Glossary · Core metricsTOFU
MER (Marketing Efficiency Ratio)
The short answer
MER (Marketing Efficiency Ratio) is your total revenue divided by your total marketing spend for the same period. If you made ₹30 lakh in revenue and spent ₹7.5 lakh across every channel, your MER is 4.0.
It's sometimes called blended ROAS, and it has one property no platform metric has: it can't be double-counted. There is only one revenue number and one spend number, so it doesn't matter which platform claims which sale.
Why MER matters more as you scale
Meta, Google and every other platform attribute conversions using their own rules, and a single purchase often appears in several reports. Add the platforms' reported revenue together and you can easily "earn" more than your store actually took. MER sidesteps that argument entirely: did total revenue move relative to total spend?
That makes MER the right headline number for the business, with platform ROAS used underneath to allocate budget within each channel.
MER vs ROAS
- ROAS — revenue attributed to ads ÷ ad spend, per campaign or platform
- MER — all revenue ÷ all marketing spend, blended
- Use ROAS to steer budgets inside a channel
- Use MER to judge whether marketing is working for the business
Limitations
- MER includes revenue from returning customers who might have bought anyway — pair it with new-customer CAC
- It can't tell you which channel drove the change — use incrementality tests for that
- Seasonality and pricing changes move it independently of marketing quality
MER example
| Month | Total revenue | Total marketing spend | MER |
|---|---|---|---|
| July | ₹60 lakh | ₹15 lakh | 4.0x |
| August | ₹72 lakh | ₹20 lakh | 3.6x |
| September | ₹90 lakh | ₹24 lakh | 3.75x |
Rising spend with a stable MER means growth is efficient; falling MER means diminishing returns. Pair MER with new-customer CAC to separate acquisition from repeat revenue.
MER in practice
A brand earns ₹40,00,000 revenue in a month with ₹8,00,000 total marketing spend: MER is 5. If MER holds while spend grows, marketing is scaling healthily.
How to use MER
- Track weekly and monthly
- Compare against target MER from economics
- Use alongside channel metrics
MER in India
For Indian brands selling across D2C, marketplaces and quick commerce, MER helps account for ads that drive sales on other channels — something platform ROAS misses.
Frequently asked questions
What is a good MER?
It depends on gross margin. Your MER needs to be high enough that gross profit covers marketing spend plus fixed costs. A 70%-margin brand can grow profitably at a lower MER than a 35%-margin one.
Should MER include agency fees and salaries?
Be consistent. Many brands track "media MER" (ad spend only) and "fully loaded MER" (including fees, tools and creative). Both are useful.
What spend should MER include?
At minimum all paid media. Some teams include agency fees and tools for a fully loaded view — be consistent.
Is a higher MER always better?
Not if it comes from under-investing in growth. Balance MER with new-customer acquisition targets.
What's a good MER?
It depends on margins; set a target from contribution margin and growth goals.
Should MER include agency fees?
Some businesses include all marketing costs; be consistent.
Related terms
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