Marketing Efficiency Ratio vs ROAS . Which Number Tells You If Ads Are Working
What ROAS Actually Measures
ROAS stands for Return on Ad Spend. It is calculated as revenue attributed to a campaign divided by the amount spent on that campaign. If you spent £10,000 on Google Ads and the platform reported £40,000 in revenue from those ads, your ROAS is 4x.
Simple version: ROAS tells you how much revenue one advertising channel claims it generated per pound spent. It is useful for comparing one campaign to another. It is not useful for understanding whether your marketing as a whole is profitable.
The key word is "attributed." ROAS is based on what an ad platform claims it generated. Using the platform's own tracking, its own attribution model, and its own definition of a conversion. After iOS 14 changed privacy rules in 2021, those platform-reported numbers became significantly less accurate for most advertisers.
Why High ROAS Can Make You Cut Your Best Campaigns
ROAS has a structural problem: ad platforms measure the revenue they claim credit for, not the revenue that would not have happened without the ads. This is called attribution overlap.
Here is a common example. You run Google Ads and Meta Ads simultaneously. A customer sees your Meta ad on Monday, searches your brand on Google on Wednesday, and clicks a Google search ad to purchase. Google Ads claims 100% of the revenue. Meta Ads, using view-through attribution, also claims the same revenue. Your blended ROAS across both channels looks like 8x. Your actual return on combined spend might be 3x. Both platforms are telling the truth from their own perspective. Neither one is showing you the real picture.
The practical consequence: businesses making budget decisions based on ROAS routinely cut campaigns that are actually generating profitable customers. Because the ROAS looks low once other channels claim the same conversions. And they keep spending on campaigns with high ROAS that are largely claiming credit for organic or brand traffic they would have gotten anyway.
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How Apple iOS 14 Broke Ad Attribution
In April 2021, Apple released iOS 14.5 and required all apps to ask users for permission before tracking them across other apps and websites. Most users said no. This broke the conversion tracking that Meta Ads, and to a lesser extent other platforms, relied on to report accurate ROAS.
Before iOS 14, Meta could track a user who saw an ad, visited the website, and purchased later. Even if days passed between each step. After iOS 14, that tracking chain was broken for users who opted out. Meta could no longer reliably connect ad views to purchases.
Meta responded by shortening its default attribution window from 28-day click and 28-day view to 7-day click and 1-day view. This means any purchase that happens more than 7 days after a click is no longer attributed. For B2B companies with longer consideration periods, this alone removes 40 to 70% of attributable conversions from the reported ROAS figure.
The practical result: a B2B company with a 3-week consideration cycle between first ad click and purchase would see most of their conversions fall outside the attribution window. Their Meta Ads ROAS looks weak. They cut the budget. The leads dry up. But the real problem was the measurement, not the channel performance.
What Marketing Efficiency Ratio Is
Marketing Efficiency Ratio (MER) Lesson is a simple calculation: total revenue divided by total marketing spend. Unlike ROAS, it does not care about which platform claims credit for which conversion. It just measures whether your marketing as a whole is generating more revenue than it costs.
Simple version: MER is what you would calculate yourself by looking at your bank account. How much did you spend on all marketing this month? How much revenue came in? Divide revenue by spend. That is your MER. No tracking needed. No attribution debate. Just the actual business result.
MER solves the attribution problem because it does not use platform attribution at all. It cannot be gamed by platforms reporting overlapping credit. It cannot be broken by iOS privacy changes. It measures what a business person cares about: does marketing generate more than it costs?
How to Calculate Your MER
For a plain-English primer before diving into the formula, see how to calculate marketing efficiency ratio Lesson. The formula below covers the full blended version including all cost types.
Example: £400,000 total revenue in a month ÷ £80,000 total marketing spend = MER of 5
This means every £1 spent on marketing generates £5 in revenue.
When to Use ROAS and When to Use MER
ROAS and MER serve different purposes. The businesses that use them correctly are the ones that use both. For different types of decisions.
- Budget decisions. Should you increase or decrease total marketing spend?
- Monthly and quarterly reviews. Is your overall marketing operation healthy?
- Comparing this period to last period. Is efficiency improving or declining?
- Justifying marketing investment to leadership. One clean number that shows business impact.
- Evaluating channel mix. When adding or removing a whole channel, compare MER before and after.
- Comparing campaigns against each other. Relative ROAS tells you which campaign is more efficient within the same platform.
- Bid strategy and campaign optimisation. Setting target ROAS for Google's automated bidding.
- Creative testing. Which ad creative generates more reported conversions?
- Short-term tactical adjustments. Not for overall budget strategy.
B2B Pipeline MER. When Revenue Takes Months to Close
Standard MER divides total revenue by total marketing spend in the same period. For B2B companies with sales cycles of 3 to 9 months, this creates a lag problem. Marketing spend happens in January, but revenue closes in April. Direct MER in January will look poor even if the marketing was excellent.
B2B companies solve this with Pipeline MER: total pipeline value generated divided by total marketing spend in the same period.
Example: £800,000 in new sales opportunities created in Q1 ÷ £80,000 marketing spend in Q1 = Pipeline MER of 10
If your average close rate is 30%, expected revenue from that pipeline is £240,000. Still a 3x revenue MER.
Pipeline MER gives you a leading indicator. If pipeline is growing faster than spend, future revenue will follow. If pipeline is flat while spend increases, the business has an acquisition efficiency problem several months before it shows up in revenue numbers.
MER Benchmarks and What Good Looks Like
| Business type | Healthy MER range | What drives the difference |
|---|---|---|
| B2B SaaS (short cycle) | 3 to 6 | Lower deal sizes but faster close. MER improves when organic traffic reduces blended acquisition cost. |
| B2B Services (long cycle) | Use Pipeline MER | Revenue lags too far to use direct MER. Measure pipeline value vs spend. |
| B2B Enterprise | Use Pipeline MER | Deals take 6 to 18 months. Pipeline MER with close rate assumptions is the most useful indicator. |
| DTC / ecommerce | 3 to 5 | Shorter cycles allow direct MER tracking month by month. |
The most useful benchmark is your own MER trend over time, not industry averages. A MER improving from 2.5 to 3.5 over 6 months signals improving efficiency. A MER declining from 4 to 2.8 over the same period signals a problem. Either rising acquisition costs, falling conversion rates, or a mix of both.
Every B2B founder I have worked with who was about to cut their paid media budget had the same problem: they were looking at ROAS on the wrong channel at the wrong time. One B2B consultancy came to us believing their Google Ads were failing. ROAS had dropped from 4x to 2.1x over 6 months. When we calculated their true blended MER, including all channels and all costs, it had risen from 2.8 to 3.6 over the same period. Their total marketing spend was generating more revenue per pound. But the ROAS on one channel looked bad because organic was growing and claiming fewer attributable conversions. They nearly cut the campaign that was working. MER told the real story.
Questions about MER vs ROAS
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