How to Calculate Effective Revenue Share (ERS)

Effective Revenue Share is a measure of effectiveness of an advertising campaign which indicates how much revenue is absorbed by marketing cost. The lower the better – a lower effective revenue share means that your ad doesn’t cost much compared to the revenue it brings in.

ERS = Cost/Revenue x 100

For example, if you spend $10 on an ad source every month and make $50 a month in revenue, the ERS for this ad source would be:

ERS = $10/$50 x 100 = 20%

This means that 20% of your revenue was used to pay for this ad source.

When using the effective revenue share metric in Google AdWords or Analytics, make some slight changes to the formula.

For Google AdWords:  AdWords ERS = Cost /(Conversion Value) x 100

For Google Analytics:   Analytics ERS = Cost/Total value x 100

Where total value = goals value + transactions revenues.


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