If you’re still obsessing over ROAS (Return on Ad Spend), it’s time to come up for air. There’s a shiny new pearl in the marketing sea, and her name is MER—Marketing Efficiency Ratio. Why is she the star of the show? Because MER looks at your entire marketing spend and how it works together, not just the pretty surface numbers of one channel.
Let’s dive in (yes, pun intended) and explore what MER is, how to calculate it, and why it’s the ultimate compass for navigating the sometimes stormy waters of ad spend efficiency.
What Is MER and Why Should You Care?
MER (Marketing Efficiency Ratio) is the ultimate mermaid’s map for charting how well your entire marketing strategy is performing. Unlike ROAS, which only looks at individual ad campaigns, MER takes a bigger picture approach. It measures your total revenue against your total ad spend.
Here’s the simple formula:
MER = Total Revenue / Total Ad Spend
So, if you made $100,000 in revenue and spent $20,000 on ads, your MER would be 5. That means for every dollar spent, you’re pulling in five—not bad, right?
Why Is MER Better Than ROAS?
Think of ROAS as a single seashell on the beach—nice, but not the full picture. MER, on the other hand, is the entire ocean. It gives you a holistic view of how your business is performing.
Here’s why MER is the sea star:
- It’s All-Inclusive: MER considers all your marketing efforts, from Meta Ads to email campaigns, influencers, and beyond.
- It’s Realistic: ROAS can look amazing for one channel, but if your overall spend isn’t profitable, you’re swimming against the tide.
- It Encourages Strategy: By focusing on MER, you’ll think about your entire marketing ecosystem, not just isolated campaigns.
How to Calculate MER (and Keep It Swimming Along)
Calculating MER is easier than spotting a mermaid at the beach. Just grab two numbers:
- Total Revenue: Look at your gross revenue for the period you’re measuring (monthly, quarterly, etc.).
- Total Ad Spend: Add up all your ad expenses across channels.
Then divide:
MER = Total Revenue / Total Ad Spend
Here’s a pro tip for smooth sailing: Track your MER consistently and compare it over time. If it’s trending downward, it’s time to review your campaigns and make some adjustments.
What’s a Good MER?
Great question! A good MER depends on your industry, margins, and goals. Here are some general benchmarks:
- 3-5: Healthy for most eCommerce brands. You’re making back 3-5 times what you’re spending.
- 5+: You’re swimming in success! High efficiency and profitability.
- Below 3: Time to check for leaks in your strategy. Are your ads underperforming? Are your costs too high?
How to Improve Your MER
If your MER isn’t where you want it to be, don’t panic—grab your snorkel and start exploring these strategies:
- Boost Your AOV: Increase your average order value with bundles, upsells, or discounts for larger purchases.
- Refine Your Targeting: Make sure you’re spending ad dollars on the right audience. Broad targeting or Advantage+ campaigns might be your treasure chest.
- Optimise Your Website: Slow load times or confusing layouts can sink conversions.
- Balance Your Channels: Don’t pour all your money into one campaign; spread it across your marketing mix.
Pro Tip: Keep testing! New creatives, audiences, and strategies are like fishing for pearls—it takes a few tries to find the best ones.
The Bottom Line
ROAS may have been your first love, but MER is the long-term partner who’ll help you build a sustainable business. By focusing on the bigger picture, you’ll not only understand your marketing efforts better but also navigate toward real growth—without getting lost in the weeds (or the seaweed, in this case).
So, ready to start measuring your marketing like a true MER-maid? Grab your compass, track your MER, and set sail for profitable waters. And if you’re feeling a little lost at sea, don’t worry—I’m here to help you navigate!
P.S. I make no apologies for the bad mermaid, and sea puns, I had an opportunity, I took it and I ran with it (regards, teenage Dahna who wanted to be a Marine Biologist)
