Shopify Advertising Guide: How To Scale Your Ecommerce Store
Estimated reading time: 14 minutes.
“Research shows that most businesses fail in the first five years…
Many of those businesses are generating tons of revenue and sales, but without the math on customer acquisition, the costs eventually bring them to their knees.”
- Neil Patel, digital marketing expert.
Advertising for Shopify sellers is crucial.
You don’t have a physical shopfront or existing traffic to rely on.
But spending money on ads could sink your business before it has a chance to find its feet - and that seems pretty counterproductive.
You have a lot of options when it comes to advertising your Shopify store, so in this guide, we’ll break down what they are and how to choose between them.
Regardless of whether you’re new to ecommerce or not, if you’re wondering how to get more customers on Shopify, or how to scale your online store, you’ve come to the right place.
In this guide on scaling your Shopify ecommerce store:
Table of Contents
Let’s start by having a look at the current situation.
Online Advertising Today: It’s Costly (And Only Increasing)
Total ad spend in 2021 is predicted to reach $455.30 billion.
And due to competition, among other things, the cost of acquiring customers is only increasing.
Whilst advertising for your Shopify store and customer acquisition is vital to your growth and resilience, the way you go about it could dictate the survival of your business.
Advertising is not about blindly pumping ad spend onto Facebook and hoping you’ll get a few sales out of it.
When you spend money on ads online, you are also buying data. You’re buying insights and information about your customers that can be used to make better decisions next time.
It’s this relentless learning process that you need to make time for, so that as costs for advertising rise, so do your returns, and your deeper understanding of your customers make the investment worth it.
That’s what this guide is all about - a long-term approach to your advertising strategy.
Why is customer acquisition so expensive?
The cost to acquire a new customer is calculated as below:
The cost of marketing / (divided by) / number of new customers acquired.
Pretty simple. If you spend $400 on Instagram and get 40 customers out of it, each one cost you $10 to acquire.
Competition is the main cause of increased acquisition costs - i.e. how much you need to spend on advertising to make a dent.
“Record ecommerce competition— by legacy wholesalers, global retail giants, and product categories not traditionally purchased online—is driving up customer acquisition costs.”
The market is saturated. Companies have more competition and are fighting harder to acquire their customers.
People might accidentally find your Shopify store, but they probably won’t. They need your help to get them there.
Fortunately, Shopify itself is a great resource for learning how to do this, so we’ll be using a lot of their insights here.
Let’s start at the beginning: Shopify’s core principles of effective advertising.
Shopify’s 5 Core Principles of Advertising
Before we dive into your options, let’s set the advertising scene a little. What should go into your Shopify advertising?
Well, according to the platform itself, it’s these five core things:
Be willing to spend consistently.
Shopify likens advertising to a diet.
It won’t have an impact if you do it well for a couple of days and then stop for a week - you need to keep pumping the paid-ad fuel into your business for it to run and grow.
“Anywhere from 10% - 30% of your topline revenue should be reinvested into paid amplification.”
Advertising is about more than just boosting a post or product for a limited time. You can use it to build your brand and trigger a year over year halo effect:
“All the energy you built up in year one supports you in year two.
When you’re spending money on Facebook, you’re not only spending money to buy customers, you’re spending money to buy data and additional brand assets… things like audiences of visitors… [and] email leads… you’ve got to be willing to spend consistently over time.”
And the longer you do this, the more data and insights you’ll have which you can use to tweak, adjust, and learn about your audience.
Launch, analyze, optimize.
It is crucial as you launch your ads to be as invested in them strategically as you are financially.
Use them, learn from them, test with them.
This step turns the money you spend on ads into investments rather than just another expense. But you have to put that analytical work in to see the positive results.
Targeting is half the battle.
“If you put your ad in front of the wrong people it’s never going to work! The people you put your ad in front of have to be interested, so targeting is very important.”
Think about who you want to see your adverts by going back to who you made your products for in the first place. Ask yourself these simple questions:
Who is your product for? What is the specific niche and market that you’re targeting? What are their interests and behaviors? What are their demographics?
Once you’ve determined these, you’ll know exactly who to target with your online ads.
Creative is the other half.
It’s also about what you put in front of your target audience.
Your ads have to be engaging and compelling so that they generate clicks.
Think about how often you click an ad - probably not that much, right? What pushes you over the edge when you do click?
Keep this in mind as you work through your ad placement options and research what types of content catches attention on those channels.
We’ll help with that too!
Optimize your funnel first.
The sales funnel is an important part of your marketing and advertising strategy.
