{"id":10203,"date":"2024-08-13T09:51:02","date_gmt":"2024-08-13T09:51:02","guid":{"rendered":"https:\/\/smarter-ecommerce.com\/blog\/en\/?p=10203"},"modified":"2026-01-28T12:06:36","modified_gmt":"2026-01-28T12:06:36","slug":"beyond-roas-vs-poas","status":"publish","type":"post","link":"https:\/\/smarter-ecommerce.com\/blog\/en\/google-ads\/beyond-roas-vs-poas\/","title":{"rendered":"Wake up: Your ROAS addiction won&#8217;t make you profitable!"},"content":{"rendered":"\n<p><strong>Here is a harsh truth: <\/strong>Too many advertisers are so <strong>addicted to ROAS<\/strong> that they completely ignore tactics that will <strong>actually<\/strong> make their business <strong>more profitable and healthy.<\/strong><\/p>\n\n\n\n<p>If that sounds all too familiar to you, we suggest kicking this bad habit now and starting to be more strategic.&nbsp;<\/p>\n\n\n\n<p><strong>So let\u2019s go cold turkey \u2013&nbsp;<\/strong><\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\"><p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<\/div><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/smarter-ecommerce.com\/blog\/en\/google-ads\/beyond-roas-vs-poas\/#roas-just-one-piece-of-the-puzzle\" >ROAS: Just one piece of the puzzle<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/smarter-ecommerce.com\/blog\/en\/google-ads\/beyond-roas-vs-poas\/#the-roas-trap-when-efficiency-misleads\" >The ROAS trap: When efficiency misleads<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/smarter-ecommerce.com\/blog\/en\/google-ads\/beyond-roas-vs-poas\/#poas-better-but-not-perfect\" >POAS: Better, but not perfect<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/smarter-ecommerce.com\/blog\/en\/google-ads\/beyond-roas-vs-poas\/#a-better-approach-high-impact-not-just-efficiency\" >A better approach: High Impact, not (just) Efficiency<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/smarter-ecommerce.com\/blog\/en\/google-ads\/beyond-roas-vs-poas\/#beyond-roas-metrics-that-perform\" >Beyond ROAS: Metrics that perform<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/smarter-ecommerce.com\/blog\/en\/google-ads\/beyond-roas-vs-poas\/#a-look-at-lookfantastic\" >A look at LOOKFANTASTIC<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/smarter-ecommerce.com\/blog\/en\/google-ads\/beyond-roas-vs-poas\/#roas-vs-poas-the-answer-is-more-multi-faceted\" >ROAS vs POAS? The answer is more multi-faceted!<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/smarter-ecommerce.com\/blog\/en\/google-ads\/beyond-roas-vs-poas\/#the-bottom-line\" >The bottom line<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\" id=\"h-roas-just-one-piece-of-the-puzzle\"><span class=\"ez-toc-section\" id=\"roas-just-one-piece-of-the-puzzle\"><\/span>ROAS: Just one piece of the puzzle<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>Return on Ad Spend <\/strong>(ROAS) measures the <strong>efficiency of your advertising spend<\/strong>, showing the revenue generated for <strong>every dollar spent<\/strong> on ads. It\u2019s a popular metric because it\u2019s easy to understand and track.&nbsp;<\/p>\n\n\n\n<p>Additionally, <strong>highly automated campaign types<\/strong> \u2013 like Performance Max \u2013 use ROAS as the <strong>only lever to optimize ads towards performance<\/strong>. <\/p>\n\n\n\n<p>So understandably, many retailers rely heavily on ROAS simply because it is one of the few steering options available to them out-of-the-box in their advertising ventures.<\/p>\n\n\n\n<p>Now, we don\u2019t want to bad-mouth ROAS \u2013 <a href=\"https:\/\/smarter-ecommerce.com\/blog\/en\/ecommerce\/roas-alternatives-order-profit-clv\/\" target=\"_blank\" rel=\"noreferrer noopener\">even though we are <strong>admittedly pretty<\/strong> good at it.<\/a> \ud83d\ude09&nbsp;<\/p>\n\n\n\n<p><strong>ROAS is absolutely essential<\/strong> to measure the efficiency of your ad spend and to understand how well your ads are driving revenue. But as is often the case, there can be too much of a good thing.<\/p>\n\n\n\n<p>To us, ROAS is a bit of an <strong>\u2018advertising ice cream\u2019<\/strong>. Hey, we love ourselves some ice cream, but we don\u2019t want to overeat on it, do we?&nbsp;<\/p>\n\n\n\n<p>Simply put, over-optimizing ads towards high ROAS will definitely give you a <strong>misleading perspective<\/strong> on your overall <strong>business health<\/strong>.