Why Your Business Needs to Pay Attention to Blended ROAS (MER)
With the rise of user privacy, conversion tracking ain’t what it used to be! As most advertisers know by now, you need users’ permission to track on Apple devices running IOS14.5+. This is causing a noticeable decrease in attributed conversions to most digital advertising efforts including all social media platforms like Facebook, Instagram, TikTok, Twitter, Snapchat, etc.
We are learning that people don’t want to be tracked, and although this is probably a win for humanity, it does make it tough to track ad performance; business owners and advertisers just want to know if their ads are resonating and converting. If your ad account is not ROAS positive, or at your goal, it does not mean that your business is not ROI positive. This is why you have to start looking at Blended ROAS, also known as Marketing Efficiency Ratio (MER).
What Is Blended ROAS/MER
- MER = total revenue divided by total paid ad spend from all channels
- This is a high-level ratio of ad spend and revenue performance. It is different from ROAS in that it doesn’t look at revenue broken out from individual ad platforms, campaigns, or ads. ROAS measures how efficient each campaign or ad is directly while MER measures efficiency for all paid advertising spend as a ratio to total revenue.
Why Your Business Should Pay Attention to MER
- The perfect cross-channel attribution method does not exist and foolproof tracking is simply not 100% achievable with privacy updates, so you need to have metrics you can trust – even if they are higher level.
- Monitoring MER allows you to see how your ads are performing in an overall and interconnected way. The modern customer journey is only getting more complex, and if you are only looking at ROAS, it can undermine the umbrella effect of all digital marketing efforts and longer paths to conversion.
- It allows you to attribute total conversions in some way to paid efforts by taking into account paid brand awareness and consideration efforts that are not conversion-focused but lead to conversions over time.
Is ROAS Still Important in the Ad Platform?
- Yes, but it has been getting less accurate and uses incomplete data. You should be looking at both ROAS and MER.
- You can make your ROAS more accurate on IOS14.5+ devices for Facebook and Instagram with Aggregated Event Measurement and prioritizing your 8 conversion events. Note: This is still limited since only the highest priority conversion event (usually a purchase) is sent from opted-out users on IOS14.5+ devices during a conversion window (max is 7-day click). There are no view-through conversions counted for opted-out users at the time of this post.
How to Take Action with MER
MER is a top-level indicator of how your total media spend and efforts are affecting total business revenue and growth. To be successful you should keep a running weekly or monthly sheet of your marketing spend, sales, and revenue to track this ratio and the changes you made during that time (see a simple example below). For example, if you just started running Tiktok ads, did you see an increase in total revenue and MER? Setting up good tests, taking good notes, and monitoring this ratio is key to making actionable changes over time.
Have questions about using the MER or running paid ads? Please reach out!