POAS: The New Blueprint for Agency Accountability

The Current Model Is Broken

Most agencies like to show off Return on Ad Spend (ROAS) as the gold standard for PPC success. On the surface, a 5:1 or 500% ROAS looks impressive. But ROAS is a vanity metric. It’s easy to manipulate and often says nothing about real business performance.

Here’s the problem: ROAS tracks revenue, not profit. It can make a campaign look strong while hiding high costs and razor-thin margins.

Key issues

• ROAS-first reporting has created a comfort blanket for agencies.
• Stakeholders are presented glossy dashboards while profits quietly bleed out.
• Clients are tired of hearing “everything’s performing well” while P&Ls say otherwise.

We’re guilty of falling into this same trap. As of May 2025 we’ve decided to fundamentally shift our Paid Media approach. Read the details of our service here.

 

Why ROAS Became the Easy Way Out

ROAS hides the real “return”
The word “return” in ROAS makes it sound like ad spend delivers equal value back. But ROAS just totals up sales attributed to ads, whether or not the ads actually caused those sales.

Simon Peel, ex-Adidas marketer, puts it plainly: “ROAS is a misnomer. It should be called ‘credit for ad spend’.”

Agencies often claim credit for purchases that would’ve happened anyway. Like targeting people already planning to buy. High ROAS usually means the campaign chased easy wins (e.g. branded search or retargeting) instead of driving new demand.

 

ROAS ignores costs and profit
ROAS shows revenue per £1 spent. But it tells you nothing about the costs behind those sales.

An ad campaign could return a 4:1 ROAS and still lose money if the margins are thin or fulfilment is expensive.

Say an agency claims £100k in sales from £20k in ad spend (ROAS = 5). Looks good -until you find out the sales cost £90k to fulfil. That’s just £10k in profit, or a POAS of 0.5.

That’s not a win. It’s a money pit. But agencies rarely include that context.

ROAS inflates campaign impact
ROAS often takes full credit for sales influenced by other channels. If someone sees a TV ad or already knows the brand, then clicks a PPC ad, the PPC campaign still gets all the ROAS credit.

It’s like a striker claiming they scored a goal when it was a team effort.

 

Chasing ROAS can hurt growth
Agencies only chasing high ROAS often doubles down on bottom-funnel tactics-like retargeting or branded search, because they’re cheap wins.

“low-hanging or even falling fruit.”

However, this short-term thinking means they neglect broader campaigns that attract new customers. The result? Nice-looking ROAS, flatlining growth.

The Hidden Costs Agencies Ignore

UK e-commerce revenue might look strong on the surface, but the costs tell a different story. Selling online in the UK is expensive-and getting worse. Operating costs like shipping, returns, payment fees, and inflation are piling up, squeezing already tight margins. Many agencies either don’t get this, or choose to ignore it. Brands don’t have that luxury.

High fulfilment costs: “the distribution tax”
Unlike in-store retail, online sellers foot the bill to deliver every order. I’ve heard this coined as “the distribution tax”  – a built-in cost penalty of e-commerce’s one-to-many model. (Blame Amazon)

UK shoppers expect fast, often free, delivery. But couriers, fuel, packaging, and warehouse labour all eat into profit. It costs far more to send a £50 product to someone’s door than to sell it off a shelf.

As online sales increase, margins shrink. Research from Alvarez & Marsal found that across Europe, the more sales shifted online, the more pre-tax profit fell. Growing online revenue often means increasing your cost-to-serve, too.

 

The returns tsunami
Return rates are sky-high in UK e-commerce, especially in fashion. Many shoppers buy with the intent to send items back. Processing those returns, free postage, labour, packaging, and write-offs add major cost.

How’s this for an example –  my lovely partner Ellinor, in preparation for any good night out, will order £200-£500 of clothing using Klarna with the intention of keeping just one item & returning the rest!

As I write, I’m thinking we need to have a conversation regarding the business-environmental-economic ethics of this practice… 

If I had to guess, the brand she buys from may well be in the negative for that individual product. I can guarantee she’ll be just one of many adopting this cash flow-fashion practice.

Side note: She now has a perfect credit score
Side note #2: This is a very complex problem, and we’re only just bringing it into the realm of consideration. Please don’t feel awful if you haven’t cracked it. We have not.

Asos said in early 2023 that above-normal return rates were hammering profitability. Their CEO blamed returns and inflation for pushing the company into a loss.

Retailers are now scrapping free returns or adding fees (like £1.95 per return) because the maths no longer works. An online sale isn’t real revenue until the product stays with the customer. Agencies rarely mention that when counting every order as a win.

