it wrong and campaigns stop spending; get it right and you stop paying for high-revenue, low-margin products. I help ecommerce businesses make the switch, from cost-of-goods data through to target-setting and monitoring.
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