Alex Held
AuthorBy default, marketing platforms such as Google Ads or Google Analytics report the revenue from purchases instead of profit, which often includes taxes, shipping, and other fees. Consequently, the data you get isn't reliable as it does not take into account your actual earnings on a particular purchase.
To effectively estimate the results of advertising campaigns and your marketing efforts, you need to track the Profit on Ad Spend (POAS). This marketing metric will be helpful for current performance analysis and planning future advertising campaigns. In this article, we will explain the importance of the Profit on Ad Spend metric and how to start tracking it easily.
Profit on Ad Spend (POAS) helps more precisely evaluate the performance of advertising campaigns. Unlike other popular formulas, such as Return on Ad Spend, it takes into account the actual profit after subtracting any additional costs (e.g., taxes, shipping costs).
Relying on profit instead of revenue generated leads to more effective ad campaign analysis and better business decisions.
To achieve this, you don't need to send the full number of conversions; you only need to send your earnings, depending on what products were purchased.
So the main task is to store your earnings data for each product somewhere and send this data instead of the purchase amount.
A dataLayer is a JavaScript object that holds and passes information about the page or user's interactions to tags. It can also be used to set up Profit on Ad Spend tracking. However, it has a significant drawback - low data security. Technically, the data you store in a dataLayer can be easily accessed through the browser's developer tools, like the "Inspect" function.
| The dataLayer is a good solution for collecting lightweight data (e.g., cart data); if that’s the case for you, check our end-to-end guide on dataLayer in Google Tag Manager. |
Such a method works via GTM setup. You need to create a lookup table variable or custom JavaScript that will collect data. However, this method will work only if you don't have a significant amount of items. Lookup tables or custom JavaScript variables will be inconvenient for dozens or hundreds of products.
Storing product IDs and their profits in an external database is the most effective approach to tracking Profit on Ad Spend. It is a highly secure method that allows you to store enormous amounts of data about the items you sell.
However, it has several difficulties with configuration, especially with connecting to the external database and then connecting this data to your existing tracking. To simplify the setup process, you can choose Stape as your hosting provider for sGTM and use the POAS Data Feed power-up for simple and reliable setup.
Learn more about the POAS Data Feed power-up.
It is assumed that you are already using server-side tracking via sGTM and that it is already configured. If not, here is a list of relevant articles:
| For a step-by-step setup guide for the POAS Data Feed power-up, feel free to read our Helpdesk article. |
Profit on Ad Spend is a helpful metric for your business to track. Unlike other metrics such as ROS and ROAS, it measures the gross profit generated for every dollar spent on an ad, so it shows the profit after subtracting any possible additional costs like taxes and shipping costs. This gives you a clear view of ad campaign profitability, enabling you to make more informed decisions.
The most effective way to track Profit on Ad Spending is to use an external database. You may consider Stape's POAS Data Feed for this purpose. It is seamlessly integrated with Stape, so it doesn't require any additional setup; in addition, the POAS Data Feed power-up is available for users with the Pro or higher plan.
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