Modern KPIs: The Rise of ACOS, MER, and Weighted CAC

There have been some gifts iOS14 gave us, one being the decline of ROAS.

We’re working with our clients and prospective clients to get our new standard reporting KPIs front and center in our conversations while still using platform ROAS and Platform CAC to bridge the learnings. The KPIs we’ll walk you through below help us manage our client’s real goal, which is to unlock growth for their business.

So…what are these shiny new(er) metrics?

ACOS (advertising cost of sales)

This metric helps our brands determine how much they can spend to acquire customers and remain profitable. ACOS represents paid spend as a percentage of total revenue.
How it’s calculated: Total Ad Spend divided by Total eCom Revenue.
Generally speaking, you want this percentage to be between 25-35%.

MER (marketing efficiency rating)

a.k.a. blended ROAS, this metric measures the overall effectiveness of paid media.
How it’s calculated: Total eCom Revenue divided by Total Ad Spend.
Your appetite for MER will be dependent upon your Operating Expenses and Cost of Delivery, though generally anything above 4-4.5 MER has been considered healthy among the clients we work with.

Weighted CAC (customer acquisition cost)

Weighted CAC helps us understand our costs to acquire new customers and over time, how efficiently our Top Of Funnel campaigns are working to bring new customers through to purchase conversion.
How it’s calculated: Total Ad Spend divided by Total New Customers Acquired.
Weighted CAC varies greatly from brand to brand, and a healthy weight CAC will depend heavily on your AOV and your margins.