What is MER (marketing efficiency ratio)?
How is MER calculated?
Take all revenue for a period. Divide it by all marketing cost for the same period.
Two choices change the answer, so write them down:
- Revenue. Gross or net? Our convention: net of returns, excluding VAT.
- Spend. Our convention: all marketing cost. That means media, agency fees, creative production and tools.
MER or blended ROAS?
Sources disagree on the spend line. Two vendors, Shopify and Eightx, divide by total marketing spend24. Admetrics, another vendor, divides by media spend only3. Shopify's blog also says MER is called blended ROAS2.
Our view: the two numbers are different, so they get different names. This is our convention, not an industry standard.
- MER: total revenue ÷ total marketing cost.
- Blended ROAS: total revenue ÷ media spend across all platforms.
Same revenue on top. Different bottom line. Always as revenue over cost, never the other way round.
For ZFD: If a report says "MER" and does not say what is in the spend, it is not yet a number you can compare.
Why does it matter?
ROAS depends on which platform is counting. MER does not, because it needs no attribution. It shows whether the whole marketing machine is getting more efficient. It does not show where to cut or add. For that you need channel-level measurement, ideally from a test.
MER is also still revenue, not profit. An Eightx article works out a break-even MER from the share of revenue left for marketing once the other variable costs are paid4. See break-even ROAS and contribution margin for the margin side. Which metric suits which decision is in ROAS vs MER vs POAS.
Worked example
Easily confused with
MER vs Blended ROAS
In our convention, media spend only in the denominator (see above).
MER vs ROAS
Revenue credited to ads by a platform, divided by ad spend.
MER vs nCAC
Acquisition spend divided by first-time customers only.
Buzzword alert
"MER is the north star"
Usually means: one ratio of total revenue to total spend, useful as a trend, silent on what caused what.
Ask: what decision does MER change that channel numbers cannot?
"We optimise for blended efficiency"
Usually means: overall spend and revenue move together, with no split of what each channel added.
Ask: which channel's spend would we cut first if MER dropped?
FAQ
Is MER the same as blended ROAS?
Often, yes: Shopify's blog treats them as one metric2. We do not. In our convention MER divides by all marketing cost and blended ROAS by media spend only.
Does a higher MER mean profit?
No. MER is revenue over cost. Profit also depends on margin, so compare MER with a break-even figure built from contribution margin.
Can MER tell me which channel works?
No. It has no channel split by design. Use it for the whole business and a test for individual channels.
Let’s find what’s actually working.
Next step. See what your numbers look like on explicit assumptions. Use the Is your ROAS real? calculator.