A good marketing efficiency ratio (MER) is typically 3.0 or higher, meaning your company earns $3 in revenue for every $1 spent on marketing. However, what’s considered “good” depends on your business model, margins, and growth goals.
As marketers today face pressure to stretch every dollar, many turn to efficiency metrics like MER to analyze the big picture: Are we getting enough revenue for what we’re spending? And if not—how do we fix it?
To help you get answers to those questions, let’s expand on the MER definition and how to use this metric for financial and marketing forecasts.
Key highlights:
- The marketing efficiency ratio (MER) is a metric that shows how well your spending translates into revenue.
- The marketing efficiency ratio formula is your revenue divided by total marketing spend. The result represents your revenue earned per dollar spent.
- A “good” MER is contextual, often considered healthy at 3.0+, but it depends on your business margins, goals, and industry.
- MER captures full-funnel impact, making it especially valuable in privacy-constrained, omnichannel environments.
- With Keen’s platform, you can act on MER insights by simulating scenarios, forecasting outcomes, and aligning marketing with financial results.
What is MER in marketing?
The marketing efficiency ratio (MER), also known as eROAS or “blended ROAS,” is a metric that shows how efficiently your marketing generates revenue with its total given budget.
The efficiency ratio formula divides a company’s total revenue by its total marketing spend (within the same timeframe). The resulting number helps you analyze how lucrative your strategic marketing efforts are as a whole. In other words, it shows you how much you’re spending to get actual results.
How to calculate MER: What you need to know
To calculate MER in marketing, divide your company’s total revenue by its marketing expenses within a specific period:
MER = Total revenue / Total marketing spend
Let’s say your company generated $500,000 in revenue last quarter and spent $100,000 on marketing. Applying the efficiency ratio formula gives you the following:
MER = $500,000 / $100,000 = 5.0
The MER formula indicates how much a business earns for every dollar spent on marketing. In this case, a 5.0 MER means you brought $5 in revenue per $1 spent.
According to Keen’s Marketing Insights Report, larger companies ($500M+) saw marketing efficiency ratios above 10, while smaller brands ranged between 2.4 and 5.1.
The media efficiency ratio is another take on MER that specifically focuses on media spending. To calculate it, you apply the same formula but divide the total revenue per ad spend across platforms.
MER = Total revenue / Total ad spend
Our report suggests that larger organizations have developed more efficient media strategies and likely benefit from stronger brand awareness.
Why should you track the ratio of marketing efficiency?
Knowing what a good marketing efficiency ratio means for your company and tracking that metric helps you understand how financially responsible you are with your overall expenses.
Calculating MER allows you to:
Analyze full-funnel campaign results
Instead of calculating specific marketing campaigns’ revenue, MER provides estimations for efficiency based on total company numbers, allowing you to consider the halo effect.
Say you’re a marketer at a mid-sized consumer packaged goods (CPG) brand launching a new product. Your media mix includes retail media networks like Amazon DSP and Walmart Connect, paid TikTok to boost awareness, and branded search to capture demand. In the first two weeks, your ROAS on TikTok looks low. Walmart Connect performs better, but it’s hard to isolate why. Amazon DSP is generating views but has low conversion rates.
Here’s what may actually be happening:
- TikTok ads introduce the product to new audiences, sparking interest
- Shoppers later see the product again on Amazon DSP during consideration
- Potential buyers search your brand on Google, click a paid ad, and complete the purchase via your site or through a retail partner
ROAS would assign credit to that final click on branded search. MER, by contrast, captures the total revenue impact of the full campaign—including the upper-funnel influence of TikTok and the retargeting boost from retail media, allowing for cross-channel media optimization.
For brands using an omnichannel marketing strategy where conversions often happen off-platform, the MER metric provides the clearest lens into what’s working across the mix. As Nielsen reports, only 38% of marketers evaluate returns on both digital and traditional media together.
MER could be the difference between cutting TikTok for “low campaign performance” or recognizing it as a lift driver across your entire media ecosystem.
Get financial stakeholder buy-in for marketing initiatives
According to Gartner’s CMO Spend Survey, 47% of marketing leaders say their function is perceived as an expense within their organizations. That perception of marketing as a cost rather than a revenue driver brings pressure. Among the surveyed CMOs, 84% report growing demands to cut marketing budgets to deliver a better return on investment (ROI).
Calculating MER helps you shift that narrative by translating complex marketing information into a single, business-relevant metric. Presenting MER to financial leaders allows them to understand:
- To what extent is marketing bringing a return on current investments?
- What’s our marketing incrementality when increasing or cutting expenses?
- How does marketing performance align with our overall margin goals?
Improve marketing resource allocation
The marketing efficiency ratio helps you analyze your budget and make changes toward what works. For instance, if digital media delivers a higher MER than printed media, reallocating the budget ensures marketing investment optimization, enabling a higher impact on your audience—with no wasted dollars.
Evaluate marketing efficiency over time
Including MER in your regular measurement routine creates a culture of continuous improvement grounded in financial impact. It also helps you understand if you’re becoming more efficient with your expenses over time.
Analyze marketing efficiency metrics quarterly and ask:
- What constitutes a “good” marketing efficiency ratio for our company?
- Is our current MER aligned with our margin structure and growth strategy?
- How does our MER compare to peers in our category and revenue tier?
- Has our MER improved over time—and if not, why?
- What changes in our media plan, spend allocation, or campaign timing would improve our MER?
Learn more: The power of marketing performance measurement
MER vs. ROAS: Key differences
While both MER and ROAS measure marketing efficiency, they operate on different levels.
