This episode debunks the myth of ROAS as a reliable metric for ad performance, especially for Shopify stores. It introduces Media Efficiency Ratio (MER) as a superior alternative, covering its calculation and benefits. Ecommerce operators will learn why MER provides a more accurate, holistic view of marketing spend, enabling better strategic decisions for sustainable growth beyond just paid acquisition.
Key takeaways
ROAS is a 'fake' metric that leads to flawed decision-making because it relies on attribution windows and often takes credit for sales that would have happened anyway (e.g., existing customers already in the purchase funnel).
Media Efficiency Ratio (MER) offers a more accurate, holistic view of marketing performance by dividing total revenue by total ad spend, eliminating duplicate attribution issues across platforms like Facebook, Google, and Klaviyo.
Focusing solely on high ROAS can lead to investing in non-incremental revenue, like retargeting existing customers, instead of acquiring new ones. MER encourages focusing on overall business growth.
MER allows for a broader inclusion of marketing expenses beyond just ad spend, such as content creation costs (video editors, camera crew), providing a more complete picture of marketing ROI.
For Shopify stores, implementing MER means looking at total revenue from all channels (online store, marketplaces) against total marketing investment, offering clarity on true profitability and scalability.
What does this episode say about paid acquisition?
ROAS is a 'fake' metric that leads to flawed decision-making because it relies on attribution windows and often takes credit for sales that would have happened anyway (e.g., existing customers already in the purchase funnel).
What does this episode say about analytics & attribution?
Media Efficiency Ratio (MER) offers a more accurate, holistic view of marketing performance by dividing total revenue by total ad spend, eliminating duplicate attribution issues across platforms like Facebook, Google, and Klaviyo.
What does this episode say about dtc strategy?
Focusing solely on high ROAS can lead to investing in non-incremental revenue, like retargeting existing customers, instead of acquiring new ones. MER encourages focusing on overall business growth.
What does this episode say about paid acquisition?
MER allows for a broader inclusion of marketing expenses beyond just ad spend, such as content creation costs (video editors, camera crew), providing a more complete picture of marketing ROI.
What does this episode say about paid acquisition?
For Shopify stores, implementing MER means looking at total revenue from all channels (online store, marketplaces) against total marketing investment, offering clarity on true profitability and scalability.
