Advertising budget?

mikeffd
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

Replies 18 (18)
AnaW
Shopify Staff (Retired)
Shopify Staff (Retired)
89 0 26

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

Adriana_Contrer
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.

Kristy4
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.

Kevin_Simonson
Shopify Expert
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!

Bob31
Explorer
142 0 28

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/
Daniel_Lindsey
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. 

Valicutzu
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

Classic_British
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!
Pollen
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
Kevin_Simonson1
Excursionist
59 0 3

Great topic, thanks for posting. 

When it comes to budgets, paid, ads, etc., too many ecommerce companies mess up their campaign narratives from the get-go, and waste a ton of money as a result.

I wanted to add my $0.02 to the discussion:

The ideal place to begin this story is by looking at what your differentiator is. The unique selling proposition. That’s still an incredibly valid place to start. In a distracted online environment, it’s never been more relevant.

You have to put yourself in the shoes of someone whose life would be improved by your product. 

Here’s our favorite question to ask new clients:

Who is the kind of person that, if they had this product, and you took it away from them, would feel some sort of pain?

This question helps us build out specifically who that person is in terms of their needs and media consumption, what kind of similar brands they're shopping with, and so on. 

Anyway, we published a post about this in greater detail, if anyone’s interested in reading more about campaign narratives: https://bit.ly/2HWiFYY

Hope that helps!

CEO of Metric Digital @ www.metricdigital.com
bluetech
Shopify Expert
401 0 3

Hi,

Let communicate at info@bluetech.co.in to discuss complete advertisement plan.

Thanks!

Sid

Bluetech | https://www.bluetechitservices.com | info@bluetech.co.in
Denise_Branson
Tourist
19 0 2

It totally depends on your total budget availability and how many you can spend it. As per my view, you should start it with a low budget in starting period. After that, if you get a good result then you should increase your budget.

 

https://www.gurutechnolabs.com/
Kevin_Simonson1
Excursionist
59 0 3

Hey Mike, thanks for posting. Tough issue, I understand. Here's my two cents...

 

For many of the new brands we work with, specifically those who are launching for the very first time, they should expect to spend at minimum, $15,000 a month on digital marketing.

 

Over three months, then, that’s $45,000. Which might be an intimidating number for a new brand. And the hard part is, you’re not going to know what will work, campaign wise. There’s not enough historical data to benchmark.

 

Meaning, brands must reframe their initial spend as more than just a pure marketing budget, but an invaluable investment in research and development.

 

Anyway, we blogged about this today if you want to read more numbers: https://bit.ly/2YedYkF

 

Hope that helps! Good luck

CEO of Metric Digital @ www.metricdigital.com
Basheer
New Member
1 0 0

Hi, i am spending 5 USD daily, and i am not getting 10-15 clicks per day, what might be the issue? 

 

Thanks

Basheer

https://virgingadgetz.com

sophiedooley54
Tourist
22 0 3

According to me you should start with least amount..start with 500 Rs. or 10 $

and see the results...if results are good then increase amount and if not got any satisfied results then you can change strategy 

https://www.intelebiz.com/service/search-engine-marketing/

 

bsherman2020
New Member
2 0 0

S1,650 per month in ad cost to make $1,000 in sales? That could not be sustainable, unless that ad cost went down and the sales went up.

Hygidots
Tourist
36 0 2

Hello, 

Online ads are great to promote awareness and drive traffic. But at some point budget may be needed for direct marketing promotions. If you want to engage some of your customers with direct mail-in marketing with unique giveaway, you may want to check this post.

Good luck

Hygidots

Hygidots
Iwan02
New Member
2 0 3

Hi there. How come you pay $0.08 per click on an ad? Also what does per click mean? How is your money actually spent when using Facebook/Instagram ads? If you pay $10 a day, how long is that one ad gonna last and how much traffic/engagement/conversion is that budget going to get you per day? And do you pay $0.08 per click on top of the $10 a day? And what if I only have $10 a week or month to be able to spend on adverts?