Marketing in a Minute – Episode 14 | Ahmed Moaaz

MER compares total revenue with total marketing spend across all channels. When several platforms each claim the same sale, this business-level ratio helps you see the wider picture.

What is MER?

MER stands for Marketing Efficiency Ratio. It is sometimes discussed alongside blended ROAS. Rather than asking about each campaign separately, it compares the whole picture: marketing expenditure and total sales revenue over the same period. In this article, the denominator includes the full marketing costs listed below, not just media spend.

MER = total sales revenue for the period ÷ total marketing spend for the same period.

For example, you spent EGP 40,000 across all marketing channels in one month, and the store recorded EGP 200,000 in sales that month. MER = 200,000 ÷ 40,000 = 5. Each marketing pound was matched by five pounds of total revenue.

Why do you need it alongside ROAS?

ROAS examines individual campaigns; MER examines the business-wide picture. A familiar attribution problem is that each advertising platform claims credit for a sale. Meta may claim that its campaign generated the order, while Google claims that search generated it. The customer may have encountered both. Add platform-reported revenue together and it can exceed actual store sales because the same order has been counted more than once.

MER avoids that particular overlap. It compares total marketing expenditure with total recorded revenue rather than adding platform attribution reports. Its usefulness still depends on accurate records and a consistent definition of costs.

It also includes sales that individual platforms may miss: someone hears about you from a friend, sees an ad and later searches for the brand, or purchases through a WhatsApp message. These sales form part of overall business revenue even if no single advertising report captures their full journey.

How should you interpret the number?

A higher MER generally means more revenue relative to marketing spend. However, an acceptable ratio depends on margins, just as with break-even ROAS, now applied at business level:

• Below the store’s overall break-even point: Revenue is insufficient to support marketing costs on the chosen margin calculation. Expanding spend can increase losses.
• Around break-even: Marketing is only just covering its costs. Improve the economics before expanding.
• Comfortably above break-even: There may be room for carefully managed growth, provided the underlying margins and results hold.

A business-level reference can be calculated using average order value divided by the average contribution available before the marketing costs included in MER. If that margin is 30%, the ratio needs to exceed approximately 3.3 to cover those marketing costs. Avoid including the same marketing costs both in the margin and in MER’s denominator.

What belongs in marketing spend?

For the definition used here, include the costs of attracting and retaining customers:

• Advertising spend across all platforms.
• Marketing-team salaries, agency fees and freelancer costs attributable to the period.
• Content production: photography, design, video editing and copywriting.
• Relevant software subscriptions, including campaign management, email and analytics.
• Influencer campaigns, competitions and promotional gifts.

Do not add unrelated expenses such as rent and administrative salaries to the marketing denominator. Track them elsewhere in the profitability calculation so the ratio remains a measure of marketing efficiency.

Common mistakes when using MER

• Comparing unlike periods: Comparing a seasonal peak with a quiet month can mislead. Compare the same season year over year, or use comparable three-month averages.
• Ignoring delayed revenue: For products with long buying decisions, this month’s spend may produce next month’s sales. A short-period MER can therefore look unfairly low. Use a longer period or a carefully defined cohort analysis where appropriate.
• Celebrating a high ratio caused by cutting spend: If spend falls by half while sales from earlier brand-building remain strong, MER may temporarily rise. Sales may then decline later. Always read the ratio alongside revenue volume.

A worked example

A store spent EGP 90,000 on platforms, staff and content in the last quarter and recorded EGP 360,000 in revenue. MER = 4. Its average margin available before those marketing costs is 28%, giving a break-even ratio of approximately 3.6. It is above the line, but the buffer is limited.

The owner then cuts marketing spend to EGP 45,000 “to save money”. In the first month the reported MER rises to 6 and the team celebrates, but revenue starts falling over the following two months as the flow of new customers slows. The lesson is that a higher ratio with shrinking revenue is not automatically a win. The goal is sustainable total profit, not the highest percentage or multiple in a report.

How can you use it in practice?

• Start the monthly report with it: Put MER before the individual platform metrics.
• Use it to review budget changes: When increasing spend, check whether the ratio remains above the relevant break-even level. If it falls below, investigate and reconsider the increase.
• Use it to spot reporting gaps: If platform reports look excellent while overall MER deteriorates month after month, reconcile the advertising story with actual store records.

Start with last month. Add all marketing spend into one figure and divide the same month’s store-recorded revenue by it. Use revenue from business records, not a sum of platform-attributed revenue. This provides a useful first view of overall marketing efficiency.

Summary

ROAS helps you examine individual campaigns. MER helps you examine marketing as a whole. Use campaign metrics for day-to-day improvements and the wider ratio for budget and growth decisions. Calculate MER consistently each month, compare it with the economics of your own business and keep both revenue volume and profitability in view.

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