MARKETING EFFICIENCY RATIO: HOW TO CALCULATE AND IMPROVE YOURS

Summary from the TLDR Marketing newsletter

The marketing efficiency ratio (MER) shows how much total revenue marketing generates for each $1 spent and gives a top-level view of overall performance across all channels. It is calculated as total revenue divided by total marketing spend. A sample result of 5.0 means $5 in revenue for every $1 spent. The metric cuts through attribution noise, but it does not show which campaigns perform best. A good result depends on margins and business model rather than a universal benchmark. The ratio works best when tracked consistently over time and paired with metrics like ROAS and LTV to explain changes.