How cheap happens
Broad targeting, low-intent placements, long-tail terms nobody else wants. CPC drops. Conversion rate drops further.
How efficient happens
Better match between search, ad and page. You pay the same or more per click and convert far more of them.
The test
Cost per order against your maximum allowable CPA. That is the only cost number connected to the business — everything else is an input.
Related: why cheap clicks are expensive.