Why marketing efficiency matters

In the world of paid ad channels, marketing efficiency is the best way to increase how much money you make on ads.Efficient marketing means putting in lower effort and still reaping big rewards because your process is solid. That’s why every marketing team’s goal should be to streamline efforts as much as possible to reduce marketing costs. And when you lower marketing costs, your ROIs go up!

Why is Marketing Efficiency So Important?

The more efficient your marketing is, the more revenue you’ll ultimately gain. So as you develop a marketing plan, it’s a good idea for your team to analyze each process and ad regularly to see what’s working and what’s not. You want ads that direct people to take action with as few touches as possible, so you spend less. That’s why your team needs to keep an eye on a few vital statistics:

  • CPA: How much are you paying for each action taken on your ads that results in a sale?
  • CTR: How many people are clicking on the ads you’re paying to be placed in front of them?
  • Conversions: How many people are becoming customers at the end of that funnel?
  • Engagements: How many people are engaging on your social ads with likes, comments, or shares?

All of these statistics help you see where your process is running smoothly or breaking down and causing inefficiency. When you spend too much on ads that just aren’t getting engagement, that’s a sign of inefficiency. Check out that red flag and find where you need to fix your process to streamline your marketing as a whole.

Marketing efficiency is even more vital when you’re working across multiple platforms. For example, suppose you’re advertising on Google, Facebook, Instagram, and TikTok. In that case, you want each of those ads to work together toward a sale through retargeting viewers. If you don’t, you’ll miss an opportunity to lead potential clients further down the sales funnel each time.

Marketing Efficiency Ratio vs. ROAS

Many people get hung on their ROAS (return on ad spend) rather than looking at the big picture.

Your ROAS is how much revenue you get back for every dollar you spend on advertising. While this is important, it’s easy to only focus on how much an individual ad made. The problem with this is that your consumers may hear about you from many different channels, and they’re all part of the picture. When you only focus on ROAS, you leave out some critical data.

Instead of just looking at ROAS, be sure to look at your Marketing Efficiency Ratio (MER) as well. This method takes your total revenue and divides it by the entire ad spend for all your marketing channels. So no matter which channel your clients come from, you can see the bigger picture of how all your marketing efforts work together.

For example, say a potential client clicks on your Facebook ad and visits your website. While they’re there, they subscribe to your email list but don’t buy anything. A month or two later, they receive an email that sends them back to your website—this time for a purchase. If you only measure your ROAS, that initial Facebook ad doesn’t get any credit, even though it pushed the client to take action that led to a sale.

So before you panic over your next ROAS report, take a step back and look at your MER first. You may just find that all your efforts are paying off better than you realized! If not, it’s time to reevaluate as a whole—not just one ad.