Google Ads vs. Instagram Ads: ROI Analysis Per E-Commerce Vertical
Updated April 24, 2023.
If you own an e-commerce business, you know that the right marketing channels can make or break your success. While there are many potential channels to choose from, two of the most popular are Google Ads and Instagram Ads. So, which one should you invest in?
Let’s take a brief overview of each channel before comparing their return on investment (ROI) for e-commerce.
Google Ads are a great option for e-commerce because they're cost-effective and highly targeted—you can target customers based on their location, gender, age group, interests, and more. You can also customize your ad campaigns to fit the needs of your specific business and budget.
According to research conducted by Merkle and reported by Search Engine Land, over half of all retail search clicks come from Google—and those clicks have an average order value (AOV) of $94. On top of that, the cost per click (CPC) is fairly low compared to other channels like LinkedIn Ads. This makes Google Ads a great option if you want to increase your visibility without breaking the bank.
Additionally, you can improve your performance with features like Google Shopping. Create great visuals to showcase your products and provide detailed product information to your potential customers.
Instagram Ads are viable for e-commerce brands because they can reach a large audience and have a high engagement rate. You can target people based on their age group, interests, and activity on other platforms like Facebook or Twitter.
Instagram isn’t just about pretty pictures—it’s also an incredibly powerful marketing tool. For example, if you’re selling apparel, beauty products, or home goods, Instagram is a great place to start advertising due to its visual nature.
According to Statusbrew, Instagram Ads have an AOV of $65 and an average click-through rate (CTR) of 1.08%. While this CTR isn’t as high as Google’s (1.91%), it still gives you good value for money and helps bring more people into your sales funnel than other platforms.
When you evaluate the ROI of Google Ads and Instagram Ads for your e-commerce brand, it's important to consider your specific e-commerce vertical and target audience.
For example, B2B products like industrial equipment or office supplies may not see as much success with Instagram Ads because their target audience may not be active on the platform, whereas Google Ads may be more effective in reaching them through targeted keywords and industries.
Alternatively, high-end luxury goods like designer fashion or fine jewelry may not see as much success with Google Ads because their target audience may not be searching for them on Google. In this case, Instagram Ads may be a more effective platform because those businesses can target their audience through visually engaging images and videos.
» Discover 4 ways to increase your marketing ROI using dynamic pricing
ROI Comparison Example: Beard King
Last year, my e-commerce client, Beard King, approached me to launch two advertising campaigns to compare the ROI between Google Ads and Instagram Ads. To start, both campaigns had a monthly budget of $2,000.
I used this formula to calculate ROI:
ROI = (Sales from ads - Cost of ads) / Cost of ads
The details of both campaigns were as follows:
- 18-35-year-old men
- 4-week running time
- Focused on the Search network
- Targeted male grooming products (e.g., beard oils and balms) through keywords
- 18-35-year old men
- 4-week running time
- Influencer pages and stories advertisements
- Targeted beard care products
After targeting the same audience and running for the same length of time, the final results of the campaigns in terms of CTR/engagement rate, cost per click (CPC), and total number of clicks were as follows:
- CTR: increased by 7%
- CPC: $0.30
- Total clicks: 654
- Engagement rate: increased by 12%
- CPC: $0.50
- Total clicks: 400
If you compare the results of both campaigns, it's clear that Google Ads yielded a higher ROI for Beard King in this case. Google Ads was able to generate 254 more clicks than Instagram Ads. This represents an additional ROI of 25%. Also, because Google Ads has an average cost per click (CPC) 30 cents lower than Instagram Ads, Beard King managed to save $76 while gaining those extra clicks!
» What about other platforms? Compare Google Ads vs Amazon Ads
Final Verdict: It Depends on You
Both Google Ads and Instagram Ads are powerful tools in any e-commerce marketer's arsenal—but they're not created equal when it comes to ROI. Generally speaking, Google Ads tend to be better if you're looking to increase your overall online visibility because its AOV and CTR are higher than Instagram's—but if you're selling something where visuals are important (like apparel or beauty products), then investing in some well-crafted Instagram Ads could be well worth your effort.
If you're starting to feel intimidated by any metrics or calculations connected to ROI or ads—don't! Simplify the entire process with BeProfit's app. Effortlessly integrate your online store and use the customizable dashboard to get an overview of all your store's figures so you can make data-driven decisions for your e-commerce business.
» Book a demo to try the BeProfit app's features for yourself