What is MER?

What is MER (Marketing Efficiency Ratio)?

Definition

MER stands for Marketing Efficiency Ratio and is calculated as:

MER = Total Revenue ÷ Total (Blended) Advertising Spend

This includes all revenue (not just from paid advertising), divided by your total ad spend across all channels.

Example: If your business generates $200,000 in revenue and your total ad spend is $40,000,
MER = $200,000 ÷ $40,000 = 5.0

This means for every $1 spent on marketing, the business generates $5 in revenue.

Why MER Matters

Unlike ROAS or PROAS, which tie ad spend directly to attributable revenue or profit, MER provides a high-level, blended view of how efficiently your total advertising investment supports business revenue — regardless of attribution.

It’s especially useful when:

• Attribution is messy or unreliable (e.g. iOS tracking limitations)

• You want to evaluate total business performance against marketing investment

• You're planning budgets or scaling decisions at the macro level

Use Cases for MER

1. Evaluating Marketing Efficiency

MER gives a bird’s-eye view of how efficiently your business is converting ad dollars into revenue. A higher MER generally indicates better efficiency.

Example: An MER of 6.0 means you're generating $6 in revenue for every $1 of ad spend — regardless of which campaigns drove the sale.

2. Budget Planning & Scaling

MER is often used as a guiding metric for budget increases. If MER remains strong when ad spend increases, you have room to scale. If MER drops significantly with more spend, it may indicate diminishing returns.

3. Attribution-Agnostic Decision-Making

MER removes reliance on last-click or channel-based attribution. It allows for the evaluation of marketing efficiency, even when it's unclear exactly which channel drove the sale.

4. Executive Reporting

MER is simple and clean, making it ideal for reporting to executives or stakeholders who want a single number to track marketing ROI across the business.

How MER Differs from ROAS, PROAS, and NPROAS

MER is attribution-agnostic and gives you a total revenue vs spend ratio — it’s broader, but less precise than ROAS or PROAS.

What’s a Good MER?

Benchmarks vary by business model and margin structure, but typically:

• MER 3.0–5.0: Common target range for profitable DTC brands

• MER 6.0+: Indicates highly efficient marketing (but often with lower spend or strong organic sales)

• MER below 2.0: May signal over-investment or low conversion efficiency

Your target MER should align with your:

• Gross margin

• CAC targets

• Business stage (scaling vs profitability)

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