Profit on Ad Spend (POAS)

poas

Overview

Profit on Ad Spend (POAS) measures the profitability generated per dollar spent on advertising.

📘

POAS = (Total Sales − Total Costs) ÷ Blended Ad Spend

The calculation is based on data in the Blended Stats table.

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Detailed Breakdown

The formula above is derived from the following components:

• Total Sales = Order Revenue − Refunds, where

  • Order Revenue = SUM(order_revenue) --> Orders table
  • Refunds = SUM(refund_money)
    • refund_money = ABS(SUM(total_refunded_price)) --> Refunds table

• Total Costs = COGS Adjusted + Payment Gateway Costs + Shipping Costs + Handling Fees + Taxes, where

  • COGS Adjusted = cogs − total_refunded_cogs, where
    • cogs = SUM(cost_of_goods) --> Orders table
    • total_refunded_cogs = ABS(SUM(total_refunded_cogs)) --> Refunds table
  • Payment Gateway Costs = SUM(payment_gateway_costs) --> Orders table
  • Shipping Costs = SUM(shipping_costs) --> Orders table
  • Handling Fees = SUM(handling_fees) --> Orders table
  • Taxes = SUM(taxes) --> Orders table

• Blended Ad Spend = spend + custom_ad_spend, where

  • spend = SUM(spend) --> Ads table
  • custom_ad_spend = SUM(IF(is_ad_spend, amount, 0)) --> Custom Spend table

Insights and Actions

Profit on Ad Spend (POAS) evaluates the profitability of your advertising efforts, providing insight into how well ad spend translates into net profit.

• Assess Profitability: Use POAS to identify whether ad spend is driving profitable growth. A low POAS may indicate high costs or underperforming campaigns.
• Optimize Spending Allocation: Compare POAS across channels to allocate budgets to those yielding the highest profitability.
• Evaluate Cost Efficiency: Pair POAS with metrics like Total Costs and Blended ROAS to understand which cost components impact profitability the most.

Related Metrics

• Blended ROAS: Offers a high-level view of revenue generated per dollar spent, complementing POAS for a broader perspective on performance.
• Total Costs: Provides a breakdown of all expenses, helping identify specific cost drivers affecting POAS.
• Order Revenue: Tracks the gross revenue generated, serving as a key input to assess the revenue-to-cost balance in POAS.

Example Use

Prompt

What's my POAS for yesterday?

Response

Query

SQL

SELECT
  COALESCE(
    (SUM(bst.total_sales) - SUM(bst.total_costs)) / NULLIF(SUM(bst.spend), 0),
    0
  ) AS poas
FROM
  blended_stats_tvf () AS bst
WHERE
  bst.event_date BETWEEN CURRENT_DATE() - 30 AND CURRENT_DATE()  - 1;