Problem
Your dashboard shows two marketing metrics — MER and True ROAS — and you want to know what they mean, why they differ, and which one actually tells you if your ads are profitable.
Cause
Most ad platforms report ROAS (Return on Ad Spend) as Revenue ÷ Ad Spend. That's a useful top-line number, but it doesn't answer the question most sellers actually care about: am I making money on my ads?
On TikTok specifically, ROAS can be wildly misleading because product costs (COGS), platform fees, payment fees, and affiliate commissions all eat into the revenue before a dollar of profit shows up. A 3x ROAS on a product with 70% gross margin is great. A 3x ROAS on a product with 25% gross margin loses money on every ad-driven sale.
Resolution
Peanelle shows both metrics so you can use the right one for the question you're asking.
MER — Marketing Efficiency Ratio
MER = Total Revenue ÷ Total Ad Spend
Identical to the classic "ROAS" you see in TikTok Ads Manager. Good for:
- Comparing ad performance across products with similar margins
- Tracking whether ad spend is scaling efficiently over time
- Matching TikTok's own reporting so numbers align with your ad team
True ROAS
True ROAS = Gross Profit ÷ Total Ad Spend
Where Gross Profit = Revenue − (Platform Fees + Payment Fees + Affiliate Commissions + COGS + Shipping + Refunds + Refund Admin Fees).
This is the number that answers "am I making money on my ads?"
- True ROAS > 1.0 means each $1 of ad spend produces more than $1 of profit. You're profitable on ads.
- True ROAS = 1.0 means break-even. Ads are paying for themselves but not contributing profit.
- True ROAS < 1.0 means each $1 of ad spend is returning less than $1 of profit. You're losing money on ads, even though you're generating revenue.
Quick interpretation table
| MER | True ROAS | What it means |
|---|---|---|
| 3.0x | 2.0x | Healthy — ads are clearly profitable. |
| 3.0x | 1.0x | Break-even on ads; scaling doesn't grow profit. |
| 3.0x | 0.5x | Revenue-positive but losing money. Margins too thin for current ad cost. |
| 2.0x | 1.5x | Lower MER than above but better margins = better business. |
The last row is why True ROAS matters: the product with the lower MER can be the more profitable ad investment.
How to improve True ROAS
- Raise margins. COGS reduction or price increases lift True ROAS immediately.
- Cut ad spend on low-margin SKUs. Check your Product P&L on the dashboard — any product with negative profit is a candidate to de-promote.
- Match ad creative to high-margin SKUs. If ad traffic lands on a discount-heavy product, pivot to a premium product with better unit economics.
Why Peanelle's numbers differ from TikTok Ads Manager
TikTok reports ROAS using attributed revenue, which they compute from clicks and view-throughs within their attribution window (usually 7-day click / 1-day view). Peanelle uses total shop revenue against total ad spend, which tends to be closer to reality for small shops where most revenue does come from ads. For large shops with significant organic traffic, Peanelle's MER will look better than TikTok's ROAS because Peanelle includes organic revenue in the numerator.