MER vs ROAS: which number should you trust?
The short version
ROAS tells you how a platform thinks its own ads did. MER tells you how the business did. Use MER to decide how much to spend and whether marketing is working. Use ROAS to decide what to change inside an account.
Every few weeks someone shows me a screenshot of a 5x ROAS and asks why the business doesn't feel like it's making money. Nine times out of ten, nobody is lying. They're just looking at the wrong number for the question they're asking.
ROAS and MER both measure revenue against spend. They answer completely different questions.
What ROAS actually measures
ROAS (return on ad spend) is the revenue a platform says its ads drove, divided by what you spent on that platform.
If Meta reports £20,000 of purchases from £5,000 of spend, your Meta ROAS is 4.0.
The important words there are "Meta reports". That £20,000 is Meta's view of which sales it should get credit for, based on who clicked or saw an ad within its attribution window. Google does the same thing with its own rules. So does TikTok. So does every other platform you pay.
Each one is marking its own homework.
What MER measures
MER (marketing efficiency ratio) is your total revenue divided by your total marketing spend, across everything.
If the business took £60,000 last month and you spent £20,000 on all your marketing, your MER is 3.0.
MER doesn't care which platform claims a sale. It just asks: for every pound we put into marketing, how many pounds came back into the business?
You'll also hear blended ROAS. It's the same idea using paid ad spend only, rather than all marketing costs. Use whichever fits how you budget, and stick to it so the trend means something.
Why the two numbers disagree
Add up what every platform claims and you'll often find it comes to more revenue than you actually took. A few reasons:
Double counting. Someone sees an Instagram ad, then Googles you a few days later and buys. Meta counts it. Google counts it. You only sold one thing.
View-through credit. Platforms can claim sales from people who saw an ad and didn't click. Some of those people were coming anyway.
Customers who'd have bought regardless. Returning customers, people searching your brand name, people who heard about you from a friend. Ads often reach them on the way to buying and take the credit.
None of this makes ROAS useless. It makes it a poor answer to "is our marketing working?"
So which one should you trust?
Both, for different jobs.
Use MER for the big decisions. Is marketing paying for itself? Should we spend more next month or less? Is the business more efficient than it was last quarter?
Use ROAS for the decisions inside an account. Which campaign is doing better? Is the new creative beating the old one? Should budget move from this ad set to that one? Within one platform, comparing like with like, ROAS is a useful signal.
The mistake is using ROAS to answer the first set of questions. That's how you end up scaling spend on a platform that looks brilliant in its own dashboard while the bank balance goes the other way.
MER has blind spots too
MER isn't perfect either, and it's worth knowing where it falls short.
It counts revenue you'd have got anyway. A brand with lots of loyal repeat customers can have a healthy MER while its ads are barely finding anyone new.
It doesn't tell you what to change. It tells you whether the whole thing is working. For the why, you go back into the platforms.
It ignores margin. A 3.0 MER is great for a business with 70% margins and a problem for one with 25%.
That's why I usually report MER alongside two other numbers: new customer acquisition cost (what it costs to win a customer you didn't already have) and contribution margin (what's left after product, shipping and marketing costs).
Work out the MER you actually need
Here's a quick way to find your break-even MER. Take your margin before marketing costs, as a decimal, and divide 1 by it.
If you keep 40p of every pound after product, packaging and shipping, your break-even MER is 1 ÷ 0.4 = 2.5. Below 2.5, marketing is costing you more than it brings in. Above it, you're making money on those sales.
That one number makes every conversation about budget clearer. It also stops anyone celebrating a 3x ROAS on a business that needs 4x to stand still.
How to start tracking it
You don't need software. A spreadsheet with one row per week is plenty:
Total revenue (from your shop or accounts, not from the ad platforms)
Spend on each marketing channel
Number of new customers
From that you get MER, blended ROAS and new customer cost every week. Look at the trend over months, not the number on any single Monday.
Then keep using ROAS inside the platforms, for what it's good at.
