What is Marketing Efficiency Ratio (MER)? [+ How to Calculate]

‍What Is Marketing Efficiency Ratio (MER)?

Marketing Efficiency Ratio (MER) is a key metric that measures how efficiently your marketing efforts generate revenue. By comparing total revenue to total ad spend over a specific period, MER provides a high-level view of your marketing performance. It helps you understand how effectively your marketing dollars are turning into revenue, offering a broader perspective than metrics like Return on Advertising Spend (ROAS), which focuses on individual campaigns or channels.

Unlike ROAS, which attributes success to specific ads, MER evaluates the entire marketing strategy, giving you a holistic view of how all your marketing activities contribute to overall business growth. This makes it particularly useful for assessing the effectiveness of omnichannel campaigns, where multiple efforts across different platforms work together to drive results.

How to Calculate Marketing Efficiency Ratio

The formula for calculating MER is simple:

MER = Total Revenue ÷ Total Ad Spend

To calculate, divide the total revenue generated from all marketing efforts by the total ad spend for the same period. For example, if your total revenue over the past quarter was $1 million and your total marketing spend was $250,000, your MER would be 4.0. This means that for every $1 spent on marketing, you generated $4 in revenue.