Marketing Cash Efficiency
Marketing Cash Efficiency (MCE) measures how much 'Cash Flow' is generated for every dollar of marketing spend, adjusted for payment terms and inventory cycles. Unlike ROAS, which is a theoretical revenue metric, MCE tells the CFO if marketing is burning cash or generating it.
The Short Version
Does your marketing pay for itself in real dollars?
Prerequisites
The Cash-Poor High-ROAS Trap
You have a 5.0 ROAS, but you are out of cash. Why? Because your customers pay in 30 days, but you pay Facebook in 24 hours.
Ignoring cash cycles in marketing efficiency leads to liquidity crises during growth spurts.
How it works
Calculate Marketing Spend (Cash Out)
Calculate Incremental Contribution Margin produced (Cash In)
Step 3: Adjust for time-to-cash (Days Sales Outstanding)
Common Misconceptions
Confusing Revenue with Cash (Revenue is vanity, Cash is sanity)
Ignoring the 'Cash Conversion Cycle' when scaling spend
Scaling barely-profitable channels that tie up working capital for months
Frequently Asked Questions
QIs this just for B2B?
No. Even DTC brands with immediate payments have inventory cash cycles. If you sell out and can't restock, your MCE drops to zero.