MER vs ROAS: the metric UK DTC founders should track
MER vs ROAS: the metric UK DTC founders should track
Why MER beats platform ROAS as the north-star metric for UK DTC brands - definitions, targets by margin, and how to structure your dashboard.
Definitions
- ROAS: platform-reported revenue / platform ad spend. Attribution-window dependent.
- MER: total business revenue / total marketing spend. Whole-business truth.
Why MER wins as the north star
ROAS double-counts revenue across platforms and misses the compound effect of paid on organic/email/direct. MER can't lie - it's the top of your P&L divided by the marketing line.
MER targets by margin
| Gross margin | Healthy MER |
|---|---|
| 65%+ (beauty, digital) | 1.8 - 2.2 |
| 45-60% (accessories) | 2.5 - 3.2 |
| 30-45% (apparel) | 3.5 - 4.5 |
| Under 30% (commodity) | 5.0+ |
How to use both
MER for budget decisions (should I spend more this month?). ROAS for campaign-level optimisation (which ad set to scale?). Never use ROAS for budget-level decisions - it will justify unprofitable growth.
New customer MER
Split MER into new-customer MER (aggressive threshold, since LTV compounds) and repeat-customer MER (must be profitable on first order). This split reveals whether you're actually growing or just churning.
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Related tools & resources
Free UK ecommerce calculators, definitions and benchmarks referenced in this guide.
Frequently asked questions
MER (Marketing Efficiency Ratio) = total revenue / total ad spend. It's a whole-business metric that includes organic, email and repeat revenue attributable to paid acquisition.