Advertising budget?

New Member
6 0 0

Hello,

I'm interested in starting a drop shipping business with Spotify. As part of my research, I'm trying to figure out what my advertising budget (FB Ads, etc) might be. What would be a reasonable amount per month?

 

Thanks

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Shopify Staff (Retired)
Shopify Staff (Retired)
89 0 13

Hey, there!

Your advertising budget for a dropshipping store really depends on your own budget, how quickly you want to grow (which may require some trial and error in the beginning), how well and quickly you're able to test/iterate get the most effective ad(s), and your market/competition. I did a bit of digging to try to get a range for you, and I found a couple posts from entrepreneurs that might help with your research:

In general, it looks like you'll get a better sense of the budget required once you run some initial tests, and start tracking conversion on your ads. Here's a great Introduction to Facebook Ads for Ecommerce.

Would be interested to hear of first-hand stories from the Shopify community though!

Ana

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New Member
1 0 0

Yo estaba en las mismas circunstancias que tu. Lo que necesitaba era un realizar una negocio de envio con spotify para incluirlas en anuncios o tambien en redes sociales como facebook, twitter. Entonces me puse a buscar empresas y encontre esta: https://www.posicionamiento.mx/servicios/sem/

Creo que cuentan con un presupuesto superior, pero si lo consideras buenas idea, te puedo decir que es haras una buen inversión.

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New Member
1 0 0

There are so many variables that can affect your ad performance. In general I'd suggest starting at about $5 - $10 per day on FB.  Note: Ads require a lot of patience, study, trial and error - and ultimately  a decent budget. 

Also note that the results you see at spending $5 per day will not likely match the results you see if you were to be spending $100 per day or $1000 day.  Reach and frequency matters.

But if your ads aren't converting at the lower amounts, I'd suggest researching that first before increasing the budget.

Hope this helps.

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Tourist
4 0 5

The short answer... It depends.

It depends on your goals. (short and long term)

It depends on the time you have to dedicate to whatever you choose to do and not do.

I recorded a 4 min video that answers this question and you can watch it here: https://blog.metricdigital.com/how-much-to-spend-on-marketing-and-advertising-a26cf1ab734d#.o0f47gw4...

Hope this helps!

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Explorer
142 0 26

Hey Mike!

If you are going to use advertising as the means to drive traffic and sales, then it might be best to work backward.

You will get a lot of advice here now that Shopify posted your question to their email newsletter, so keep in mind that everyone who answers is approaching it from a different angle than you are. They are in different niches and may or may not be drop shipping.

But most importantly, only YOU know how much you need to sell to make this a viable business for you and only YOU know how much can spend each month.

Keep in mind that advertising does not guarantee sales.

If your site doesn’t build trust, if you don’t clarify your message (i.e. why should buyers buy from you anyway?), and if you aren’t selling something unique, your conversion rate will be less. That is to say, you’ll spend more on advertising and see fewer sales.

Back to working backwards…

A “good” conversion rate is around 2% to 5% when using Adwords. The median is 2.34% (http://www.wordstream.com/blog/ws/2014/03/17/what-is-a-good-conversion-rate), but that depends on your industry. Also, the article notes that for ecommerce sites, the average is likely lower. So plan low and think in terms of 1% to 2% conversion rate.

What do we do with this info?

Without knowing what industry/niche you are going into it’s hard to give you detailed info, but here is a simplified look at how you could work this out.

Let’s assume:

  • You are able to spend $300 per month ($10/day) (because that’s what you budget allows).
  • Each ad will cost you $1 per click (UPDATEValicutzu noted below that his FB ads run at an average of $0.08/click. My $1/click, while reasonable for a moderately competitive Google Adwords keyword, was really just to make my point simple to follow. My apologies if it isn't accurate across all ad platforms or leads you to the conclusion that all advertising is a poor investment.)
  • This means you get 300 visits per month
  • At a 2% conversion, that means you will receive 6 orders
  • Multiple 6 times the average order size (I realize you won’t know this in the beginning, but take a guess at what you think the most popular products are and average the price). Let’s assume it’s $20. 6 x $30 = $180.

You just spent $300 to sell $180. Working backwards, you could say, "I need to sell $1000/month, I'd need to spend $1,650 in ads."

This is totally hypothetical of course - you might be able to sell more per order or spend less per ad - so keep that in mind.

Now you might be OK loosing some money in the beginning like this in order to get some sales. At least then you have customers you can market to via email.

Of course, you might able to get a better conversion rate, but in my experience and in reading about other people’s experiences here on the Shopify forum, advertising is tricky and unless you know what you are doing and/or are willing to spend hundreds of dollars paying someone to manage your ads.

Good luck!
Bob

Build & grow an ecommerce business that will help you reach your goals with my no bull, no hype, no pitch mini-guide: http://www.bobpotter.co/
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Shopify Partner
1 0 1

As has been said, reasonable amount is purely a direct refleciton of what your monthly revenue goals are. 

Just for reference in the past 3 months I've spent ofver $50k in Facebook Ads for my Drop Shipping Shopify store. 

It's all going to depend on the margins you build into the products you are selling.  But with most products I found that Facebook Ad Costs are going to be roughly 30-40% of total revenue.  

Ex. You have a product you can buy for $5 and you want to sell it for $15.  So you'll have $5 of that in ad cost leaving with $5 in profit.  That's a rough safe way of looking at it. 

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New Member
1 0 0

$1 per click ad is hororr ! 

My avg for FB ads is 0.08/click . 

For $1000 per month get 12 500 visitors . 

My conversion rate is 1.66 ----> 207 customers. 

207x $17 profit/1single product = $3 519/ month profit

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Highlighted
Tourist
16 0 1

PPC ads can become a little much. I spend the bare minimum because I have my focus elsewhere. Think of FREE ways to drive business and traffic to your site. Use tools like Twitter, FG, IG, etc. Start with the free matierials then decide if you want to do PPC. PPC reminds me of gambling untill all your money is gone. - forgive me for my many misspelt words.

Vintage Triumph parts, classic BSA parts, and Norton parts!
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Excursionist
73 0 8

Hey there,

Like the others have said, it depends on what you're looking to do. At a minimum, I'd recommend about ~$250/month to start. You can also take advantage of the Shopify App Store to help you find apps that improve your FB ad results. Check out Pollen (https://apps.shopify.com/poln). It handles things like retargeting, audience selection and more for you!

Put your Facebook Ads on Autopilot - http://gopollen.com
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