MER over ROAS
Summary
ROAS might look good on paper, but it’s hiding the true cost of your marketing. Learn why MER (Marketing Efficiency Ratio) is the smarter way to measure success.
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Transcript
You shouldn't all rely on ROAS. ROAS is BS. ROAS is the total revenue over the total spend, but it's not nuanced. It doesn't contain a lot of information. A better metric I think is Marketing Efficiency. Look back at the past 12 months revenue and divide that by the total marketing spend. But it's not just like your ad spend. It's like how many people were, cost of the people involved in managing the program and your marketing team. Like it all kind of rolls up.
And so you get this overall efficiency number and you kind of want to track that over time. The problem with ROAS is you could have a number that looks good on paper, but as soon as you add in the cost of your marketer, the agency, all these other ancillary things, it goes to zero pretty quickly. So I think that's one of the many problems with ROAS. And I think I kind of fault multi-touch attribution as part of the issue here.I would encourage all marketers to kind of look at their efficiency metric, you know, on a monthly basis, looking back the last 12 months, it's just a great place to start.