It’s essentially a map of which visitors get which type of engagement from you.
For example, you probably don’t want to send offers to customers that have never heard of you - they don’t know what your brand is, so a voucher likely won’t make much difference.
But if they know you, have thought about a purchase, perhaps even got one in their shopping cart, an introductory deal might just seal it.
Shopify sales funnels are a whole other strategic aspect of your business, and we recommend taking the time to learn more about them.
Now that we’ve got the foundations in place, let’s explore your advertising options for Shopify and the things to look out for in each.
How To Acquire Customers: Your Options
Let’s explore some of the key players in Shopify advertisement partners.
“49% of shoppers surveyed say they use Google to discover or find a new item or product.”
As you might expect, Google Ads is a dominator in the online advertising space.
It doesn’t just have the prime online real estate (the search results pages), but it has the data and insights advertisers need to analyze their ad performance and improve it.
And as we’ve seen, this is the crux of successful, profitable advertising.
Google is where people go to find things, so if they’re looking for a product then they already have intent to buy. Google uses its insights to recommend the right products to the right buyers intending to buy.
This is different to, say, Facebook. An ad there needs to interrupt a newsfeed and catch attention - not necessarily to an intentional buyer.
And this is why Google stands out.
“[Google] is a platform that relies on relevance.”
There are eight ad types with Google:
There are three of these options which are probably the most suited to Shopify store owners: Search ads, Display ads, and Shopping ads.
In this course, Shopify breaks down each of these above, what they are, how to set them up, and tips for using them successfully.
Google Ads at a glance…
- Ad format: Pay-per-click (PPC). You don’t spend unless you generate a click.
- Best for targeting: A broad audience, with most typically within the 18-44 year old category, and spanning the globe. 82.95% of organic searches in the US are through Google.
- Typical ROI: Google will estimate your results based on your budget and time span. It could be as much as 200% or more.
The advantage of Facebook ads, according to Shopify, is that Facebook has a ton of data about its users and it uses this data to direct ads to the right audiences.
For the everyday advertiser, this is enormously beneficial.
Facebook ads are also scalable. As soon as you’ve got an ad that’s working for you, you can pump more money into it to get it in front of more people.
Marketers can choose between several different types of ads.
Facebook Ads at a glance…
- Ad format: Billing threshold. When your ad spend reaches your billing threshold, Facebook charges you. Find out your billing threshold under payment settings in Ads Manager.
- Best for targeting: A broad audience. Don’t specify too much at the start, and see what the results are. The narrower your target, the more Facebook will charge you.
- Typical ROI: The average conversion rate for Facebook ads is between 9 and 10%. But seeing as this varies hugely between industries, it’s best to calculate your own once you’ve got started.
The engagement rate of Instagram ads are a lot higher than other social media platforms.
“Forrester did independent research on the platform’s ads and found that consumers are 58x more likely to engage with branded content on Instagram compared to Facebook and 120x more likely compared to Twitter.”
As you can see, for some brands, Instagram is a fantastic advertising tool.
Instagram is projected to make $18.16 million in ad revenue in 2021, a massive increase from $13.86 million in 2020.
Instagram ads at a glance:
- Ad format: Cost-per-click (CPC). You pay to promote existing content, and get it in front of more users.
- Best for targeting: 18 to 35 year olds.
- Typical ROI: Instagram is one of the most expensive sites for cost per click, typically ranging between $0.20 and $2. However, the average order value is relatively high at $65, compared to Facebook at $55 and Youtube at just over $37.
Youtube is the fifth most used social media platform for marketers (following Facebook, Instagram, LinkedIn, and Twitter) as of 2020.
And it’s on the up.
The video sharing platform generated $7 billion in ad revenue in Q2 of 2021, which is a whopping 49% increase year-on-year.
Marketers are equally keen to maximize this channel. In 2020, 60% of marketers stated they would spend more money advertising on Youtube.
There are four different types of Youtube Ads:
- In-Stream TrueView Ads: played before, during, or after a video and can be skipped after five seconds.
- Discovery TrueView Ads: appear next to videos or on search pages.
- Pre-Roll Ads: inserted anywhere in a video, lasting up to 20 seconds, and cannot be skipped.
- Bumper Ads: played before a video, up to six seconds long, and cannot be skipped either.
Youtube Ads at a glance…
- Ad format: Only pay when people choose to watch your ad.
- Best for targeting: A broad audience. You can target your audience with specific filter functions such as demographic, interests, and affinity audiences.