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"970\" height=\"762\" src=\"https:\/\/smarter-ecommerce.com\/blog\/en\/wp-content\/uploads\/2024\/08\/Screenshot-2024-08-06-at-14.32.08-1.png\" alt=\"The misleading efficiency of ROAS\" class=\"wp-image-10331\" srcset=\"https:\/\/smarter-ecommerce.com\/blog\/en\/wp-content\/uploads\/2024\/08\/Screenshot-2024-08-06-at-14.32.08-1.png 970w, https:\/\/smarter-ecommerce.com\/blog\/en\/wp-content\/uploads\/2024\/08\/Screenshot-2024-08-06-at-14.32.08-1-300x236.png 300w\" sizes=\"auto, (max-width: 970px) 100vw, 970px\" \/><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-the-roas-trap-when-efficiency-misleads\"><span class=\"ez-toc-section\" id=\"the-roas-trap-when-efficiency-misleads\"><\/span>The ROAS trap: When efficiency misleads<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Over-optimizing for ROAS can lead to <strong>several pitfalls<\/strong> that <strong>undermine long-term profitability<\/strong> and strategic growth:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-limiting-revenue-growth-nbsp\"><strong>Limiting revenue growth:<\/strong>&nbsp;<\/h3>\n\n\n\n<p>An excessively high ROAS might indicate <strong>under-investment in growth opportunities<\/strong>. Sometimes, <strong>lowering your ROAS<\/strong> can lead to <strong>greater revenue<\/strong> by capturing a larger market share.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-misleading-profitability-nbsp\"><strong>Misleading profitability:<\/strong>&nbsp;<\/h3>\n\n\n\n<p>A high ROAS might mask low-profit margins. For starters: ROAS <strong>doesn\u2019t consider additional costs<\/strong> \u2013 like shipping\/fulfullment, returns, digital taxes, coupons etc.<\/p>\n\n\n\n<p><strong>Or in other words<\/strong>: Achieving an excellent ROAS by promoting low-margin products can result in impressive revenue <strong>but poor overall profitability.<\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-ignoring-strategic-goals-nbsp\"><strong>Ignoring strategic goals:<\/strong>&nbsp;<\/h3>\n\n\n\n<p>Solely focusing on ROAS can distract from broader strategic objectives such as giving your very own first-party products more visibility in the ads game. Or acquiring new customers yet unfamiliar with your brand.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-a-little-thought-experiment\">A little thought experiment<strong>: <\/strong><\/h3>\n\n\n\n<p>Say you are selling consumer electronics, including high-margin laptops and low-margin accessories.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Pushing the wrong products:<\/strong><br><br>Your advertising focuses on selling phone chargers and cables, which have a low cost and sell in high volume. This results in a high ROAS because the revenue generated from these accessories is significant compared to the ad spend.<br><br><strong>However: <\/strong>these products have very slim profit margins. Even though your ROAS looks impressive, the overall profitability is low because the profit per unit is minimal.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Missing growth potential:<\/strong><br><br><strong>You maintain a high ROAS<\/strong> by advertising low-margin accessories. Meanwhile, high-margin products like laptops are not getting the ad support they need.<br><br>If you adjust your strategy and <strong>lower your ROAS target slightly<\/strong> to include advertising for laptops, you might sell fewer units overall, but each laptop sold brings in <strong>a much higher profit<\/strong>. This can result in higher total profits, even if the <strong>ROAS is lower.<\/strong><\/li>\n<\/ul>\n\n\n\n<p>This is why many creative thinkers in the world of PPC have developed alternative measurements to evaluate profitability beyond just revenue. But are they all what they are <strong>made out to be?<\/strong><\/p>\n\n\n\n<p>So let&#8217;s have a look at ROAS vs <strong>POAS<\/strong> \u2013<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"578\" src=\"https:\/\/smarter-ecommerce.com\/blog\/en\/wp-content\/uploads\/2024\/08\/poas-roas-whonoas-1024x578.png\" alt=\"ROAS vs POAS \u2013 What's the difference?\" class=\"wp-image-10296\" srcset=\"https:\/\/smarter-ecommerce.com\/blog\/en\/wp-content\/uploads\/2024\/08\/poas-roas-whonoas-1024x578.png 1024w, https:\/\/smarter-ecommerce.com\/blog\/en\/wp-content\/uploads\/2024\/08\/poas-roas-whonoas-300x169.png 300w, https:\/\/smarter-ecommerce.com\/blog\/en\/wp-content\/uploads\/2024\/08\/poas-roas-whonoas-1536x867.png 1536w, https:\/\/smarter-ecommerce.com\/blog\/en\/wp-content\/uploads\/2024\/08\/poas-roas-whonoas-640x360.png 640w, https:\/\/smarter-ecommerce.com\/blog\/en\/wp-content\/uploads\/2024\/08\/poas-roas-whonoas.png 1552w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><figcaption class=\"wp-element-caption\">ROAS vs POAS \u2013 Know the difference!