Our top passion at Blend is helping companies grow their revenue, but a close second is understanding the ROI of our clients’ marketing investment. Unfortunately, there is no single perfect marketing metric, even for digital advertising; so it’s important to use multiple metrics to get a good picture of marketing effectiveness.
In this post, we’ll compare Return On Ad Spend (ROAS), Blended ROAS, and the Marketing Efficiency Ratio (MER).
| ROAS Return On Ad Spend | Blended ROAS Blended Return On Ad Spend | MER Marketing Efficiency Ratio | |
|---|---|---|---|
| What It Is | The revenue that an ad platform claims credit for, divided by ad spend on that platform. ROAS Explained for Tours, Activities, & Attractions | Revenue directly attributed to an ad click, divided by total ad spend. Is Your Advertising ROI Inflated? What Your Advertiser Probably Isn’t Telling You. | A measurement of the overall effectiveness of your marketing efforts |
| Calculation Details | Revenue credit is claimed on the basis of an attribution model. For example, a 7-day-click, 1-day-view attribution model will claim credit for any revenue generated from a user within 7 days of an ad click, and within 24 hours of a user being shown an ad. | Revenue is counted only if the last traffic source to send the user to the website was an ad (unless a different attribution model is chosen). | Total revenue divided by total marketing spend. |
| Where To Find It | In your ad platform. | In Google Analytics, look at revenue attributed to ad channels. In your ad platforms, find your ad spend. Run the calculation manually. | In your accounting software, find your revenue and your marketing costs. Run the calculation manually. |
| What It’s Good For | Presenting a best-case view of the value of a given advertising channel. | Presenting a conservative, combined view of the value of advertising, without any revenue being claimed by multiple channels. | A broad measurement of marketing efficiency. |
| Drawbacks | Multiple platforms will claim credit for some of the same revenue. If each platform is claiming a 4x ROAS, your combined ROAS is not truly 4x. | Does not account for any revenue that was influenced by advertising—only revenue that can be directly tied to advertising. A user who clicks on an ad, but eventually buys from an organic click, will have $0 in revenue counted in this metric. | No granularity. Doesn’t account for non-marketing impact on revenue. External factors could be contributing to an increase or decrease in MER, so results should be interpreted carefully. |
| Example | Facebook: 4.5x ROAS $45,000 revenue, $10,000 spend Google: 5.0x ROAS $70,000 revenue, $14,000 spend | 3.3x Blended ROAS $80,000 last-click ad revenue $24,000 combined ad spend | 5.6x MER $200,000 revenue $24,000 ad spend $12,000 other marketing costs |
