MER, or marketing efficiency ratio, is a marketing performance metric that measures the effectiveness of a marketing campaign or initiative by comparing the cost of the campaign to the revenue or profit generated.
The marketing efficiency ratio is calculated by dividing the revenue or profit generated by the campaign by the cost of the campaign. For example, if a marketing campaign generates $100,000 in revenue and costs $10,000, the marketing efficiency ratio would be 10:1.
A high MER indicates that a marketing campaign is generating a strong return on investment (ROI) and is therefore considered to be effective. Conversely, a low MER indicates that a campaign is not generating enough revenue or profit to justify its cost, and may need to be reevaluated or adjusted.
The MER can be used to compare the effectiveness of different marketing channels or campaigns, and can help marketers make data-driven decisions about where to allocate their resources. By calculating the MER for each campaign, marketers can identify which campaigns are generating the highest ROI and adjust their strategies accordingly.
Here is an example of our internal report called 6ixWand:
Below you can see the chart with the trend of Facebook ad costs compared to the total revenue of our client. You can see the correlation between increased ad spend and overall revenue. The scorecards above tell you about current and projected revenue and ad cost by the end of the month. If you meet the overall KPIs, it tells you how much your daily acquisition spend should be.
We can use the so-called total (or blended) MER, where we compare the investment on a specific campaign vs the total turnover and track its evolution over time. This way we can explicitly determine what change the increase/decrease in investment in a given campaign has brought to the overall turnover.