Return on ad spend (ROAS) factors in the revenue generated by specific ad campaigns. This metric evaluates one-time efforts, especially on mainly bottom-of-funnel (BOFU) channels like paid search or retargeting. However, it credits conversion to a single ad or touchpoint despite other influences.
The marketing efficiency ratio takes a broader view, showcasing how well your overall strategy translates investment into business outcomes. MER accounts for today’s privacy challenges, like cookieless marketing.
Here’s a summary:
| Aspect | MER | ROAS |
| Focus | Total marketing performance across all efforts | Performance of specific ads or channels |
| Scope | Holistic—includes brand, performance, and blended media | Narrow—tied to trackable, direct-response campaigns |
| Attribution dependency | Low—this indicator doesn’t rely on user-level tracking | High—this metric needs reliable marketing attribution data |
| Actionability | The results inform marketing investment decisions | The data provides insights into campaign execution and allows for performance tuning |
When to use the MER metric and when to use ROAS
Understanding when to rely on MER vs. ROAS often depends on whether you’re working with strategic media planning or tactical performance.
Analyze MER when you need to:
- Align marketing with financial goals across the business
- Forecast revenue or justify annual budgets
- Provide unified marketing measurement, including brand and upper-funnel spend
- Demonstrate performance to finance stakeholders
Use ROAS to:
- Optimize campaigns or compare specific marketing channels
- Adjust tactics based on short-term return
- A/B test creative or bidding strategies
- Report on direct-response performance in real time
Learn more: The hidden pitfalls of ROAS: How it’s killing performance marketers
How to implement the marketing efficiency ratio in your business
To implement the measurement of the marketing efficiency ratio in your organization, follow these four steps:
- Collect your marketing data
Start with clean, centralized data regarding your:
- Total revenue
- Total marketing spend
- Gross margin
- Contribution margin
Gathering this information gives you a view of the performance of your full-funnel marketing strategy.
- Use MER to forecast different scenarios
Calculate MER, then model it against your revenue goals and marketing budget to see if your current investment strategy supports sustainable growth. An AI-powered marketing mix modeling (MMM) platform like Keen can help you do so.
Keen allows you to simulate different spending scenarios—adjusting channels, timelines, or budget levels—to understand their possible revenue, efficiency, and contribution impact. For example, if you’re planning a heavier investment in retail media during Q4, Keen can help forecast whether that shift will improve your overall MER or erode your margin.
Include an image of the scenario planning feature in Keen’s platform.
Alt text: Scenario planning in Keen’s marketing mix modeling platform.
Learn more: Introduction to scenario-based marketing planning
- Analyze MER alongside other marketing metrics
MER becomes even more useful when paired with these other marketing metrics that add depth and context to it:
- Customer lifetime value (LTV): This indicator helps assess the long-term revenue potential of each customer. Pairing LTV with MER shows if short-term marketing efficiency is also contributing to long-term revenue.
- Customer acquisition cost (CAC): While MER shows total return, CAC reveals how much it costs to acquire each customer. If MER is high but CAC is rising, your growth might not be scalable.
- Contribution margin: This metric represents the revenue left after subtracting variable costs from total sales. Paired with MER, it shows if revenue generated through marketing is not just covering spending but also producing profit.
- Revenue velocity: This calculation shows how quickly marketing investments convert into revenue within a given time period. Analyzing it with MER helps teams evaluate cash flow impact and time-to-return.
- Review your results with frequency
As you run campaigns, monitor if you have a good marketing efficiency ratio according to your company’s standards and check how actual MER compares to planned scenarios. Then, verify marketing channel performance metrics and adjust your media mix or spend levels accordingly.
Top 4 challenges when measuring marketing efficiency
When measuring marketing efficiency and analyzing MER or the media efficiency ratio, CMOs face four common challenges:
- Inaccurate marketing data
Multiple platforms, missing spend categories, or incomplete revenue reporting lead to inaccurate data and skewed results. Establishing a centralized, consistent data pipeline in your marketing strategy software stack ensures MER reflects reality.
- Metric misinterpretation
As we’ve said earlier, what constitutes a good marketing efficiency ratio varies. For example, a lower MER might reflect a short-term investment in brand awareness that pays off over time, while a higher MER could signal underinvestment that’s limiting growth potential.
To understand if your MER is “good,” compare it against your margin profile, sales goals, and marketing strategy. High-margin businesses may thrive at 3.0, while lower-margin brands might need 5.0+ just to break even. Without layering in metrics like contribution margin or CAC, you risk drawing the wrong conclusions from a single number.
- Benchmarking blind spots
Relying on generic benchmarks can lead to false comparisons. Keen’s Marketing Elasticity Engine (MEE) helps you get the right insights by benchmarking your performance against similar companies with comparable margin structures, spend levels, and marketing mixes. By doing so, you’re not just asking, “Is my MER good?”—you’re answering, “Is it good for a business like mine?”
- Actionability gaps
MER shows you whether your marketing channel mix is efficient—but it doesn’t tell you how to fix inefficiencies, reallocate the budget, or model future outcomes. That’s where many teams get stuck.
Implementing AI-powered marketing tools like Keen can help you bridge this gap by providing relevant strategy insights on the go. Our platform helps you analyze different scenarios, enabling real-time planning and dynamic budget allocation suggestions.
Optimize your marketing efficiency metrics with Keen
Leading marketing teams use MER to forecast revenue, evaluate tradeoffs, and align with finance. But turning MER into action requires a powerful solution like Keen’s AI-powered MMM platform.
Keen transforms MER from a static metric into a predictive tool.
Our marketing measurement solution applies scenario planning techniques to model different investment strategies, showing how changes in spending might impact your revenue, efficiency, and contribution margin—before you commit a dollar.
Start your free trial and begin optimizing your channel mix for a good marketing efficiency ratio with Keen.
