MER vs. blended ROAS vs. ROAS: what is what?

MER, blended ROAS and ROAS sound similar but measure different things. Here is the clear separation:

ROAS according to the platform, per platform

• Formula: purchase value a platform reports / advertising spend of that platform.
• Source: Meta, Google or TikTok, each by its own attribution. The purchase value is usually gross (including VAT) and not deduplicated.
• When to use: when you compare campaigns within one platform.
• Limit: platforms often credit revenue to themselves. This creates double counting.

Blended ROAS: the whole shop against all advertising costs

• Formula: net revenue of the shop / advertising costs of all channels.
• Net means: excluding VAT, after refunds.
• Source: shop revenue and the advertising costs of all connected advertising accounts.
• When to use: when you compare periods or shops with each other.
• Limit: it knows neither cost of goods nor fees. A blended ROAS of 2.0 can mean a loss.

MER: all marketing costs

• Formula: net revenue / (advertising costs + agency and fixed marketing costs).
• Source: like blended ROAS, plus your fixed costs in the marketing and agency categories.
• When to use: when you want to know whether marketing works efficiently overall.
• Strength: works even when pixel attribution is incomplete.
• Limit: seasonal peaks or organic reach can improve MER without advertising alone being responsible.

ROAS at the profit threshold: from when advertising pays off

• Formula: net revenue / contribution margin before advertising, i.e. 1 / contribution margin rate.
• Example: at a 40% contribution margin the threshold is 2.5.
• If blended ROAS is above it, the contribution margin covers the advertising (POAS above 1.00). Fixed costs are not yet covered then.
• If the cost of goods is missing, the threshold is unknown. NorthProfit does not estimate it.

Which number when?

• Daily: platform ROAS for campaign decisions.
• Weekly: blended ROAS for comparison with the profit threshold.
• Monthly: MER for marketing efficiency.
• Quarterly: net profit margin for strategy.

There is no fixed “good” number: what counts is whether your blended ROAS and your MER are above the ROAS at the profit threshold, which your own contribution margin determines.

NorthProfit shows the metrics in the dashboard and in the marketing area. If you calculate from Shopify's “total sales”, you get a value roughly 19% higher at 19% VAT.