<\/figcaption><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-poas-better-but-not-perfect\"><span class=\"ez-toc-section\" id=\"poas-better-but-not-perfect\"><\/span>POAS: Better, but not perfect<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>Profit on Advertising Spend <\/strong>(POAS) is kinda the new cool kid in town. A lot of advertisers talk about it, but very few truly understand what it actually measures. Or how it <strong>actually contributes<\/strong> to your overall profitability.&nbsp;<\/p>\n\n\n\n<p>Generally speaking, POAS <strong>goes a step furthe<\/strong>r than ROAS by <strong>considering profit margins<\/strong> as well as what you spent on your ads. POAS <strong>calculates the<\/strong> <strong>profit generated<\/strong> from your ad spend rather than just the revenue, providing a clearer picture of your ad campaigns&#8217; profitability.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-how-poas-works\">How POAS works:<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Revenue calculation:<\/strong> Like ROAS, POAS starts by looking at the revenue generated from your ads.<br><\/li>\n\n\n\n<li><strong>Cost deduction:<\/strong> It then subtracts the costs associated with the products sold, including manufacturing, shipping, and other related expenses.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-why-this-matters\">Why this matters:<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Alignment with profitability:<\/strong> POAS aligns your advertising spend more closely with profitability goals, giving a more accurate measure of success by focusing on the profit rather than just revenue.<br><\/li>\n\n\n\n<li><strong>Considering costs:<\/strong> POAS accounts for the actual costs of goods sold, providing a realistic view of your profitability.<br><\/li>\n\n\n\n<li><strong>Better decision making:<\/strong> With POAS, you can make better decisions about where to allocate your ad spend to maximize profits.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-it-s-not-all-sunshine-and-rainbows-though-nbsp\">It\u2019s not all sunshine and rainbows, though \u2013&nbsp;<\/h3>\n\n\n\n<p>When looking at ROAS vs POAS, it&#8217;s important to point out that POAS is still just a marketing efficiency and <strong>not a profitability<\/strong> metric. While it provides a clearer picture of profit generated from your ad spend, POAS still <strong>focuses on individual campaigns<\/strong> and doesn\u2019t consider the <strong>full picture of your entire business&#8217;s health.<\/strong><\/p>\n\n\n\n<p>So going all in on POAS gives you <strong>a better jumping-off point<\/strong> towards measuring profitability, but it can still present similar challenges to those posed by ROAS. <\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>POAS gives you a <strong>better jumping-off point<\/strong> towards measuring profitability, but \u2013 <strong>like ROAS<\/strong> \u2013 it&#8217;s still just <strong>an efficiency metric!<\/strong><\/p>\n<\/blockquote>\n\n\n\n<p>Update: We\u2019ve published our 2026 ranking of the <a href=\"https:\/\/smarter-ecommerce.com\/blog\/en\/google-ads\/top-4-ppc-platforms-that-enable-true-profit-on-ad-spend-poas-bidding\/\" target=\"_blank\" rel=\"noreferrer noopener\">Top 4 PPC Platforms for POAS Bidding<\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-a-better-approach-high-impact-not-just-efficiency\"><span class=\"ez-toc-section\" id=\"a-better-approach-high-impact-not-just-efficiency\"><\/span>A better approach:<br>High Impact, not (just) Efficiency<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>Let\u2019s cut the BS: <\/strong>Whether you are choosing between ROAS vs POAS, both are just efficiency metrics. <strong>They don&#8217;t measure business outcomes. Nor business results!<\/strong><\/p>\n\n\n\n<p>Sure, efficiency is important for any business, but it will only get you so far. In fact, you can run some <strong>really impressive looking campaigns<\/strong> and yet still <strong>fail to drive profits.<\/strong><\/p>\n\n\n\n<p>So instead of using ROAS as a measure of per-campaign performance, use it as a <strong>steering mechanism across all your campaigns<\/strong>. The goal isn\u2019t to chase the highest ROAS targets but to <strong>set the right targets <\/strong>that will steer you<strong> towards profitability.