Calculate your main MER on direct-to-consumer revenue only, divided by the marketing spend aimed at those customers, and keep wholesale in a separate view. Adding wholesale revenue to the numerator makes your marketing look more efficient than it is, because most wholesale revenue comes from buyers and sales relationships rather than from your ads.
What is MER?
MER, or marketing efficiency ratio, is total revenue divided by total marketing spend over the same period. It ignores attribution entirely, which is the point. It tells you whether all your marketing together is paying off, regardless of which channel claims what. The full definition is in what is MER, and MER vs ROAS covers when to use each.
Should wholesale revenue go into MER?
For the version you use to manage ad spend, no. Wholesale orders depend on retailer buying cycles, trade shows and your sales team. A large reorder from one stockist can double your revenue for a month without any change in what your ads did. If that revenue sits in your MER, the ratio swings for reasons that have nothing to do with marketing, and you lose the signal you wanted.
There is a case for a second, blended version. Your ads do build awareness that helps retail sell-through, and leadership often wants one number that covers the whole business. Keep both, and label them clearly so nobody compares one month’s blended figure against another month’s DTC figure.
What does the math look like?
Take a month with $400,000 in DTC revenue, $250,000 in wholesale revenue and $120,000 in marketing spend. Blended MER is $650,000 divided by $120,000, or about 5.4. DTC MER is $400,000 divided by $120,000, or about 3.3. If your break-even DTC MER is 3.0, the blended number tells you there is lots of room to scale, while the DTC number tells you you are close to the line.
If part of that spend supports wholesale directly, such as trade show costs or co-op advertising with a retailer, take it out of the DTC denominator and put it with the wholesale view.
What about ads that drive retail sales?
This is the hard part, and there is no tidy answer. If a retailer shares sell-through data by region, you can compare regions where you ran heavier paid social against ones where you did not. Some brands run geographic holdouts specifically to measure retail lift. Without that kind of test, treat retail halo as a reason to tolerate a slightly lower DTC MER, not as a number you can calculate precisely.
What if wholesale orders run through my Shopify store?
Then check what your tools count. If B2B orders come through Shopify B2B, a wholesale channel app or draft orders, they may land in the same revenue total your analytics and attribution tools report. Filter them out by sales channel, customer tag or order tag before calculating DTC MER. ThoughtMetric reports MER alongside channel ROAS from the store orders it tracks. (Disclosure: ThoughtMetric sponsors this site.) If your wholesale orders flow through the same store, confirm how they are being counted, and calculate MER from a filtered order export if needed. More options are in MER tracking tools.
What counts as marketing spend in MER?
At minimum, all paid media aimed at consumers. Many brands also include agency and creator fees, affiliate commissions and the cost of discounts or free gifts used in campaigns. What matters most is staying consistent month to month. Decide what goes in, write it down, and use the same definition every time, or your MER trend will move because the inputs changed rather than because performance did.
Keep tool subscriptions and salaries out unless you have a specific reason to include them. They are real costs, but they do not scale with media spend, and including them makes the ratio harder to act on.
How often should I calculate MER?
Weekly for spotting problems, monthly for decisions. Weekly MER moves around with promotions and email sends, so use it to catch something breaking rather than to reset budgets. Monthly and trailing 90-day MER are better for deciding whether to scale. For brands with wholesale, monthly also lines up better with retailer ordering, which makes it easier to keep the DTC and blended views from blurring together.
Set a break-even DTC MER from your contribution margin before you start tracking. If you keep 40 cents of every dollar after product, shipping and fees, the break-even point is 2.5. Anything below that means marketing is costing more than it brings back, however good the blended number looks.
A quick setup for brands selling both ways
- Tag or separate wholesale orders so they can be filtered in every report.
- Calculate DTC MER from DTC revenue and DTC-focused marketing spend.
- Keep a blended MER for leadership, labeled as blended.
- Move trade show and retailer co-op costs to the wholesale side.
- Use regional tests if you want to estimate retail lift from ads.
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