Shopify Community AMA: 2H Media Recap

Community Moderator

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Thanks to all who participated in our AMA with 2H Media on planning your 2023 marketing budget. There were excellent questions asked, and a big thank you to Matthew and Aron of 2H Media for fielding them and providing our community with vast marketing knowledge.


Here are some questions you asked of 2H Media:


Question from @Winspan: I sell my own work on shirts, caps, and mugs. I've tried fb ads. 

How much should I be spending on my marketing? What's my yearly budget supposed to be? 


Answer: How much you should be spending on marketing is a tough question. It depends on a few factors: 

  • Your industry
  • How much competition there is
  • Your margins
  • Your marketing/growth strategy. (if you want to grow faster, you'll need more budget)

Typically we start at the desired end result and work backwards. So you need to have a revenue/sales goal in mind.

Let's say your sales goal is $100,000 for the year.


We usually recommend a marketing budget between 10% - 15% of total revenue. This includes costs associated with your website, email marketing, paid ads (including ad spend) and anything else that falls within the realm of marketing.

So, if your marketing budget is $10,000 - $15,000 you should be able to prioritize the most important opportunities. This means you need to spread your budget out across multiple initiatives. You wouldn't spend the whole amount on one marketing activity.

As the year progresses you should be able to get a better sense of your revenue and adjust your budgeting accordingly.


Question from @PhilTulz: If I don't have a budget, what should I do myself, and how should I prioritize my time?


Answer: We always recommend budgeting both time and money. If your money budget is small or nonexistent right now, your time budget has to be a lot bigger to make up for it.

As a new merchant, you're likely being pulled in a lot of different directions so deciding what to DIY and how to prioritize your time can be a challenge. To start out, keep it simple: Get the platform working consistently for you. Don't focus on any complicated customizations or extra features unless absolutely necessary to your business.


Right now, your time is a limiting factor on your business growth and you don't have money to offset that so you need to prioritize revenue generating activities - sales and partnerships are the best place to start.


Put a plan in place and make sure you tick off measurable deliverables every day in terms of capturing images for marketing, posting on social media, and connecting directly with potential customers and partners through direct outreach and whatever industry events you can afford to attend. 


To avoid being overwhelmed, I recommend completing an Eisenhower Matrix to really prioritize your goals and cut down on all the noise.


Question from @Jac_Dan_McL:

  1. What should I be spending the most on?
  2. Are there any trends right now that I should be focused on?
  3. Where should I be advertising? Google TikTok Meta? Does it matter what my product is for the marketing platform I focus on?


Answer: As a rule of thumb you want to spend the most on the channel and activities that generate the most. I would start by analyzing where you are making the most sales. I would run the following reports:

  • Sessions by referrer
  • Sessions attributed to marketing

From these reports you can determine how your efforts are bringing in traffic to your website. If you are running paid ads you will need to look at those reporting tools as well.

We always want to pour gas on the fire so if you are getting a ton of sales through Instagram you will want to focus more of your time and money on this sales channel.

When it comes to marketing it's very rarely "set it and forget it" so you will need to refer back to these reports often and adjust your spending. There's a ton of factors that can shift whether a channel is performing or not so please remain vigilant.

Trends: Most small business owners can suffer from "Shiny object syndrome" which is basically chasing a trend without a strategy or game plan in place. My advice is to avoid seeking out trends and focus on the core business activities that earn you the most.If you do have the budget to explore new ideas, start small to avoid any unneeded risk.

Advertising: Each platform has its pros and cons. You need to be on the platform that makes the most sense for your desired audience. We start with this question:


"Where are your customers?"

That's the platform you need to focus on. 


Don't spread yourself too thin. Each platform takes time, energy and money to become profitable. We would rather you have 1 successful channel working for you than 4 that aren't.


Question from @FleuRias: If I am just starting out with dropshipping, what should I focus on?


Answer: Dropshipping is really tough. Since you don't control the product, so you need to find other ways to set your company apart from the competition. The main things you can do to stand out in this space are to build a long-term brand that looks and feels like a legitimate company, provide outstanding customer service, and put serious budget into ads. Social channels are some of your best bets for gaining ad traction (facebook, instagram, tiktok). If it's feasible for you, figure out how to produce consistently great video content about your products. You'll want to land some product that you can use to create your own promo content and push it out into all your channels. In addition to organic posting, paid ads are key. I'd recommend spending at least $1000/mo on ads if you want to make any real headway.


For more on dropshipping success, there is a great Shopify blog post you should read.


Question from @ wingspan: Is there a way to determine how much my competitors are spending on advertising as well as how to determine customer lifetime value (CLV)


Answer: There's no great way you can determine how much your competitors are spending on advertising. It would be a pretty unfair advantage if we could look into someone else's business and get that information.


We can make a few assumptions. If you see one of your competitors advertising on very broad keyword or on keywords with a ton of competition you can assume they are spending a ton on a per click basis.

There are tools like Google Keyword Planner that allow you to look at how often a specific keyword is searched for, the amount of competition on the keyword and how much you can expect to spend per click. This is where we normally start with determining what keywords to buy. Google Keyword Planner is a free tool, but you will need a Google Ads Account to access it.