- Typical ROI: It’s reasonably cost-effective. The average cost-per-video (CPV) is $0.026, the average impressions click-through rate (CTR) is 0.514%, and the average view rate is 31.9%.
Now we’ve covered some of the top contenders for your ad spend, let’s explore retention - maximizing the value of your existing customers.
How To Keep Your Customers By Focusing On Retention
It costs rather a lot more to acquire a new customer than to retain one.
Big companies like Delta airlines and Microsoft are focusing on retention, with assertive offers to existing customers to encourage them to spend again.
There are a few simple ways you can focus on and improve your customer retention.
Let’s explore a few of them next.
Ask for and pay attention to customer feedback
Feedback is the biggest tip you can receive.
You can learn about what you’re doing well and what you need to improve.
Here’s how you could do it:
- Set up a survey: You can use a platform like Survey Monkey.
- Research your questions: Get the information you need (some examples here).
- Invite customers to do the survey: You can use an email template to do this.
- Analyze the results: Take time to understand the reponses.
- Act on them: Make the changes you need to improve your customer experience.
Provide outstanding customer service
Customers want to feel respected and valued. Be reachable, responsive, and helpful, with:
- SMS messaging: Set up an Abandoned cart reminder including a discount code, and a Return customer text with a special discount for their next order. Check out this example of a successful strategy.
- Chat bots: These speed up response times and answer routine and repeating questions. Choose a chatbot platform to get started.
- Automated emails: Send real-time, personable messages to provide crucial information or encourage action.
Build a community
You and your customers have something in common. Why not build a community around this shared interest?
Shopify is doing this itself through:
- Collaborating with Operation HOPE to support one million new Black-owned businesses in the US by 2030.
- Aiming to lower the barrier of entry to entrepreneurship in 2021, by providing merchants with the tools they need to manage and grow their business over multiple channels.
Think about how you can personalize your service to also create a community feeling.
Here are some ideas:
- Send a ‘thank you’ with each order: This human touch shows that a person was on the other end of an order. This can make for smoother customer interaction when it comes to returns or complaints. Thank yous are also highly shareable - here are a few ideas for how to do this.
- Respond to mentions of your business on other channels: Customers talking about your brand expect to be heard. Acknowledge them or risk losing them.
- Automate some processes to avoid missing a chance for interaction: A whopping 83% of customers need support to complete an online shopping purchase.
But having multiple touchpoints with the same customer will cost you. Automating messages and processes means you can keep them engaged, make them feel valued, and reduce your acquisition costs at the same time.
- Create content around your shared interest: If you are a particular expert in your industry, or you are passionate about it, why not create original content. Doing this can help you connect with your customers, encourage them to engage with you outside of buying products, and foster long lasting relationships in the process.
- Offer a loyalty rewards program: This is a great way to retain and reward customers for their loyalty. There are numerous apps you can use to help you do this, and this guide from Shopify will help you get set up.
Adopt a recurring revenue model (aka subscriptions)
“A recurring revenue model is a business model where the vendor provides access to a product or service in exchange for a recurring fee charged at scheduled intervals (monthly, quarterly, or yearly). This model forms the base for subscription businesses and membership services.”
- Subscription management, Zoho.com.
The undeniable advantage of subscription models like this is that they allow you to predict your cash flow and profit margin, and you know that you have money coming in regularly.
You can develop meaningful, long-lasting connections with your customers and design an entirely new experience for those opting for your subscription model.
With these four tips for customer retention, you should be doubling down on sales and decreasing your costs in no time.
Don’t Lose Track of Your Ad Spend
We’ve learned why advertising is so important for Shopify sellers and how to use it strategically, but there’s still money involved.
And you need to keep track of how much you’re spending to get the results you want.
Shopify statements don’t always break down everything you need to know about your business financials.
For each of your settlements, A2X splits them by month and provides a journal summary that details exactly how much money was added or taken from each deposit before it landed into your bank account.
It organizes your books via the accrual method of accounting, which is much stronger for ecommerce and gives you a better, more dynamic view of the true health of your business (without hours of extra input from you).
Here’s how it works:
Also on the Blog
- The A2X Shopify Accounting Hub
- 15 Actionable Tips to Grow Your Shopify Store in 2021
- Shopify Instagram Guide
- How to Set Up Your Shopify Facebook Pixel
- Shopify & Google Analytics Guide
- How to Create a Shopify Pinterest Marketing Strategy
- Shopify SEO Tips
Ready to get started?
Save time, work smarter and get reliable Amazon and Shopify financials you can trust, in a matter of minutes.