Marketing Efficiency Ratio
Date: 2026-08-16
Total revenue divided by total marketing spend. Crude, unattributable, and impossible for any platform to inflate — which is exactly why it’s the number worth watching alongside everything more sophisticated.
What it is
Marketing efficiency ratio (MER), sometimes called blended ROAS, is all revenue divided by all marketing spend.
On the running model:
£750,000 revenue ÷ £225,000 spend = 3.33
Every pound of marketing is accompanied by £3.33 of revenue. Accompanied by, not caused by — and that distinction is both its weakness and the source of its value.
Why it’s useful despite being crude
Every attribution-based metric can be gamed, inflated or double-counted:
- Platforms claim overlapping conversions — Walled Garden Reporting
- Modelled Conversions add estimates to observed data
- Attribution Models and Attribution Windows are choices, not measurements
MER has none of those degrees of freedom. Revenue comes from the order system, spend comes from the bank. Neither can be attributed, modelled or claimed twice.
Which makes it the sanity check: if attributed returns are excellent and MER is falling, the attribution is wrong. That single comparison catches most measurement drift, and it’s the reason to track both.
What it can’t do
- It can’t allocate. MER says nothing about which channel to fund, because it deliberately doesn’t attribute
- It moves with mix. A rise in organic or repeat revenue improves MER without any marketing change — which is a feature for a business-health read and a bug for judging campaigns
- It’s revenue, not contribution. A MER of 3.33 on a 30% contribution margin means £1.00 of contribution per £1.00 of spend — break-even. Compute a contribution-based version and the picture is far less comfortable — Contribution Margin
- It lags. Spend today acquires customers over weeks, so a monthly MER is noisy on longer consideration cycles
The contribution version
Worth deriving, because it’s the one that says whether marketing pays:
revenue £750,000
× contribution margin 30%
contribution £225,000
÷ marketing spend £225,000
──────────
contribution MER 1.00
Exactly break-even before any fixed cost. The revenue MER of 3.33 sounds healthy; the contribution MER of 1.00 says marketing is currently funding itself and nothing else.
That’s a realistic position for a growing retailer — new customers lose money on their first order and pay back later — but it’s only visible with the margin applied — Payback Period, LTV to CAC Ratio.
Using it
- Track it monthly as a trend, not against a benchmark. The absolute level depends entirely on your margin and your organic share
- Compare to attributed returns. Divergence between them is a measurement signal, and it’s the main reason to bother
- Watch it alongside new-customer count. MER improving while new customers fall means you’re harvesting existing demand rather than growing — New vs Returning Customer Acquisition
- Annotate spend changes, or MER moves get attributed to performance — Annotation and Change Logs
Where it sits
MER is the top of a three-level view, and each level answers a different question:
MER is marketing paying for itself overall?
attributed CAC/ROAS which channels look efficient?
incrementality which channels actually caused anything?
Use all three. MER for the health check, attribution for day-to-day optimisation within a channel, and Incrementality Testing before moving material budget between channels.