Marketing
Marketing efficiency ratio (MER)
Marketing efficiency ratio is total revenue divided by total marketing spend: a blended view of what all marketing returns, without relying on attribution.
MER = Total revenue ÷ Total marketing spend
Worked example
| Revenue for the month | $400,000 |
| Google Ads spend | $50,000 |
| Facebook Ads spend | $30,000 |
$400,000 ÷ $80,000 = 5.0× (marketing is 20% of revenue)
Why it matters
Each ad platform credits itself for sales, so platform ROAS figures overlap. MER uses revenue you actually recorded and every dollar of spend, so it cannot be inflated by attribution, which makes it a steadier check on whether marketing as a whole pays off.
Common mistakes
Where it misleads
Calling it total marketing spend while counting only paid ads, which overstates MER.
Using gross revenue before refunds and discounts.
Cutting spend to lift MER and missing that revenue from past campaigns will fade a few months later.
Related terms
Keep reading
- Return on ad spend (ROAS)Return on ad spend is the revenue earned for every dollar spent on advertising.
- Customer acquisition cost (CAC)Customer acquisition cost is the average sales and marketing spend needed to win one new customer.
- Contribution marginContribution margin is what each sale leaves over after every cost that rises with that sale, available to cover fixed costs and profit.
Stop calculating it by hand.
Dear CFO keeps your statements, forecasts and metrics current from the systems you already run.