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Marketing Efficiency Ratio (MER): Everything You Need to Know

Marketing Efficiency Ratio (MER): Everything You Need to Know

When it comes to tracking your digital advertising efforts, there’s usually one metric to rule them all — ROAS. However, there’s a new metric on the block. Meet MER, or Marketing Efficiency Ratio. More and more businesses are beginning to use MER to gauge success, but what is MER? And what’s the difference between MER and ROAS? When should you use MER?

We’re sharing all the details you need to know about MER.

What is MER?

Marketing Efficiency Ratio, or MER, is a metric that allows you to see the impact of how all marketing channels are working together. Rather than just calculating based on the direct revenue associated with your ad campaign, you calculate based on total company revenue. This allows you to take the halo effect into account.

(If you’re advertising on Amazon, maybe this comparison will help: MER is the equivalent to TACoS on Amazon.)

MER vs. ROAS

If you’re wondering what the difference is between MER and ROAS, don’t worry — you’re not alone. Both metrics have a similar calculation, with a few key differences:

ROAS = Ad revenue / Ad spend

MER = Total revenue / Total ad spend

Traditionally, ROAS looks at ad spend and revenue from a 1:1 level, regardless if you’re spending money on a display awareness campaign or a conversion-focused retargeting campaign on Facebook. This has led to hasty decisions to pause campaigns, and can also stunt growth before it happens. Pair that with IDFA updates, cookie loss, and the dreaded IOS14 update, you’re dealing with a recipe for measurement disaster.

ROAS is still useful for calculating individual campaign performance comparatively, but not effective for comparing the businesses growth efficiency historically (pre-IOS14 and when more data was available for advertising platforms). For a more holistic view of your business, MER is the better metric.

Why Should I Use MER?

As ecommerce (and commerce in general) becomes much more holistic, it’s important to have a metric that reflects that. The customer journey is no longer linear, so you need a metric that takes into account all touchpoints your customer may have had before making a purchase.

MER looks at total site revenue and total digital spend (or all spend, if applicable). The goal is to be above a certain MER, just like with ROAS.

When to Use MER

If you’re responsible for presenting data to show the success of your marketing efforts, you will likely use both MER and ROAS for different scenarios. MER is best used when looking at your overall marketing efforts across all channels — Google, Facebook, Instagram, etc. However, if you’d like to report on the results of a specific campaign, ROAS will be the best choice.

An Example Scenario

Let’s give an example of how you would use MER in reporting the results of your marketing efforts.

Let’s say you ran a Pinterest campaign for your brand’s newest product. Pinterest campaigns typically take 30 days to ramp up depending on your budget size, so your ROAS on Pinterest is likely low during this initial period.

However, over the course of those four weeks, those ads are driving new users to your site, who are then…

  • retargeted on Facebook
  • look for a review of your product on Amazon by clicking on a Sponsored Product Ad
  • search your brand and click on a Google ad
  • purchase from your website

When they eventually convert, every channel gets credit thanks to MER. So, even though their initial exposure was on Pinterest and their last click was from a Google ad, every channel gets credit for contributing to the purchase.

Have more questions about MER? The Blue Wheel team members are experts. Reach out to learn more about working with our advertising team!

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