<\/strong><\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>Instead of chasing the highest ROAS targets, <strong>set the right targets<\/strong> that will <strong>steer you towards profitability.<\/strong><\/p>\n<\/blockquote>\n\n\n\n<h3 class=\"wp-block-heading\">Step 1: Leverage your unique business data&nbsp;<\/h3>\n\n\n\n<p>Nobody knows your business better than you do. So harness the <strong>full potential of the multi-dimensional data points<\/strong> that are right at your fingertips!*&nbsp;<\/p>\n\n\n\n<p>Utilize your first-party data, including details about sales performance, inventory levels, and customer preferences. <\/p>\n\n\n\n<p><em>&nbsp;[* What do we talk about when we talk about multi-dimensional data? Check out our <strong><a href=\"https:\/\/smarter-ecommerce.com\/blog\/en\/google-ads\/multi-dimensional-product-segmentation\/\">guide on Multi-Dimensional Product Segmentation<\/a><\/strong> to get the full picture!]<\/em><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Step 2: Identify high-impact products&nbsp;<\/h3>\n\n\n\n<p>The next step is to use this data<strong> to score and identify the products<\/strong> in your inventory <strong>that have the highest chance<\/strong> to contribute to your <strong>bottom line<\/strong>.*<\/p>\n\n\n\n<p><em>[* <strong>Pro tip: <\/strong>To streamline this process, we use an AI-driven scoring model that continuously learns and adapts to changes in your inventory.]<\/em><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Step 3: Set up campaigns with the \u201cright\u201d ROAS targets<\/h3>\n\n\n\n<p>With your <strong>high-impact items identified, it\u2019s now time to build campaigns that perfectly align with your business goals<\/strong>, rather than just efficiency.<\/p>\n\n\n\n<p>Again, <strong>this isn\u2019t about foregoing ROAS targets<\/strong> but to define the <strong>\u201cright\u201d targets <\/strong>to steer your campaigns towards your ultimate goal: <strong>profitability.&nbsp;<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image size-large is-resized\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"526\" src=\"https:\/\/smarter-ecommerce.com\/blog\/en\/wp-content\/uploads\/2024\/08\/Screenshot-2024-08-06-at-15.59.25-1024x526.png\" alt=\"\" class=\"wp-image-10273\" style=\"width:840px;height:auto\" srcset=\"https:\/\/smarter-ecommerce.com\/blog\/en\/wp-content\/uploads\/2024\/08\/Screenshot-2024-08-06-at-15.59.25-1024x526.png 1024w, https:\/\/smarter-ecommerce.com\/blog\/en\/wp-content\/uploads\/2024\/08\/Screenshot-2024-08-06-at-15.59.25-300x154.png 300w, https:\/\/smarter-ecommerce.com\/blog\/en\/wp-content\/uploads\/2024\/08\/Screenshot-2024-08-06-at-15.59.25-1536x789.png 1536w, https:\/\/smarter-ecommerce.com\/blog\/en\/wp-content\/uploads\/2024\/08\/Screenshot-2024-08-06-at-15.59.25.png 1550w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><figcaption class=\"wp-element-caption\">Beyond ROAS: We segment and score your product catalog with <a href=\"https:\/\/www.linkedin.com\/posts\/smarter-ecommerce-gmbh_multi-dimensional-product-segmentation-activity-7195752887182888960-6PBr\" target=\"_blank\" rel=\"noreferrer noopener\">multi-dimensional data<\/a> \u2013 then design, monitor and adjust campaigns based on your goals and KPIs.<\/figcaption><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\">So, what are the \u201cright\u201d ROAS targets?<\/h3>\n\n\n\n<p>To continue our little <strong>thought experiment from above \u2013&nbsp;<\/strong><\/p>\n\n\n\n<p>With a little help of our <strong>AI-driven scoring model<\/strong>, you can <strong>identify the items<\/strong> in your inventory with the <strong>highest profit margins<\/strong> \u2013 in the case of our consumer electronics reseller, that would be those really awesome laptops.<\/p>\n\n\n\n<p>Now you can <strong>set up campaigns with the right ROAS targets<\/strong> to get the best performance out of your ads.<\/p>\n\n\n\n<p>So here\u2019s a crazy idea:<strong> Why not \u201clower\u201d your target ROAS?<\/strong><\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>For example: <\/strong>Instead of chasing high ROAS targets like before, you should <strong>set up campaigns with lower ROAS targets<\/strong> to promote your high-margin laptops. Even if the ROAS is lower, the <strong>significant profit margins<\/strong> on these products can lead to <strong>greater overall profitability.