The digital marketing ecosystem is constantly evolving, which is why new metrics or terms are always appearing. Which can help us better understand the performance of campaigns or new trends in this world. In this way, the addition of new metrics can offer marketing teams new means to improve campaign performance. And even to optimize conversions, profits or , through the new information they provide.
An example of this is the POASa new metric that has begun to be implemented and that many marketing professionals have begun to use on the to measure the performance of your campaigns. But what does this new metric refer to?
What is POAS and how is it different from ROAS?
How many of the terms within digital marketing POAS is an abbreviation, specifically for Profit on Ad Spendwhich would be in Spanish: Return on ad spend. As its name indicates, this metric offers a measurement of the real profit generated by the investment made in advertising campaigns.
In this way, it offers specialists varied information on their performance, being able to efficiently evaluate the benefit that the campaigns generate for the company. Unlike the information retrieved with ROAS, which generally presents the return on investment. This without taking into account pertinent deductions to be able to limit the profit margin left by the campaigns.
The calculation of the POAS is made by taking the profits generated and dividing them by the investment cost of the advertising campaign, as follows:
POAS = Earnings / Ad Spend
Now, although it may sound similar to ROAS, both metrics differ widely in terms of the results obtained in each one. As we explained in another article on this metric, the ROAS or Return on advertising investment, is calculated by dividing the total revenue by the cost of advertising investment, as follows:
ROAS = Total Revenue / Ad Spend
In this way, we can see that the biggest difference between one and the other is its generality feature, since the ROAS takes into account the total income from sales without taking into account the profit margin. On the contrary, the POAS takes into consideration the profit margin of each sale; which also allows you to estimate the change in profit margin over time and also the actual value of sales.
How can POAS help improve sales?
The results offered by the POAS allow marketing teams to maintain a complete profile of campaign performance, while also getting closer to the specifics of each sale. In this way, it allows generating more accurate data reports, resulting in better decision-making about future campaigns. Even starting from the particular information of the sales, it could help to make strategic adjustments on the campaigns in progress, which allow optimizing your profits.
In the same way, it offers greater transparency and transparency on the management and results of the investments made. which allows the differents teams included in the process, understand how the resources were used and the results obtained based on it.
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