Why I’m Talking to Clients About Marketing Efficiency Ratio (MER)

If you’ve been running Google Ads (or any paid ads), you’ve probably come across the term ROAS - Return on Ad Spend. It’s one of the most common metrics used to measure whether ads are “profitable” or not.

ROAS is useful, but lately I’ve found myself introducing clients to an additional way of looking at their marketing performance: Marketing Efficiency Ratio (MER).

It’s not a new idea, and I certainly didn’t invent it. But after learning more about it from others much more in the know than I, it’s one of those concepts that I feel more small businesses should know about.

In this post, I’ll explain what MER is, how it’s different from ROAS, and why it can give you a clearer big-picture view of your marketing.

Why ROAS Isn’t Always Enough

Let’s start with ROAS. At its simplest, ROAS tells you how much revenue you generate for every £1 you spend on ads. So, if you spend £1,000 and get £4,000 in sales directly attributed to those ads, your ROAS is 400%.

That’s great for looking at individual campaigns or ad groups. You can see which ones are working, which need tweaking, and where to allocate more budget.

But here’s the problem:

• Tracking isn’t perfect anymore. Not that it ever was, but with privacy changes, cookie restrictions, and people opting out of tracking, many conversions can get missed. And although there are solutions out there like third-party attribution platforms, many businesses are not able to afford the lofty monthly fees.
• Not every sale comes directly from an ad click. Also, people might click an ad, do more research, come back through organic search, or even buy in-store. That means your ROAS might under-report what your ads are really contributing.

Looking too closely at campaign-level ROAS can make you miss the bigger picture. This is where MER comes in.

What is Marketing Efficiency Ratio (MER)?

MER is a high-level metric that looks at your total revenue compared to your total marketing spend.

The formula is simple:

MER = Total Revenue ÷ Total Marketing Spend

So, let’s say:

• You spend £5,000 on all your marketing in a month (Google Ads, social ads, email, etc.).
• Your total revenue for that month is £25,000.

Your MER is 5. That means for every £1 spent on marketing, you generated £5 in revenue.

How MER is Different From ROAS

Think of ROAS as zooming in and MER as zooming out.

• ROAS is great for campaign-level decisions: “Which ad group is performing best?”
• MER is great for understanding overall efficiency: “Is my marketing spend sustainable at this level?”

With MER, you’re not worrying about which specific campaign got credit for the sale.

You’re looking at the whole picture of spend versus return.

For example: I recently worked with a small boutique retail business that relied heavily on Google Ads. They did a little bit of SEO, but beyond that, not much else. The challenge was that attribution was a nightmare:

• Their e-commerce platform showed one set of figures.
• Google Ads reported something slightly different.
• GA4 reported another version again.

Each platform gave credit in a different way (obviously taking most of the credit too), and it was easy to get lost in the weeds trying to reconcile them. And third-party attribution platforms were way out of their budget scope.

That’s where MER helped. By looking at total revenue versus total marketing spend, we got a clearer picture of whether the overall marketing was efficient, regardless of which channel claimed the credit.

We also separated out new business versus returning customers. This was really useful because it showed whether the spend was driving genuine growth or just bringing back loyal buyers who would likely have purchased anyway. MER made it much easier to see that the investment in ads was paying off in terms of new customer growth as well as overall sales.

Why MER Matters for Small Businesses

If you’re a small business owner, you probably don’t have time to get lost in the weeds of attribution models and last-click versus first-click, etc., debates. You just want to know: Is my marketing spend paying off?

MER helps you answer that question.

A few reasons why I like it for small businesses:

• It cuts through the noise. You don’t need perfect tracking data to calculate it.
• It includes everything. Google Ads, Facebook, email marketing, print ads - whatever you’re spending on marketing can go into the calculation.
• It sets a benchmark. Over time, you’ll know what MER you need to stay profitable and can see whether you’re getting more or less efficient.

When to Use MER

I’m not saying ditch ROAS. It still has its place, especially when you’re making tactical decisions about where to allocate budget.

But MER comes into its own when:

• You’re running multiple channels (Google Ads, Meta Ads, maybe a bit of LinkedIn) and want to see how they work together.
• You’re worried your reported ROAS looks lower/higher than reality because of tracking gaps or over attribution.
• You want to set a simple efficiency target for your whole marketing budget.

A Practical Example

One of my clients spends just under £3,000 a month on Google Ads. Their reported ROAS is around 400%, not bad at all. But they were also spending on SEO and a bit of email marketing.

When we looked at the bigger picture using MER, their total marketing spend was closer to £4,000 a month, with total revenue around £20,000. That gave them an MER of 5.

That’s a healthy ratio, and it reassured them that even though some campaigns looked like they were under-performing on paper, the overall picture was strong.

How to Get Started With MER

The nice thing is, you don’t need any fancy tools to start using MER.

1. Add up your total marketing spend for the month (ads, agencies, print - whatever you count as marketing).
2. Divide your total revenue by that number.
3. Track it month by month.

Over time, you’ll spot trends. For example, maybe your MER drops when you scale ad spend too quickly, or it improves when you add email marketing into the mix.

A Quick Word of Caution

Like any metric, MER isn’t perfect. On its own, it won’t tell you where to optimise, and it can’t replace campaign-level insights. Think of it as a health check rather than a detailed diagnosis.

Another thing to keep in mind is customer lifetime value (LTV). When I ask clients how much a customer is worth, many will look at the first order. For example, a retail business might say: “A customer is worth £80.” But if the nature of the product means that customer comes back and buys several times a year, the true value is much higher.

That’s why it’s important not to view MER in isolation. A strong MER tells you your marketing is efficient but combining it with lifetime value gives you a far more realistic picture of growth potential and profitability.

I’ll be writing more about lifetime value in an upcoming blog, so keep an eye out for that if you’d like to dive deeper.

Wrapping Up

If you’re a small business owner juggling multiple marketing channels, MER is worth adding to your toolkit. It’s simple, it’s high-level, and it helps you answer that all-important question: Is my marketing spend paying off overall?

It’s not about replacing ROAS, but about zooming out and seeing the bigger picture.

And if you’d like help working out what MER (and ROAS) should look like for your business, let’s chat it through.

👉 Book a discovery call with me and I’ll help you make sense of your numbers.