Return on Ad Spend, better known by its abbreviation POAS, provides information on how much profit you make per dollar spent on ads compared to the total profit you make per product. While traditional calculations like ROAS (Return on Ad Spend) look primarily at the revenue an ad generates, POAS focuses on the actual profit margin. It not only shows how much revenue a campaign generates, but also takes into account product costs and other variable expenses, giving you a clearer picture of the true value of your ads.
After all, getting 1 million sales from your campaigns sounds great. But if your advertising costs are 999,999, your campaigns have only generated 1 euro. So in that case, it makes more sense to report how much value american mobile number list campaign generates compared to the purchase price of the products sold.
The main difference between POAS, ROAS and turnover is in the approach. Revenue is set at the total value of the entire order, ROAS measures how much revenue is generated per euro of advertising costs, while POAS looks further afield and focuses on profit based on the purchase price of the products sold. Let's say a campaign generates €10,000 in sales at €2,000 of advertising costs, then total sales of €10,000 and a ROAS of 5x may look good. But if the products have a low profit margin, the actual profit may be much lower than expected. This is where POAS comes in: it lets you know how much you're really making, after costs like production, shipping and other overheads have been deducted.
Why would you want to use POAS in your campaigns?
Using POAS helps you optimize advertising campaigns because it doesn't just focus on increasing sales, but on maximizing profits. By using POAS, you can better assess which campaigns actually contribute to the net profit of your online store. This is especially important if you sell products with different margins. It may happen that a campaign with a high ROAS hardly generates any profit, because the promoted products have a low margin. POAS ensures that your marketing algorithms are fully focused on promoting products and campaigns that are actually profitable, and not just on achieving high sales volumes.
A high number of orders and turnover does not always equate to a higher profit margin
What type of webshops is it interesting for?
POAS is especially interesting for webshops that sell products with different profit margins. Think of retailers that offer both own-brand products and purchased products, where margins can vary greatly. For these webshops, it is essential to look not only at the turnover, but above all at which products actually generate profits.
Via AdPage Server-Side Tagging, this is only possible if you use our DataLayer and webhooks. So this is possible for Shopify, Magento, WooCommerce and custom sites that have implemented AdPage DataLayer and webhooks.
How does POAS work?
In order for POAS to work in your Google Analytics, Google Ads or Meta Ads, you will need to attach an extra parameter to your purchase event in addition to the "value". This extra parameter will be populated with the POAS value of a created order.
To populate that extra parameter with the correct data, you need to retrieve the product price and product cost for each purchase event. The smartest way to do this is to work with an XML feed. This is a document that is constantly updated based on the settings made in the product feed of an online store. In this XML feed, a cost price is available for each product with which the calculation can be performed in the server container.
How do you set up POAS?
To set up POAS, follow these steps:
1. Retrieve the XML feed
Generate an XML feed with the product information. This can be done, for example, using tools like Channable, a WooCommerce plugin, or another tool suitable for your online store. Make sure that the feed contains all the necessary data, such as the cost price of the products.
2. Link the DataLayer to the XML feed
Go to the webshop you want to set up POAS on and view the DataLayer, within Google Chrome do this with the DataLayer Checker extension or the Analytics Debugger extension. Find the item_id in the DataLayer and make sure it has the same name as in the XML feed. This is important because this link ensures that the cost of the products is correctly merged into the webhook.
item_id in the AdPage data layer
In the XM feed
