Switching from ROAS to POAS? Implement This Quick Tip to Prevent Wasted Ad Spend
Return on Ad Spend (ROAS) doesn’t tell the full story.
- A high ROAS can still be unprofitable.
- A low ROAS can actually be profitable.
That’s why incorporating profit data into your ad account is crucial—it shows which campaigns are genuinely driving profit versus just revenue.
However, the switch from ROAS to Profit on Ad Spend (POAS) can be painful. If done wrong, it can lead to uncontrolled ad spend and tank your campaign performance.
The Problem: Smart Bidding Gone Wild
Let’s say you’ve been optimizing for a 700% ROAS, but your actual POAS target is 200%. When you switch, your bid strategy will optimize for 200% instead of 700%.
And guess what happens next? Google’s Smart Bidding sees the lower target and thinks, “Great! Time to spend like crazy!”
Your costs skyrocket. Your campaign performance nosedives. And you’re left wondering what just happened.
The Fix: Use a Portfolio Bid Strategy with a Tight Max CPC Cap
If you’re making the transition from ROAS to POAS bidding, don’t just let Smart Bidding run wild. Control your CPCs.
Here’s how:
- Set up a Portfolio Bid Strategy. This helps you manage bidding across multiple campaigns with shared settings.
- Apply a tight Max CPC Cap. This prevents Google from overpaying per click while it adjusts to the new POAS target.
Why This Works
- Prevents sudden cost spikes in the first few days.
- Limits overspending while Smart Bidding learns.
- Keeps performance stable instead of tanking post-switch.
Final Thoughts
Switching from ROAS to POAS is a game-changer for understanding true profitability, but without proper guardrails, it can backfire fast.
By implementing a Portfolio Bid Strategy with a strict Max CPC Cap, you can make the switch without letting Smart Bidding go off the rails.
