Marketing Efficiency Ratio (MER) vs. ROAS

When measuring digital advertising performance, most businesses focus on ROAS as the ultimate metric. But there’s another equally important metric gaining popularity — MER, or Marketing Efficiency Ratio. More and more brands are adopting MER to evaluate success. So, what exactly is MER, how is it different from ROAS, and when should you use it?

Here’s everything you need to know about MER.

What is MER: Definition and Meaning

MER, short for Marketing Efficiency Ratio, measures how all your marketing channels work together to drive total business revenue. Unlike metrics that only track direct revenue from ads, MER considers overall revenue, giving you a full picture of marketing impact — including the halo effect from multiple channels.

For Amazon advertisers, MER is very similar to TACoS, as it looks at total revenue compared to total marketing spend.

MER vs. ROAS

The difference between MER and ROAS can be confusing at first. Both are performance metrics, but they serve different purposes.

ROAS Formula

ROAS = Ad revenue ÷ Ad spend

ROAS measures return on ad spend at a campaign level. It doesn’t matter whether you’re running awareness ads or conversion-focused campaigns — the calculation remains the same. This often leads to campaigns being paused too soon, which can hurt long-term growth. And with changes like IDFA restrictions, cookie loss, and iOS14 updates, measuring with ROAS alone has become less reliable.

ROAS still works for comparing individual campaigns, but for evaluating overall growth efficiency, MER provides a much clearer perspective.

MER Calculation

The formula for Marketing Efficiency Ratio is straightforward:

MER = Total Revenue ÷ Total Ad Spend

Here’s what it includes:

Total Revenue: All income earned during a specific period.
Marketing Expenses: All marketing-related costs, including ad campaigns, promotions, and market research.

The result shows how much revenue is generated for every unit of currency spent on marketing. A higher MER means your spending is more efficient, while a lower MER suggests it’s time to re-evaluate or optimize your strategy.

When to Use MER vs. ROAS

Both MER and ROAS have their place. MER is ideal when analyzing the big picture — overall marketing efficiency across all platforms like Google, Facebook, and Instagram. ROAS, on the other hand, is better suited for reporting the performance of a specific campaign or channel.

Example Scenario of Using MER

Imagine you launch a Pinterest campaign for a new product. In the first month, your ROAS from Pinterest looks low because the campaign is still ramping up. However, those ads introduce new customers to your brand.

Later, those same users may:

Get retargeted on Facebook
Search for your product on Amazon and click a Sponsored Ad
Look up your brand on Google and click a search ad
Finally purchase directly from your site

In this case, MER ensures every touchpoint gets credit for the sale — not just the final click.

Why MER Matters

As online shopping journeys become increasingly multi-channel and non-linear, MER gives businesses a holistic view of their marketing performance. Instead of focusing only on last-click attribution, MER considers total revenue against total spend.

Just like ROAS, the goal is to keep MER above a healthy threshold, ensuring efficient growth.

What is a Good MER?

There’s no one-size-fits-all answer to what makes a “good” MER. It depends on industry benchmarks, company goals, and current business context.

Industry Comparison: Use sector-specific standards as a reference.
Efficiency vs. Effectiveness: A high MER doesn’t always mean success, and a low MER isn’t always bad — context matters.
Trends Over Time: Monitoring MER regularly helps reveal improvements or inefficiencies.
ROI Alignment: Evaluate MER alongside ROI to confirm your spend is driving sustainable growth.
Business Stage: Startups may initially have higher MER due to bigger upfront investments, while established brands often operate at lower, optimized ratios.

Ultimately, a “good” MER should align with your growth targets and profitability goals.

Role of MER in Forecasting and Planning

MER plays a critical role in financial planning and future projections:

Budget Allocation: Helps decide where and how much to invest in marketing.
Performance Tracking: Reveals whether strategies are becoming more efficient over time.
Revenue Forecasting: Guides projections based on expected spend and historical MER.
Optimization: Identifies the strongest-performing channels and underperformers.
Decision Making: Influences whether to scale campaigns or adjust strategies.

How to Implement MER Effectively

To apply MER successfully, businesses should take a structured approach:

Collect complete data on revenue and marketing spend across all platforms.
Pair MER with supporting metrics like CAC, CLV, and conversion rates.
Interpret MER in context by reviewing patterns and performance over time.
Reallocate resources to high-performing channels while improving weak ones.
Continuously monitor MER to keep marketing strategies agile.

Common Challenges with MER

While MER is highly valuable, businesses may face challenges, including:

Difficulty in attributing revenue across multiple touchpoints.
Ensuring accurate, consistent data collection across platforms.
Misinterpreting MER without considering broader context.
Using irrelevant benchmarks instead of industry-specific or historical comparisons.

Overcoming these challenges requires disciplined data management and a strong understanding of customer journeys.

Final Thoughts

Marketing Efficiency Ratio (MER) is becoming an essential metric for eCommerce and beyond. It offers a holistic view of how marketing spend impacts total revenue, ensuring every channel’s contribution is recognized.

By tracking MER alongside ROAS, businesses can balance campaign-level insights with overall efficiency. Done right, MER helps optimize strategies, strengthen financial planning, and ensure long-term growth.