The takeaway for UK brands:

Revenue is vanity. Profit is sanity.

If your agency’s celebrating ROAS wins without factoring in Britain’s brutal delivery, returns, and operating costs, you’re being misled.

In a market where every online sale comes with heavy overhead, the only metrics that matter are the ones tied to profit. And that’s precisely what CFOs and boards are now watching.

What is POAS?

To connect marketing metrics with financial reality, savvy marketers are shifting focus from ROAS to POAS = Profit on Ad Spend.

POAS is precisely what it sounds like: how much profit you make for every £1 of ad spend. It’s the profitability-focused version of ROAS, and a far better North Star for judging campaign success.

 Formula:
POAS = (Profit from ad-attributed sales) ÷ (Ad spend)

To calculate it:

• Start with all sales driven by your ads.
• Subtract direct costs- cost of goods, shipping, handling, payment fees, returns, and even customer service if needed.
• What’s left is your profit.
• Divide that profit by your ad spend.

Example:
Say you spend £10,000 on ads and generate £50,000 in sales.

• Cost of goods: £25,000
• Fulfilment & other costs: £15,000
• Profit: £10,000

ROAS = 5.0 (500%)
POAS = 1.0 (100%) → You broke even: £1 in, £1 out.

But if costs were higher and profit dropped to £5,000, POAS would fall to 0.5. That’s just 50p profit per £1 spent, or a loss when marketing costs are factored in.

This is the critical difference:
ROAS shows revenue. POAS shows reality.

ROAS vs POAS: A quick side-by-side

Metric	What it Measures	Good for	Blind to
ROAS	Revenue per £1 ad spend	Optimising sales volume	Profit, margins, cost-to-serve
POAS	Profit per £1 ad spend	Judging true business impact	–

Why POAS is Better

POAS forces you to face the only question that matters:
“After all our costs, did this campaign actually make us money?”

A campaign with a 3x ROAS might sound great. But if your profit margin is only 20%, that’s a POAS of 0.6, just 60p profit per £1 spent. That’s a loss.

Meanwhile, a 1.5x ROAS might look modest. But with 80% margins, the POAS is 1.2, meaning 20% profit per £1 spent. That’s a win.

POAS aligns marketing goals with business goals. It stops teams chasing revenue at all costs and starts them chasing profit. That means:

• Prioritising high-margin products
• Improving basket size or conversion rates
• Dropping campaigns that sell well but deliver poor profit

What Accountability Looks Like in Practice

POAS brings marketing and finance together. To use it properly, you need to know your break-even point.

Breakeven ROAS is the ROAS which you make £0 profit.

Example: If your post-cost margin is 25%, your breakeven ROAS is 4.0.
You need £4 in revenue to recover £3 in costs and £1 in ad spend.

POAS shows this directly:

• POAS of 1.0 = breakeven
• Above 1.0 = profit
• Below 1.0 = loss

This clarity helps with better budgeting:

• That campaign with 3x ROAS might be below breakeven  -don’t scale it.
• Another with 6x ROAS might be a profit machine, double down.
• A campaign with 0.8 POAS? Either fix it or kill it-unless it serves a strategic role.

This is the kind of insight ROAS can’t give you.

POAS = Accountability
POAS is hard to game.

If POAS is 0.5, no one’s buying excuses about “brand awareness” or “attribution quirks.” You’re losing money, full stop.

That’s why challenger agencies are switching to POAS. It shifts the conversation from:

“Look how high your sales are!”
to
“Let’s make sure those sales are profitable.”

Why Most Agencies Won’t Embrace This

If POAS is such a clear improvement, why aren’t all agencies using it?

Simple: it’s harder, it’s riskier, and it exposes performance. Many agencies avoid it for reasons that are, let’s be honest, self-serving.

 

1. It’s more work
   ROAS is easy. Platforms like Google spit it out by default.

POAS? That takes work. You need to pull in cost-of-goods, fulfilment, returns, fees data etc..

Most agencies don’t have at their fingertips. It often means integrating e-commerce platforms, inventory systems, or finance tools.

Many agencies don’t bother. Too complex. Too messy. But effort isn’t an excuse. If you’re managing ad budgets, you’re responsible for showing whether that spend made money. Lazy agencies hide behind convenience.

 

2. They lack access or trust
   Agencies often don’t have margin data because clients don’t share it. That’s a trust issue.

Profit data is sensitive, yes, but a strategic partner should have access. If your agency is still playing in the shallow end with GA4 revenue reports and no visibility into actual costs, you’re not getting the whole picture.

