Mar 29, 2025

MER vs ROAS: Which metric should drive your scaling decisions?

Learn the difference between MER and ROAS, when to use each, and how to protect a MER band so you only scale when growth is profitable.

TL;DR

  • ROAS = tactical steering inside platforms.

  • MER (blended ROAS) = business-level efficiency for budget approvals.

  • Protect a MER band; scale only when incremental MER holds.

Quick definitions

  • ROAS (Return on Ad Spend): Revenue attributable to a specific campaign/channel ÷ spend in that campaign/channel. Great for creative, audience, and bid decisions.

  • MER (Marketing Efficiency Ratio, aka blended ROAS): Total revenue ÷ total marketing/ad spend for a period. Great for CFO conversations, budget caps, and pacing.

MER vs ROAS—use each for what it’s good at

  • Use ROAS to choose winners: angle A vs B, audience X vs Y, placement mixes, etc.

  • Use MER to decide how much to spend overall, and whether the whole machine is efficient.

Why platform ROAS alone can mislead

  • Retargeting and brand terms look great in ROAS but don’t grow the pie.

  • Attribution lag and walled gardens hide halo effects.

  • Cutting prospecting often raises ROAS while total revenue drops—MER catches that.

How to set a MER band (fast math)

  1. Build Contribution Margin % (CM%) after COGS, shipping/fees, discounts/returns.

  2. Pick a post-marketing contribution (PMC%) goal (e.g., 10–15% to cover fixed costs).

  3. Allowed Marketing Share (AMS%) = CM% − PMC%

  4. MER floor = 1 ÷ AMS% → set a band (floor → floor + ~10–15%).

Example: CM% 47%, PMC% 15% → AMS% 32% → MER floor ≈ 3.13 → band 3.1–3.6.


Incremental MER: your scale check

Blended MER can stay steady while the next dollar performs worse.
Incremental MER (iMER) = ΔRevenue ÷ ΔSpend between two periods.
Scale budgets only while iMER ≥ your MER floor.

A simple, weekly decision flow

  1. Testing? Use ROAS to pick winners; don’t let MER fall below floor.

  2. Scaling? Increase budget only while iMER stays in band.

  3. Mixed channels? Optimize with ROAS, approve totals with MER.

Dashboard that keeps everyone honest

Top row: MER, iMER, blended CAC, payback, pLTV-90, contribution margin.
Below: platform ROAS by channel/campaign + creative/angle scorecard.

FAQ

Is MER the same as blended ROAS?
Yes—MER is total revenue ÷ total marketing spend.

What’s a “good” MER?
It depends on margin. Use the band method above.

How often should we check iMER?
Weekly (7-day windows), excluding big promos.