<br><\/strong><\/li>\n\n\n\n<li><strong>By setting different ROAS targets<\/strong> for each segment based on their predicted contribution to your profitability, you can optimize your ad spend to achieve <strong>better overall financial performance<\/strong>\u2014not despite, but actually because your<strong> ROAS targets are lower!<\/strong><\/li>\n<\/ol>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>You can achieve <strong>better overall financial performance<\/strong> not despite, <strong>but because<\/strong> your<strong> ROAS targets are lower!<\/strong><\/p>\n<\/blockquote>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-beyond-roas-metrics-that-perform\"><span class=\"ez-toc-section\" id=\"beyond-roas-metrics-that-perform\"><\/span>Beyond ROAS:<br>Metrics that perform<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>Beyond setting up your campaigns<\/strong> for high impact, there is even more <strong>you can do<\/strong> to get a fuller picture of your growth opportunities. It&#8217;s all about the right metrics.<\/p>\n\n\n\n<p>Okay, now you know that <strong>ROAS is an efficiency metric<\/strong> and not a performance indicator. But which KPIs will actually help your business <strong>measure the performance of your marketing ventures?<\/strong><br><br>We suggest that you consider a more <strong>holistic approach<\/strong> that includes <strong>multiple metrics<\/strong> \u2013 not just one. This <strong>multi-dimensional view<\/strong> helps you gain deeper insights into your campaigns&#8217; effectiveness to drive sustainable growth.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-customer-lifetime-value-clv\">Customer Lifetime Value (CLV):<\/h3>\n\n\n\n<p>Understanding the total value a customer brings over their entire relationship with your business is crucial. Focusing on CLV helps identify the most profitable customer segments. <\/p>\n\n\n\n<p>This, of course, means changing your mindset from generating short-term revenue after a click to winning the right clients. <strong>Are you ready for that?<\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-product-margin\">Product Margin:<\/h3>\n\n\n\n<p>Not all products contribute equally to your bottom line. High-revenue products might seem attractive, but their profit margins can vary significantly.&nbsp;<\/p>\n\n\n\n<p>Prioritizing advertising for high-margin products ensures that your marketing efforts are driving the most profitable sales, enhancing overall business profitability even if the initial ROAS is lower.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-basket-margin\">Basket Margin:<\/h3>\n\n\n\n<p><strong>Now we\u2019re talking!<\/strong> Consider the profitability of the entire shopping basket, which might include a mix of high-margin and low-margin items. Some products can drive additional purchases, increasing the overall value of the basket.&nbsp;<\/p>\n\n\n\n<p>With a clearer focus on basket margins, you can create strategies that maximize the total profitability of each transaction, rather than just individual product sales.<\/p>\n\n\n\n<div class=\"cta-row-box-bluesolid\" style=\"position: relative;\">\n<div class=\"down-arrow-white\"><\/div>\n<h3 class=\"cta-row-title\">Take full control of your <b>Google Ads<\/b><br> and start <b>growing your business<\/b>!<\/br><\/h3>\n<a class=\"btn btn-gold-cta\" href=\"https:\/\/smarter-ecommerce.com\/en\/demo\/\" target=\"_blank\" rel=\"noopener\">Here is how <i class=\"fa fa-angle-right\"><\/i><\/a><\/div>\n<div id=\"product-scoring\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-a-look-at-lookfantastic\"><span class=\"ez-toc-section\" id=\"a-look-at-lookfantastic\"><\/span>A look at LOOKFANTASTIC<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Take a page out of <strong><a href=\"https:\/\/smarter-ecommerce.com\/en\/case-studies\/lookfantastic\/\" target=\"_blank\" rel=\"noreferrer noopener\">THG\u2019s playbook<\/a><\/strong> to see how aligning campaigns with more profit-driving strategies will help you hit your lucrative business goals \u2013 and not just ROAS targets.<\/p>\n\n\n\n<p><strong>THG\u2019s LOOKFANTASTIC store<\/strong>, a leading online beauty retailer, faced tough challenges when aiming to align Performance Max campaigns with their business goal to drive sustainable profitability.<\/p>\n\n\n\n<p>Through AI-driven product scoring and customer data analysis, LOOKFANTASTIC shifted to <strong>high-margin products<\/strong> and <strong>strategic brand promotions<\/strong>.