Customer Lifetime Value (CLV) is a very important metric for brands that have a ton of repeat purchases.

Let's say you sell a consumable product like shampoo, soap, food, makeup or even shoes. At some point your customer will run out and if they liked your product they will want to buy more. This means we advertised to the customer once, but we can generate multiple sales over and over again from the same person. This usually increases the cost of acquisition because the full value of the customer isn't realized until they have purchased multiple times.


Unless your clientele is mostly b2b, you probably have a lower CLV as a print on demand business. Most people will order print on demand for a specific occasion but aren't going through print on demand products on a regular basis. If you are focused on b2b some of your recurring accounts could be very lucrative making your CLV much higher.


The article you linked has a great breakdown.

So a marathon runner who regularly buys shoes from your shoe store might be worth:

$100 (per pair of shoes) x 4 (pairs per year) x 8 (years) = $3,200

And the mom of a toddler might be worth:

$20 (per pair) x 5 (pairs per year) x 3 (years) = $300

So who should you be paying more attention to? Using CLV, the marathon runner should be your focus!


Shopify has a great article on calculating and increasing your CLV here.


Question from @ jac_dan_mcl: 1. What reports to run in Shopify for the most important sales data? 2. When to start planning or creating a budget? Does it need to happen before I even start or should I test a few things and see what gets me the best results for the least money?


Answer: I assume you are on Shopify Basic.You get basic reports included with this plan but the most important for sales are as follows:


  • Sessions attributed to marketing
  • Sessions by referrer
  • Sessions by location (very important if you have geo focused campaigns)

These reports are a starting point to being  looking at where your customers are coming from.


Creating a Budget: Most companies start planning for the year in advance to make sure they have resources allocated correctly. It's never too late to start but you will want to find a rhythm for your business. You don't want to be planning during your busy season.

In a perfect world, yes you should have a plan in place before you start spending money on ideas. Part of your plan should include time for testing and exploring new opportunities. You will want to include a time budget as well for things that are new.


Question from @Devon15: I currently run a shopify online furniture business that also includes brick and mortar.  I am trying to manage my marketing budget and make it work the best for me.  Most of our brick and mortar business comes in via Social, but I need to increase the reach of my online business.  What do you think are the best marketing channels for increasing online?


Answer: We're very familiar with the furniture market. In terms of marketing channels, we always recommend doing more of what works.


Since socials are already pushing most of your traffic into your physical locations, you know which platforms you have an audience on. I'd look at running specific ad campaigns across those socials with messaging and calls-to-action (CTAs) that encourage people to order online. If you feel you really need to jumpstart this, consider offering an online exclusive. This could be a sale or a free gift with purchase. Once your social channels are doing more consistent work for your online store, you can consider branching into other channels. At that stage, I would look at Google Ads.


Also, since you sell large items (furniture) and you have physical locations, local SEO is massively important to your business. In terms of effort, one of the first things we'd recommend you look at is your Google My Business listing to make sure all of your information is up to date and you have a ton of images uploaded. If you have barcodes and GTINs, you can also easily add your products into Google Merchant Centre, and have your products display on Google Shopping, which is wildly popular for furniture.


Question from @JunebugJewelry: What is the best way to upgrade to Google Analytics 4? Is there an easy way or do I  need to invest in an expert?


Answer: Within your Google Analytics dashboard, you can navigate to Settings. Under the Property column you should see GA4 Setup Assistant. 


Google has a whole process to migrate from UA to GA4. Just follow the steps. If you have a hard time you might need to get some extra support.

You can also find information on GA4 directly in Shopify. If you navigate to your Online Store you can click Preferences where you can find how to enter the Google Analytics Code.


If you haven't migrated to GA4, it will probably look like the screenshot above.Google Analytics can seem very intimidating so try to work within your strengths and don't be afraid to reach out for help.


Question from @JunebugJewelry: What is the best way to connect the analytics data when I get sales on my site from Facebook Shop? These sales show up as sales, but not conversions. Is there a way to get that data connected so that I am better able to market to these users outside of Facebook? 


Answer: You will need to have a Facebook Pixel installed on your Shopify store. Shopify has a great guide you can follow here.


Shopify won't actually show you Facebook conversions, but if you have your Pixel installed your Facebook Ads Manager will record conversions made on your store.The only conversion metrics Shopify provides at a Basic subscription level is overall store conversion rate regardless of where the traffic is coming from.


You can see where your Facebook Pixel is within Shopify by navigating to your Online Store you can click Preferences where you can find where to enter the Facebook Pixel Code.


Question from @MacondoForever: I have never planned a marketing budget.  I just go for a target ROAS of 3+.  How do I create a budget that doesn't feel like it can constrain growth? 


Answer: Having a target 3+ ROAS (return on ad spend) is great. To keep everyone in the loop, a ROAS of 3 means that for every $1 spent on advertising, it generates $3 worth of sales.