Too many agencies hide behind what’s “available” instead of pushing for what’s meaningful.

 

3. Their fee model rewards spend, not profit
   Most agencies are paid as a % of ad spend. That creates a perverse incentive: spend more = make more.

So why would they tell you to cut spending on unprofitable campaigns? Doing the right thing could mean shrinking their own fees.

They’ll keep pushing more spend under the guise of “great ROAS” while profit quietly bleeds out. Until clients change how agencies get paid, this won’t change. Smart clients are already switching to performance-linked or POAS-aligned fee models.

 

4. They’re scared of being exposed
   Profit metrics show the truth. There’s nowhere to hide.

An agency that’s been coasting on a 4x ROAS might look great-until you factor in costs and realise they’ve been losing you money.

That’s a tough conversation. So they avoid it. Instead, they fluff reports with clickthrough rates, impressions, engagement-vanity metrics that distract from poor commercial performance.

But e-commerce brands are waking up. CFOs are asking better questions. “Did we actually make money?” is replacing “How many clicks did we get?”

 

5. They don’t have the skills
   Tracking POAS means understanding margins, breakeven points, unit economics, not just campaign setup and bid strategy.

Many agencies aren’t there yet. Especially traditional media buyers who never had to think like business analysts.

https://www.linkedin.com/feed/But this is the future. You can’t just be a Google Ads jockey anymore. You need to speak the language of profit, and that means levelling up.

Excuses don’t cut it anymore

Every barrier above can be solved. The agencies that lean into POAS are getting better results and building longer, stronger client relationships.

The ones that don’t? They’ll be replaced by the next CMO who wants the truth.

If you’re still clinging to ROAS-only reporting, you’re not protecting your clients-you’re failing them. It’s time to evolve or get out of the way.

No more fluff. No more spin. If you can’t prove your campaigns are profitable, someone else will.

What Brands Should Be Asking For

• “What’s my POAS across each product line?”
• “Which campaigns are profitable, not just performing?”
• “Can you show me how this campaign contributed to bottom-line growth?”

In short: A Profit-First Performance Model.

If you’re ditching vanity metrics, you need a new playbook. Here’s what an accountable, profit-driven performance report should include, weekly or monthly.

 

What You Should Expect from a Profit-First Agency

If you’re serious about profitable growth, your agency should be reporting on more than just ROAS and revenue. Here’s what you should ask them to provide, weekly or monthly.

1. Breakeven ROAS

Ask your agency:

“What ROAS do we need to break even, based on our margins?”

They should know this number cold. You want to see:

“Based on your 60% margin, breakeven ROAS is ~1.67.
Campaign A ran at 1.5 (below breakeven = loss).
Campaign B hit 3.0 (profit-maker).”

If they’re not benchmarking ROAS against breakeven, they’re giving you incomplete data.

2. POAS and Net Profit

You’re not spending ad budget for clicks-you’re paying it for profit.

Your agency should be telling you:

“Google Search delivered a POAS of 1.4 (£14k profit on £10k ad spend).
Facebook retargeting hit 0.9 (£9k profit on £10k spend-we’re reviewing this).”

Push for transparent monthly reporting of total profit driven by campaigns, not just spend and revenue.

3. Contribution Margin by Product or Category

Demand clarity on where profit is coming from, not just sales.

Ask:

“Which products drove the most profitable sales, and how was the budget allocated accordingly?”

You want breakdowns like:

“£100k in sales from Category 1 at 50% margin (£50k profit)
vs. £100k from Category 2 at 20% margin (£20k profit).”

This tells you if the agency is pushing the right products or just chasing revenue at your expense.

4. True Marketing ROI

You need to see how marketing spend contributes to actual business performance.

Ask:

“What’s the marketing contribution to profit margin overall?”
“Is spending leading to profitable growth once we factor in offline or repeat sales?”

They should be reporting on the real return, not just what’s visible in Google Ads or GA4.

 

5. CAC vs LTV

If you’re focused on customer growth, this is non-negotiable.

Ask:

“What’s our current CAC, and how does that compare to average LTV?”

You want answers like:

“CAC is £25.
First-purchase margin is £10.
But average LTV is £60, so acquisition is profitable with a short payback period.”

If your agency can’t show this, they’re not thinking long-term.

 

6. Weekly/Monthly Profit Trend

Forget just tracking spend and sales. You need to see profit over time.

Ask them to show:

“What’s the net profit trend from marketing efforts, and how is it changing over time?”

A simple profit-over-time chart, annotated with key campaigns or changes, reveals more than any ROAS figure ever could.

