Marketing efficiency ratio (MER) is your total revenue for a period divided by your total marketing spend for the same period. It ignores which platform claims which sale and asks a blunter question: for every pound the business put into marketing, how many pounds of revenue came back?
How MER works
The sum is simple. A UK online retailer that takes £80,000 in a month, excluding VAT, and spends £16,000 across Google Ads, Meta, an email platform and an affiliate network has an MER of 5. Some people express it as a percentage of revenue instead (20% in this example), which is the same figure turned upside down.
What makes MER useful is what it leaves out. Each ad platform reports its own platform-reported conversions, and they overlap: a customer who saw a Meta advert, searched your brand on Google and then clicked an email can be counted three times. Add up the revenue each platform claims and you often get more than you actually banked. MER uses the revenue in your shop or accounts system, which happens once per order, so it cannot double count.
The trade-off is that MER tells you nothing about which channel did the work. It is a health check on the whole marketing operation, not a tool for deciding between two campaigns.
Why it matters
Since browsers and cookie consent began limiting tracking, platform figures have relied more on modelled conversions. In the UK, where visitors can refuse analytics and advertising cookies under PECR, a share of every sale is invisible to the ad platforms. MER sidesteps that gap because it does not depend on tracking at all.
It also keeps the business honest about scale. If you double ad spend and revenue barely moves, MER drops, whatever each platform says about its own ROAS. That makes it a good early warning that you are buying sales you would have made anyway, a question you can test properly with incrementality experiments.
Common mistakes
- Mixing VAT-inclusive revenue with VAT-exclusive spend. Pick one basis, ideally excluding VAT for both, and stick to it.
- Counting only ad spend and leaving out agency fees, software, content and influencer costs, which makes the ratio look better than reality.
- Using MER to judge a single campaign. A fall in MER says something has changed, not what.
- Comparing MER across months without allowing for seasonality, a sale or a new product launch.
- Ignoring returns. A fashion brand with a high returns rate should use net revenue, or MER will reward campaigns that bring in serial returners.
- Treating revenue as profit. An MER of 4 is excellent at a 70% margin and loss-making at 20%.
How to act on it
Set up a simple monthly sheet: net revenue from your shop or accounts, all marketing costs, and MER. Next to it, track new customer revenue and returning customer revenue separately, because a business can hold a steady MER while quietly living off past customers. Pair it with blended customer acquisition cost to see what each new customer is costing across all channels.
Work out the minimum MER the business needs to cover its contribution margin, then use the platform ROAS figures only to decide where, within that envelope, the money goes. When I review an account as part of ongoing PPC management, MER is the number I check first, before reading any figure the platforms report about themselves.