MER is an acronym that stands for Marketing Expense Ratio. It is a metric used in marketing to measure the efficiency of spending on marketing activities.
The marketing expense ratio calculates the ratio of total marketing expenses to total sales revenue. It measures what percentage of revenue is spent on marketing efforts. For example, if a company spent $100,000 on marketing last year and had total sales revenue of $1 million, their MER would be 10% ($100,000 marketing spend divided by $1 million in sales).
The formula for calculating marketing expense ratio is:
MER = Total Annual Marketing Expenses / Total Annual Sales Revenue
The marketing expense ratio provides companies with some key insights:
In summary, the marketing expense ratio is a simple but useful metric for gauging the productivity and efficiency of marketing investments. Tracking it over time and comparing to benchmarks allows companies to hone their marketing approach and spending levels. A “good” ratio depends largely on the industry and growth aims at a company. But maintaining an MER within reasonable parameters helps ensure marketing dollars are effectively supporting sales.
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