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We’re SO done with ROAS.
When you stop and think about it, Return on Ad Spend (ROAS) never made sense.
Even if you were only advertising on one platform, in-app ROAS reporting was only ~70% accurate at best.
So ROAS is out.
Instead, your team needs to know your marketing's impact on real business outcomes: that’s your return on marketing.
Some experts may say MER should be called Return on Media...that's good too.
Either way, it's way better than ROAS.
The truth is, ROAS is a relic of the single-channel past.
In today's complex digital advertising world, customers interact with your brand across multiple touchpoints before converting.
ROAS simply can't capture all of that.
However...Marketing Efficiency Ratio (MER) can.
MER looks at your total revenue vs. total marketing spend.
It cuts through the noise of vanity metrics and channel-specific KPIs to answer the only question that really matters:
Are you driving profitable growth?
In this definitive guide to MER, we'll dive deep into why MER is the metric you need to be tracking, how to measure and optimize it, and how to use it to win the war of attention in your market.
You've probably heard of MER.
But you've likely thought it was just one more silly acronym marketing agencies make up when things go wrong with your advertising dollars...
In some cases, that IS true.
Marketing agencies have been known to make themselves look good while your business falls apart - all so they won't get fired.
But not all marketing agencies are made the same.
As Tier 11 VP of Traffic Strategy, John Moran bluntly puts it:
ROAS is the devil 👿.
It’s a bold claim. Here’s why we stand by it...
The core issue with ROAS is that it's too focused on individual channels and campaigns.
It tells you how much revenue a specific ad spend drove, but it doesn't account for the full customer journey and all the touchpoints that contribute to a sale.
We all know what the customer journey really looks like.
In no particular order, your customers might…
ROAS would only credit that sale to the last touchpoint, ignoring all the steps that came before.
This is especially true now that GA4 only offers two attribution models: last click and “data-driven.” 🙄
MER solves this by looking at your marketing holistically. It doesn't care which specific channel or campaign drove the first, last, or 100th click.
It only cares about the overall efficiency and effectiveness of your marketing in driving revenue growth.
Did 👏 your 👏 marketing 👏 work 👏
Story time.
A tea infuser brand was running YouTube ads that showed a pitiful 1.09 ROAS in Google Ads.
Taken at face value, you'd assume the YouTube campaign was a flop…
For every dollar spent on YouTube, you collected $1.09? Not worth your time.
But, when looking at total revenue across all channels, the picture was very different.
The brand's overall MER was a healthy 3.5.
What happened?
The YouTube ads were driving a huge uplift in Amazon sales, which Google Ads wasn't capturing.
As John explains:
“Attribution is based on ‘could the platform track it?’ And if it did, how much of it could it track?”
In this case, Google Ads was only seeing a small slice of the pie.
Yet another reason we built Data Suite. Never trust in-app metrics.
Here's the video version:
The tea infuser example illustrates a key point: the goal of marketing is not to drive a specific ROAS on a specific platform.
It's to win what John calls "the war of attention."
Your ads might not always drive immediate click-throughs and purchases.
But if they're making your brand and products top-of-mind for potential customers, they're doing their job.
Those customers might later search for you on Google or Amazon when they're ready to buy.
MER captures this by looking at the total revenue generated in relation to total marketing spend, regardless of where the final sale happened.
It's a much truer reflection of your marketing's impact.
For many ecommerce brands, Amazon is a huge piece of the omnichannel puzzle.
But it's also a black box when it comes to attribution.
Let's say you're running Google Ads and seeing a 2.28 ROAS.
Not bad, right?
But if 80% of your sales are actually happening on Amazon, that ROAS is only telling 20% of the story.
Again, this is where MER comes in.
By looking at total revenue across all channels—including Amazon—in relation to total ad spend, you get a much more accurate picture.
In the example above, the brand's MER was 3.19, even though Google Ads showed 2.28.
That delta represents all the Amazon sales driven by the Google Ads that weren't being captured in Google's ROAS.
As John puts it:
“Top line media efficiency ratio, all cash in, how much do we make everywhere, is going to be influenced by new customers, returning customers, referral customers...things coming from affiliate, things that are coming from Amazon.”
Calculating your MER is straightforward. Simply divide your total revenue by your total marketing spend over a given period:
MER = Total Revenue / Total Marketing Spend
For example, if you generated $1,000,000 in revenue on $200,000 in marketing spend last quarter, your MER would be 5:
$1,000,000 / $200,000 = 5
This means that for every $1 you spent on marketing, you generated $5 in revenue.
You could do the same with JUST your ad spend in that period, so you get Media Efficiency Ratio.
Same thing, just a slightly different way of measuring it.
So how do you actually use MER to guide your marketing decisions?
The key is benchmarking.
Take a snapshot of your key metrics—MER, nCAC, nMER, etc.—during a period when your business is healthy and profitable.
These become your benchmarks.
Then, as you monitor performance over time, you can compare your current metrics to those benchmarks.
The goal is not to chase an arbitrary ROAS number, but to maintain (or improve) your benchmarked MER.
Let's say your benchmark MER is 3.5, and your Facebook ROAS is 1.23.
If your Facebook ROAS dips to 1.1 but your MER holds at 3.5, that's ok!
It likely means Facebook is playing a key role upper-funnel, and the sales are being captured elsewhere.
Conversely, if your Facebook ROAS spikes to 2.0 but your MER drops to 3.0, that's a red flag.
It likely means you're over-investing in bottom-funnel at the expense of upper-funnel channels that were filling the pipeline.
Most importantly, your MER benchmarks should be informed by your specific growth objectives and unit economics.
Work backwards from your revenue goals to determine the MER you need to hit to achieve profitable growth.
Embracing MER as your primary performance metric requires a mindset shift.
It means moving away from a siloed, channel-specific view of marketing and instead treating your efforts as an integrated system with a singular goal:
Driving incremental business value.
This shift starts with getting buy-in from your full marketing team and key stakeholders.
Everyone needs to understand:
Regular reporting and performance reviews should center around MER, with tactical metrics and KPIs laddering up to this overarching measure of success.
Operationally, an MER-centric approach requires:
It's not always easy, but the payoff—a marketing machine that reliably and efficiently drives business results—is more than worth it.
In the new era of digital marketing, efficiency is the name of the game.
Consumer attention is fragmented, competition is fierce, and budgets are under constant scrutiny. In this environment, vanity metrics and siloed optimization won't cut it.
Marketers need a clear, consistent way to quantify and improve their impact on real business outcomes.
This is the promise of Marketing Efficiency Ratio.
By making MER your north star, you ensure that every dollar and every effort is aligned towards what matters most: profitable, sustainable growth.
There will always be nuances, caveats, and contextual factors to consider.
But as a unified measure of marketing productivity, MER is the best we've got—and it's a damn sight better than ROAS.
So if you're ready to leave the vanity metrics behind, to embrace full-funnel optimization, and to make every marketing dollar work harder, MER is your path forward.
Measure it, benchmark it, optimize for it, and watch your results soar.
Our team of performance marketing experts lives and breathes MER optimization. We'd love to show you how it can transform your business.