ROAS mainly has to do with the profitability of your products and the cost of advertising but it doesn't help you meet your revenue goals. Other factors play a part such as CLV (Customer Lifetime Value). If your products don't have a great margin, you will need a higher ROAS to break even.


If your goal is to generate $100,000 in sales (this is the goal so you aren't constraining growth) and your ROAS is 3, your advertising budget is in the $30,000 range. That $30,000 needs to fit within your overall marketing budget including trade shows, web development, print media, video and photo production, etc. ROAS is just an isolated metric specifically for your ad dollars, and not for your marketing budget as a whole. 

Question from @rexa28: How much do I need to spend on Meta ads on average to get decent traffic to my website? Are there any other "free" alternatives to promote my website? How can I accelerate my sales?


Answer: There is no hard and fast rule on how much you need to spend to get decent traffic. We typically recommend $1000/mo at the absolute minimum for paid advertising if you are going to use paid ads as part of your marketing strategy. That said, this really comes down to the value you are trying to capture; Your entire marketing budget should be at least 10-15% of your target revenue. 


Regarding "free" options for promoting your website and accelerating your sales, nothing is really free. It's super important to value your time appropriately as a business owner and DIY can cost you a lot in the long run, especially if you are spending a lot of time working on marketing activities that are not really driving sales.


That said, if you have an abundance of time right now and a lack of funds for marketing, start with things you can control yourself:

  • Get really good at capturing video content on your phone
  • Stay diligent and active on social media
  • If you are selling locally, keep your Google My Business up to date
  • Look for online groups in your market that allow promotion


Question @CandTel88: Are you seeing TikTok trends declining? It seems that all social platforms are "running ads" between influencer partnerships and direct brand ads, how does one push through to be seen and heard? 

Is it best to stick with Google ads? 


Answer: We aren't seeing TikTok trends declining but to be honest, TikTok has never really been on our radar. For most businesses, chasing trends is expensive and ineffective so we prefer to invest in more long-term strategies. For social platforms, Facebook still dwarfs every other platform in terms of monthly active users and that's where we see more companies having success. With platforms like TikTok, you might luck out with a viral hit but that's hard to manufacture consistently. As you mentioned, sticking with Google ads is great. 


We're big believers in the platform. For social media, pushing through the ads is pretty challenging. The best thing to do is produce exceptionally good video content but even then, it's a challenge. Paid social media ads work well but organic posting can be hard to translate into new leads. Often organic social media is more of a sales/closing tool than a marketing tool.

Question from @Megan32: I am a small business owner and I find myself in the  'throwing spaghetti at the wall and seeing what sticks', phase of things. I would love to make more data-driven decisions with my marketing budget and I am curious to hear how you would recommend getting started. For example in a previous response you mentioned, Measurable Deliverables, do you mind giving some examples of what you mean and how you would measure. For example 1) Instagram Post (Static), measure time/engagement/conversions? 2) Email, measure CTR/conversions/unsubscribed? 


Answer: I think we all move in and out of the "throwing spaghetti" phase as our businesses grow. To answer your question, I always prefer to focus on hard metrics such as site visits, and conversions.

As Matthew mentioned in another post, I would run the following reports:


  • Sessions by referrer
  • Sessions attributed to marketing

This will let you know where your traffic is coming from. Google ads manager, facebook pixel, and Google analytics will also be able to provide more information.  


Be careful not to get too caught up in the other metrics. You want your post engagement to be high but high post engagement doesn't help you if those posts don't drive leads so focus on site visits and conversions. For email, CTR is important and so is open rate but unless they're super low (less than 50%, and less than 2.3% respectively), put your effort elsewhere.


If you are managing to drive decent traffic to the site, look at your conversion rate next. If it's less than 3%, it needs work. If it's less than 1%, it needs serious work.


Question from @Mussty: I'd love to ask about marketing strategy for a business focused on local deliveries.

We are a grocery store with 4000+ products and only deliver to about a 4 mile radius. Very different to a DTC brand selling nationwide/worldwide.What should we focus on? Which platform(s) will be best? How should we allocate our budgets? We are about to launch our store for home delivery service this week so this is super relevant to us!!


Answer: As such a tightly geographically locked business, your situation is very different than a lot of the other merchants in this thread. 


To answer your question, there are a few things you should focus on:

  • Google My Business: This is easily the most important tool for geographically locked businesses, and it's free.
  • Print Marketing: Print ads still work very well. They're easy to overlook with how popular digital ads are, and can be difficult to track but a strong direct mail campaign to your city's key zip codes can be inexpensive and massively impactful. You can run one a few or even several times a year and make a huge impact. If you include a coupon code, that can be a great way to track performance.
  • Google Ads: We're big believers in Google Ads, and your location targeting will be really clear since you don't have to figure out where your customers are.
  • Organic social media can also be powerful for local businesses. Make sure to connect with local public figures (politicians, other businesses, etc.) Organic posting is the way to go. Getting mentioned by the right people will go a long way.


Thanks again to all who joined us live for our second Community AMA of 2023. You can find all questions and answers from the event in the 2H Media AMA thread


Want more from 2H Media? Check out their YouTube channel for a library of educational content.


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