If you're running an ecommerce brand, you're probably drowning in metrics right now.
But here's the thing - your ad spend is likely your biggest expense, and it's where literally everything flows from.
So let's cut through the noise about media efficiency ratios (MER) or what most people call blended return on ad spend (ROAS).
What the Hell is MER Anyway?
At its core, MER is dead simple: it's your total DTC revenue divided by what you're spending on ads. That's it.
You calculate MER by taking all the money coming in through your Shopify store and dividing it by what you're burning through on Facebook, Google, TikTok, or whatever platforms you're using to reach people.
You can pull these numbers from pretty much anywhere - Quickbooks Online, your Shopify dashboard, or your ad platforms.
If you're fancy, maybe you're using Triple Whale or Northbeam. Whatever works. The point is, the data's there.
Think of MER as your brand's vital signs. It's not going to tell you everything about your health, but it'll definitely let you know if something's seriously wrong.
But here's where it gets interesting - and where most people mess up.
Having a "good" MER doesn't automatically mean your ad strategy is working.
And having a "bad" one doesn't mean you're screwed.
Most brands you'll see out there? They're sitting somewhere between 3x and 10x ROAS. What does that mean in real money?
Let's say you're doing $100,000 in revenue:
- At 3x: You're spending around $33,000 on ads
- At 10x: You're looking at about $10,000 in ad spend
But hold up - before you go chasing that 10x number, we need to talk about why higher isn't always better.
The 10x ROAS Trap
Here's a story that'll blow your mind: Imagine a brand doing $100,000 in revenue with zero ad spend.
They're crushing it organically, right?
Then they decide to throw $10,000 at ads for three straight months. Revenue stays at $100,000.
Guess what? That's technically a 10x blended ROAS. Looks amazing on paper, right?
Wrong.
That $10,000? Might as well have set it on fire.
They didn't move the needle on revenue at all. Maybe you could argue it prevented a decline, but that's a different conversation.
The Truth About "Good" blended ROAS
Here's what nobody tells you - there is no "perfect" ROAS. It depends on so many factors:
- Are you bootstrapped or swimming in VC money?
- Pushing subscriptions hard?
- Got killer lifetime values?
- Crushing it on organic TikTok?
- Working with influencers who actually deliver?
Three to five might be solid for one brand while another's killing it at 10x. Some VC-backed brands might even go below 3x and still be executing their strategy perfectly.
Watching the Trends
The real gold isn't in hitting some magical number - it's in the trends.
Month over month, are you stable? Are your fluctuations making sense?
Black Friday's a perfect example. Your ROAS might shoot through the roof, but if you're discounting everything to hell and back, your margins might be in the toilet.
Higher ROAS, lower profits. Fun times.
Here's what you need to take away from all this:
- Keep your ROAS somewhat stable for your strategy
- Watch for meaningful patterns, not just numbers
- Remember that context is everything
- Don't let anyone tell you there's a "perfect" number
And for God's sake, don't optimize for ROAS in a vacuum. It's one piece of the puzzle - an important piece, but still just a piece.
Want to know if your ads are actually working? Watch your overall contribution margin. That's where the rubber meets the road. Everything else is just noise.
Remember: Your media efficiency ratio is like your speedometer - crucial to watch, but useless if you don't know where you're going.
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