&nbsp;<\/p>\n\n\n\n<div class=\"cta-row-box-bluesolid\" style=\"position: relative;\">\n<div class=\"down-arrow-white\"><\/div>\n<img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/a.storyblok.com\/f\/42081\/250x141\/65876d7a4d\/thg_thumbnail-no-avail.png\" alt=\"THG Logo\" \/>\n<br><p=\"cta-row-title\" style=\"color: white;\"><b>THG<\/b> went above and beyond ROAS to achieve <br><b>real, sustainable business growth<\/b>!<\/br>\n<br><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/a.storyblok.com\/f\/42081\/1080x324\/9333e62138\/profitable-revenue-gains_thg.png\" alt=\"THG's profits across stores\" style=\"width: 76%;\" \/><\/b><\/h3>\n<br><a class=\"btn btn-gold-cta\" href=\"https:\/\/smarter-ecommerce.com\/en\/case-studies\/lookfantastic\/\" target=\"_blank\" rel=\"noopener\">Read the Case Study <i class=\"fa fa-angle-right\"><\/i><\/a><\/div>\n<div id=\"multi-dimensional-product-segmentation\"><\/div>\n\n\n\n<div style=\"height:25px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p>This resulted in a<strong> +39% increase in daily revenue<\/strong> in key markets like Germany and <strong>a +42% revenue boost<\/strong> for <strong>several beauty shops in THG\u2019s network<\/strong>\u200b\u200b.&nbsp;<\/p>\n\n\n\n<blockquote class=\"wp-block-quote white-blockquote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>Focusing on our strategically important products led to truly impressive revenue growth.<\/p>\n<cite>Mason Park, Paid Media Lead, THG<\/cite><\/blockquote>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-roas-vs-poas-the-answer-is-more-multi-faceted\"><span class=\"ez-toc-section\" id=\"roas-vs-poas-the-answer-is-more-multi-faceted\"><\/span>ROAS vs POAS? The answer is more multi-faceted!<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Don&#8217;t get us wrong, ROAS is an important metric, but <strong>it doesn\u2019t tell the whole story<\/strong>. ROAS is an efficiency, and not a profitability metric. And while<strong> POAS is a superior way<\/strong> to track the profitability of your Ads campaigns, it too limits your business perspective <strong>on a per-campaign basis.<\/strong> <\/p>\n\n\n\n<p>So what is the answer then? <strong>Think more multi-dimensional!<\/strong><br><br>To achieve long-term success, integrate broader business metrics, including \u2013 <strong>but NOT limited to<\/strong> \u2013 <strong>POAS<\/strong>, <strong>Basket Margins<\/strong>, and <strong>Product Margins<\/strong>. With a more holistic approach and focusing on what truly matters, you can <strong>drive actual sustainable growth<\/strong> and profitability.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-the-bottom-line\"><span class=\"ez-toc-section\" id=\"the-bottom-line\"><\/span>The bottom line<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>ROAS has its limits:<\/strong> It&#8217;s a marketing efficiency metric. Period.<\/li>\n\n\n\n<li><strong>POAS is misleading:<\/strong> Don&#8217;t let the &#8220;Profit&#8221; mislead you. It&#8217;s also just an efficiency metric. And efficienct campaigns alone won&#8217;t make your business profitable.<\/li>\n\n\n\n<li><strong>Be more holistic:<\/strong> Incorporate a wider set of business metrics, from CLV, Product Margin, and Basket Margin for a fuller picture of business health.<\/li>\n\n\n\n<li><strong>Segment strategically:<\/strong> Use AI and a multitude of your critical business data to tailor campaigns that enhance profitability.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Here&#8217;s a harsh truth: Good ROAS does NOT equate to high profitability. To achieve higher returns in your Google Ads, look at ROAS vs POAS.<\/p>\n","protected":false},"author":91,"featured_media":10204,"comment_status":"closed","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4,479,435,7,584,568],"tags":[104,476,700,695,701,703,273,702],"class_list":["post-10203","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ecommerce","category-google-ads","category-adwords-automation","category-google-shopping","category-innovation","category-microsoft-advertising","tag-ecommerce","tag-google-ads","tag-online-retail","tag-performance-max","tag-poas","tag-profitability","tag-roas","tag-roas-vs-poas"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.7 (Yoast SEO v27.4) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Kick your ROAS addiction: ROAS vs POAS<\/title>\n<meta name=\"description\" content=\"Here&#039;s a harsh truth: Good ROAS does NOT equate to high profitability. 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