Also ask:

• Are we making more profit per customer or order over time?
• What’s being done to improve that?

7. Breakeven Point Alerts

Ask your agency:

“Do you have safeguards in place when performance slips below breakeven?”

You want alerts, thresholds, and proactive decisions, not surprises at month-end.

 

Hold Your Agency to Profit, Not Vanity Metrics

Start every conversation with:

“If this were your business, would you be happy with these numbers?”

Your agency’s job isn’t to defend a media plan-it’s to help grow your business profitably.

If they’re reporting like this:

• You’ll have the numbers to take straight into board meetings
• You’ll know your spend is driving the business forward

You’ll stop wondering and start seeing exactly what your marketing is delivering.

 

You Deserve More Than a Pretty Dashboard

Most agencies won’t offer proper accountability unless you demand it. If you’re a CMO, CEO, or ecommerce lead tired of surface-level reporting, these are the questions and actions that will separate real partners from pretenders:

1. Ask for profit metrics, not just revenue numbers

Start with the basics:

“We spent £50k last month – how much profit did that generate after all costs?”

If the response is ROAS or “we drove £300k in sales,” stop them there. That’s not the question.

You want POAS. You want gross and net profit. If your agency can’t frame performance in those terms, they’re not managing your money-they’re just spending it.

 

2. Ask: What’s our breakeven ROAS, and which campaigns are below it?

If they don’t know your breakeven ROAS, they’re flying blind. You need a clear answer:

“With a 60% margin, your breakeven ROAS is 1.67.”

Then ask:

“Which campaigns are below breakeven, and what are you doing about them?”

Unprofitable campaigns should be improved or cut-immediately. If the agency hasn’t been thinking this way, they’ve likely been wasting your budget.

 

3. Push for full-cost reporting

Ask:

“Do your performance figures account for shipping, returns, discounts, and other variable costs?”

For example:

“You pushed a promo with free shipping on £50+ orders. Did your ROI figures subtract the £5 shipping loss on each one?”

“Returns are running at 30%-is that baked into your revenue or not?”

A solid agency will have adjusted figures. A weak one will mumble about “platform limitations.”

 

4. Ask for profit per order or per customer

You want to know:

“We got 1,000 orders last month- what was the average profit per order after ads and fulfilment?”

If the answer is negative, ask why they’re still scaling that campaign. If it’s low, ask if it’s sustainable. If it’s strong, you know where to lean in.

This is about connecting marketing to your unit economics, not hiding behind averages.

 

5. Ask: Are we acquiring valuable customers?

It’s not just about today’s sale. Ask:

“What’s the lifetime value of the customers we acquired last month?”
“What’s the payback period based on our CAC?”

If they say “we don’t track LTV,” that’s a red flag. Your agency should be thinking like an investor, acquiring customers who come back, not just one-time discount hunters.

 

6. Demand a weekly profit check-in

Monthly reporting is too slow. By then, the money’s gone. Ask:

“Every week, give me a simple update: spend, profit, POAS, and action taken.”

Not a 40-slide deck, just:

“Spent £10k, made £8k profit after costs, POAS = 0.8. Slightly down, here’s why, and here’s what we’re doing.”

If they say “we can’t get that data weekly,” ask why not. Either they’re not set up to monitor real performance, or they don’t want to.

 

7. Call out cherry-picking

Ask:

“Show me the POAS for all campaigns, including the ones that missed target.”
“What % of our spend last quarter was profit-generating?”

You want visibility into everything, not just the highlight reel. If they only show top performers, they’re likely hiding poor spending. Don’t let them.

 

8. Make profitability a condition of partnership

Be direct:

“We care about profit. If you can’t deliver it, we’ll find someone who can.”

Consider tying fees to performance. Incentivise hitting profit targets, not just spend. If an agency baulks, it tells you everything you need to know. The right partner will say yes.

 

9. Trust your gut and the numbers

If you leave an agency meeting unsure how your marketing impacts your bottom line, push harder. Ask again. Don’t settle.

The era of agency accountability is here. The days of “ROAS is good, so all’s good” are over.

 

The new blueprint: Profit-first or nothing

You need an agency that speaks the language of POAS, profit per customer, breakeven thresholds, and unit economics.

Show them the door if they’re still talking in impressions and ROAS with no mention of margin or cost.

Your paid media approach should be a profit engine in 2025. If not, you’re not getting what you’re paying for.

 

Contact us today & we’ll help you build a profitability model for free.

I’ll personally be talking a lot about this over the coming months. Connect with me on LinkedIn to see how this approach unfolds. Feel free to ask me any questions that spring to mind.

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