Short answer
ROAS measures revenue attributed to a channel against that channel's spend, as the platform sees it. MER measures total revenue against total marketing spend, as your bank account sees it. Use ROAS to optimise inside Google and Meta, use MER and contribution margin to judge whether marketing is profitable, and use incrementality tests to find out what your ads actually caused.
ROAS: useful, and biased
Return on ad spend is revenue attributed to ads divided by ad spend. It is the number every platform puts front and centre, and it is genuinely useful for comparing campaigns, ads and audiences within one platform.
The catch is that each platform grades its own homework. Google and Meta both use their own attribution windows and models, so a customer who saw an Instagram ad, then searched your name on Google and booked, can be counted as a conversion by both. Add the two platforms' reported revenue together and you can end up with more revenue than you actually took.
MER: the number platforms cannot inflate
Marketing efficiency ratio is total revenue divided by total marketing spend for the same period. It ignores attribution entirely. If MER improves as you change your spend mix, marketing is working harder. If platform ROAS climbs while MER falls, something is being over-credited.
MER is blunt, it includes revenue from regulars who would have come anyway, so it works best read alongside ROAS rather than instead of it.
Margin and break-even ROAS
Revenue is not profit. Break-even ROAS is one divided by your gross margin: with a 70 percent gross margin it is roughly 1.43, so any campaign returning less than that loses money on every attributed sale once ads are paid for. The more useful number for a venue is contribution margin after ad spend: revenue, minus cost of goods, minus marketing. That is the figure we report against.
Incrementality: did the ads cause it?
The hardest and most valuable question is whether a customer would have come anyway. Incrementality testing answers it. Geo holdouts pause ads in comparable areas and compare results. Platform lift studies split audiences into exposed and held-out groups. Results are rarely as rosy as platform dashboards, which is exactly why they are worth running before scaling budget.
Making the data honest
- Server-side tracking through the Meta Conversions API and Google enhanced conversions, so conversions are not lost to blockers.
- Offline conversion imports of completed bookings and sales, so platforms optimise toward revenue rather than form fills.
- Value-based bidding such as target ROAS, once conversion values are reliable.
- Consistent UTMs on every ad link, so GA4 tells the same story.
- One reconciled view of spend, attributed revenue and actual takings.
This is the framework behind our revenue reporting and how we run Google Ads and Meta Ads. If you are not sure your numbers add up, start with a free audit.