E-commerce CPC vs CPM Comparison

Cross-Channel Performance Analysis

Normalized Metrics Summary

Detailed Channel Breakdown

Facebook CPM (Best Efficiency)

• Original model: CPM - $5.00 per 1,000 impressions
• Impressions: 600,000
• Clicks: 4,000
• Normalized CPC: $0.75 ($3,000 / 4,000 clicks)
• Click-through rate: 0.67% (4,000 clicks / 600,000 impressions)
• Conversion rate: 1.0% (40 purchases / 4,000 clicks)
• Cost per conversion: $75.00 - Lowest
• Revenue: $6,000
• ROAS: 2.00x

Google Ads CPC

• Original model: CPC - $2.00 per click
• Clicks: 2,500
• Normalized CPM: $8.33 (estimated, assuming 0.6% CTR)
• Conversion rate: 2.0% (50 purchases / 2,500 clicks)
• Cost per conversion: $100.00
• Revenue: $8,000
• ROAS: 1.60x

Channel Rankings

By Efficiency (Cost per Conversion):

1. Facebook CPM: $75.00/conversion - Best efficiency
2. Google Ads CPC: $100.00/conversion (+33% vs Facebook)

By Revenue Performance (ROAS):

1. Facebook CPM: 2.00x - Best return
2. Google Ads CPC: 1.60x

By Volume Delivered:

1. Google Ads: 50 conversions (highest volume)
2. Facebook: 40 conversions

By Conversion Quality:

1. Google Ads: 2.0% conversion rate (higher intent)
2. Facebook: 1.0% conversion rate (cold traffic)

Insights and Recommendations

Facebook CPM - Best Efficiency Winner

• Most efficient at $75/conversion (25% cheaper than Google)
• Better ROAS at 2.00x vs 1.60x
• Lower conversion rate (1.0%) is typical for CPM-based cold traffic campaigns
• High click volume (4,000 clicks) shows strong reach and scalability
• Action: This is your most efficient channel - increase budget by 40-60% to scale

Important Context:
Facebook’s efficiency advantage comes from lower cost per click ($0.75 vs $2.00), which more than compensates for Google’s higher conversion rate. The cold traffic nature means there’s room to improve conversion rate through better landing pages or retargeting.

Google Ads CPC - Volume and Quality Leader

• Higher cost per conversion at $100 (33% more expensive than Facebook)
• Lower ROAS at 1.60x
• However: 2x higher conversion rate (2.0% vs 1.0%) indicates better quality, higher-intent traffic
• Delivered highest volume (50 conversions)
• Action: Maintain current spend, focus on reducing CPC through quality score improvements and negative keyword optimization

Quality vs Efficiency Trade-off:
Google delivers higher-intent traffic (2% conversion rate) but at a premium cost per click. Facebook delivers larger click volume at lower cost, but with lower conversion rate. Both are profitable (ROAS > 1.0x).

Budget Reallocation Scenario

Scenario 1: Maximize Efficiency
Shift $1,000 from Google to Facebook:

• Facebook: $3,000 -> $4,000 (+$1,000)
  • Expected: 53 conversions (+13), $10,667 revenue (+$2,667)
• Google: $5,000 -> $4,000 (-$1,000)
  • Expected: 40 conversions (-10), $6,400 revenue (-$1,600)
• Net impact: +3 conversions, +$1,067 revenue from same total budget

Scenario 2: Maximize Volume
Maintain current allocation or slightly increase Google:

• Current setup delivers 90 total conversions
• Google’s higher conversion rate makes it the volume leader despite higher cost

Key Metrics Comparison

Cost Efficiency:

• Facebook wins: $75/conversion vs $100/conversion
• 25% cost advantage for Facebook

Revenue Efficiency:

• Facebook wins: 2.00x ROAS vs 1.60x ROAS
• 25% ROAS advantage for Facebook

Traffic Quality:

• Google wins: 2.0% conversion rate vs 1.0% conversion rate
• Google traffic converts at 2x the rate

Reach & Scale:

• Facebook wins: 600k impressions, 4k clicks vs 2.5k clicks
• Facebook provides 60% more click volume at 62.5% lower CPC

Recommendations

Immediate Actions:

1. Scale Facebook: Increase Facebook budget to $4,000-5,000/month to capitalize on superior efficiency
2. Optimize Google: Audit Google campaigns for:
   • Low-quality keywords driving up CPC
   • Opportunities to improve Quality Score and reduce CPC
   • Better ad copy to maintain high conversion rate

Testing Priorities:

1. Facebook: Test conversion rate optimization to move from 1.0% toward 1.5%
   • Better landing page targeting
   • Retargeting campaigns for engaged users
   • Lookalike audiences based on converters
2. Google: Test strategies to reduce CPC while maintaining 2.0% conversion rate
   • Quality Score improvements
   • Ad extension optimization
   • Dayparting and device bid adjustments

Long-term Strategy:

• Facebook is your efficiency engine - scale this up while maintaining performance
• Google is your quality/volume engine - optimize costs to improve efficiency
• Both channels are profitable (ROAS > 1.0x) and complementary
• Ideal allocation: 55% Facebook, 45% Google to balance efficiency and volume

Next Steps

1. This week: Increase Facebook budget by $1,000, monitor conversion rate and ROAS
2. This week: Export Google Ads search term report, identify wasted spend
3. Next month: Run Facebook conversion rate optimization test (new landing page variants)
4. Next month: Implement Google Quality Score improvements (ad relevance, landing page experience)
5. Next quarter: Pull customer lifetime value (CLV) by channel to validate ROAS assumptions with repeat purchases