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Why Growth Hackers at Genero look beyond ROAS to measure growth

As marketers, we’ve seen metrics change over the years. Return on Ad Spend (ROAS) has been a common way to measure our advertising’s effectiveness. At Genero, we now focus on Marketing Efficiency Ratio (MER) for a broader view. In this article, we’ll explain why we prefer MER over ROAS and how we made this shift

Cost per click: The Beginning

In the early days of keyword-level optimization, Cost Per Click (CPC) was the primary measure of efficiency. However, CPC failed to account for the quality of the traffic. For example, a high-end furniture retailer might prefer fewer clicks from potential luxury buyers over a high volume of low-intent clicks.

While CPC remains a useful metric for understanding competition and the impact of platform changes, its value beyond that is limited.

Cost per Acquisition: A Step Forward

As conversion tracking improved, Cost Per Acquisition (CPA) became the go-to metric, focusing on generating quality actions on websites. However, not all conversions carry the same value. For example, in e-commerce, selling a pair of socks versus a designer jacket should be differentiated, but CPA treats them equally.

Return on Ad Spend: The Evolution

Return on Ad Spend (ROAS) advanced the conversation by considering the revenue driven by campaigns. It’s a specific form of Return on Investment (ROI), measuring the return for each dollar spent on ads. Despite its usefulness, ROAS alone doesn’t address long-term strategic goals.

Limitations of ROAS

While some marketers view ROAS as the ultimate metric, it isn’t. The limitations of ROAS include:


Its lack of correlation with volume:
ROAS can be misleading if it’s decoupled from volume, potentially leading to high ROAS but lower overall sales. To avoid this, it’s crucial to measure incremental ROAS, which helps find the balance between ad spend and revenue, ensuring that additional spending continues to be profitable.

How it ignores the long-term value a customer can bring:
ROAS focuses only on short-term gains, ignoring the long-term value a customer can bring. By considering Lifetime Value (LTV), businesses can reframe their performance metrics to account for the total revenue a customer generates over their entire relationship, leading to better long-term growth strategies.

An unrealistic assumption of perfect attribution:

ROAS assumes perfect attribution, which is unrealistic given the complex customer journey involving multiple touchpoints. Marketing Efficiency Ratio (MER) provides a more holistic view by evaluating the overall effectiveness of all marketing efforts, rather than attempting to attribute revenue to specific campaigns.

What should I report on?

Investing in the entire marketing funnel and understanding what drives revenue is key to long-term brand growth. Although ROAS and CPCs cannot be completely dismissed, we should look at these metrics from a different perspective. Be aware of their limitations and compare them to more comprehensive metrics like LTV and MER. It is important to measure and monitor LTV and MER if you aren’t already doing so.

Embrace the Future of Marketing Metrics with Genero

The marketing landscape is ever-evolving, and metrics are no exception. While ROAS has its place, the future lies in a more balanced approach that considers both short-term gains and long-term growth. Stay adaptable and keep an eye on emerging metrics that align with your business goals.

Ready to move beyond ROAS and unlock the full potential of your marketing efforts? 

At Genero, we specialize in comprehensive metrics that drive long-term growth and profitability. To learn how our innovative approach to metrics like MER can transform your marketing strategy contact our team today. 

Let’s redefine growth together—reach out to our team now.