Short answer
ROAS (return on ad spend) measures revenue attributed to a specific campaign or platform divided by its spend. MER (marketing efficiency ratio) measures total revenue divided by total ad spend across all platforms. Use ROAS to optimise within a platform and MER to judge whether your overall marketing is working, because platform ROAS numbers overlap and usually add up to more than your real revenue.
Key takeaways
- ROAS is attributed; MER is blended. They answer different questions.
- Meta and Google often both claim credit for the same order, so summing platform revenue overstates results.
- Set a target MER from your contribution margin, not from a benchmark.
- In India, measure MER on delivered revenue, or COD and RTO will flatter it.
Ask a D2C growth team how ads are doing and you'll usually hear a ROAS number. Ask the founder how the business is doing and the answer often doesn't match. MER is the bridge.
The formulas
ROAS and MER
ROAS = Revenue attributed to campaign ÷ Campaign spend
MER = Total revenue ÷ Total ad spend (all platforms)
A worked example
When to use which
| Question | Use |
|---|---|
| Which Meta ad set should get more budget? | ROAS (within Meta) |
| Should we raise total ad budget next month? | MER |
| Is Google or Meta more efficient? | Both, carefully: ROAS within each, plus MER changes when you shift budget |
| Is the business profitable after ads? | MER combined with contribution margin |
Setting a target MER
Your break-even MER depends on margins:
Break-even MER
Break-even MER = 1 ÷ CM2 %
Example: CM2 of 50% means break-even MER = 2.0
If CM2 (contribution after product, shipping, payment and RTO, before ads) is 50%, every ₹1 of ads needs ₹2 of revenue to break even. A target MER above that leaves room for fixed costs and profit. See contribution margin for D2C brands.
The India adjustment: delivered revenue
If 30% of your orders are COD and 20% of those return to origin, revenue at order time overstates real revenue. Calculate MER on delivered (or expected delivered) revenue for a truthful number.
How MarQet BI helps
MarQet BI pulls Meta and Google spend next to Shopify revenue and Shiprocket delivery outcomes, so blended MER, ROAS by platform and delivered revenue sit in the same view. Try the ROAS, MER and CAC calculator for a quick check.
Frequently asked questions
What is MER in ecommerce?
MER, or marketing efficiency ratio, is total revenue divided by total marketing or ad spend across all channels. It is also called blended ROAS.
Is MER better than ROAS?
Neither is better; they answer different questions. ROAS optimises campaigns within a platform. MER shows whether total marketing spend is paying off.
What is a good MER for a D2C brand?
Calculate break-even MER as 1 divided by your contribution margin before ads. A good MER is comfortably above break-even. It varies a lot by category and margin.
Written by
Ayush Singhal, Founder, MarQetAyush founded MarQet to give D2C founders one system for customer conversations, daily performance and quick-commerce shelf availability.