MER (Marketing Efficiency Ratio) is just the percentage of your revenue that goes on marketing. If you made $100 and spent $15 on ads, your MER is 15%. That's it. No platform dashboards. No attribution models. Just your real numbers.
ROAS (return on ad spend) sounds useful. It isn't.
Here's the problem. Every ad platform takes credit for every sale. Google says it drove the sale. Meta says it drove the sale. So does your email tool, your affiliate, and probably your retargeting stack.
Add up what all those platforms "report" and you'll often get 250% of your actual revenue. Everyone's claiming the same win.
This is attribution theatre. It looks like useful data. It isn't.
A 4x ROAS on Meta is what Meta's algorithm decided to report. It's not what your business actually earned.
Popular doesn't mean profitable. A great ROAS number can sit right alongside a business that's bleeding cash.
MER = total marketing spend divided by net revenue. Expressed as a percentage.
Net revenue is your total sales with GST removed. That's your real number.
MER is platform-agnostic. It doesn't care what Google reports. It doesn't care what Meta reports. It only cares about what you actually spent and what actually came in.
That's what makes it honest.
If you spent $15,000 on ads this month and your net revenue was $100,000, your MER is 15%. Full stop.
No arguments about attribution windows. No last-click vs data-driven debate. Just: what did you spend, and what did you make?
Not all MERs are equal. Where you sit depends on where you are in your business.
8% MER — Profit maximiser You're an established brand. High repeat purchase rate, strong organic traffic, word of mouth working. You don't need to buy every customer. You're squeezing margin.
15% MER — Balanced growth The sweet spot for most Ecommerce businesses. You're growing, but profitably. This is where most healthy businesses should aim to be.
20% MER — Aggressive expansion You're pushing hard. Minimal margin, maximum growth. This only makes sense if you have the cash flow to sustain it and a plan to bring it down once you've captured the market.
Quick example:
Say your gross revenue is $110,000. Remove GST and you're at $100,000 net. At a 15% MER, your total marketing budget is $15,000. That covers everything: Google Ads, Meta, influencers, email tools, the lot.
MER isn't a set-and-forget metric. You check it weekly. You compare it to last week. You compare it to the same week last year.
I track it alongside five other numbers:
Together, those six numbers tell you almost everything you need to know about whether your business is healthy.
If your MER is climbing but net profit is holding, you're probably fine. If MER is climbing and net profit is dropping, something's broken.
It also keeps you honest when someone wants you to spend more. The platforms that benefit from higher ad spend will always have a reason to push you up. Check your MER first.
If you're under your target MER, there's headroom to spend more. If you're over it, pull back. It's that simple.
There is no secret to running a profitable Ecommerce business.
There's just a set of numbers to watch and take action on.
MER is one of the most important ones. It's the number that cuts through all the noise from platforms and dashboards, and tells you the actual story.
Start tracking it this week. It takes five minutes. And once you have it, you'll never look at ROAS the same way again.
Iain Calvert runs Calvert & Co, an Ecommerce consultancy for growing businesses doing $500K to $50M. He works with a small number of clients and doesn't take on everyone.
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