How To Scale Your Shopify Paid Ads Revenue By 10X — Hemant Varshney | Why Brands Fail To Scale Ads, Why Scaling Ads Requires Structure, How Andromeda Changes Meta Strategy, How Creative Drives Better Targeting, How To Structure Winning Campaigns (#474)

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00:00:10:07 - 00:00:32:27
Unknown
Half the battle is Shopify. And what I mean by that is half the battle is your conversion rate. You can double and triple your traffic to site. But what ends up happening is if you're not optimized properly on site first, it's not a good use of your marketing dollars because you're spending to a site that doesn't convert.

00:00:33:00 - 00:00:53:11
Unknown
Hello and welcome to another episode of the eCommerce Coffee Break podcast. If you're running paid ads and feel stuck, you're not alone. Many brands are spending more but not seeing real growth. So what's actually holding them back? Today we're breaking down how to scale your paid ads revenue by ten X without just burning more budget. To break this down, I'm joined by Hemant Varshney.

00:00:53:12 - 00:01:14:07
Unknown
He's the founder and CEO of Digicom.io. He spent more than 16 years in gross marketing and he has managed over 100 million in ad spend helping e-commerce brands turn ads into real profit. Welcome to the show, Klaus. Thank you for having me. I'm very excited to be on exciting topic paid ads matter huge topic. Always something new there.

00:01:14:07 - 00:01:42:16
Unknown
So let's start simple. Most Shopify brands run ads. Why do they still struggle to scale? That's that's a, you know, simple question. It's a complex answer, right? There's a lot of Shopify brands that are launching. So if you think about like a just launched category, right? Like we're doing like a couple thousand dollars a week. The question that we first need to look into is a traffic traffic source, right?

00:01:42:16 - 00:02:11:10
Unknown
And also conversion rate. Often times folks will start a Shopify brand because of or, you know, a brand that lives on Shopify that it's. Okay, cool. Let's let's make money the thing the thing is like to build a brand in a foundation. Realistically it takes six months to a year before you start to really see revenue, right? And for those founders, you need to critically think about your store and your traffic source.

00:02:11:10 - 00:02:34:24
Unknown
Not all traffic is equal. That's very important. You need to know who your consumer is. You need to know their personas. And then ultimately, you need the data so that you can start optimizing and building better. And you know that that's the starting point for brands that are that are doing, let's say, a million, 2 million, 3 million right now and end even more.

00:02:34:24 - 00:03:06:09
Unknown
Right? Like we have some brands that are doing 100 million. Their their complexities are very different right So their complexities are same but different. Right now the larger challenge for most brands that have been scaling it specifically Meta, right. With the Andromeda updates, which I would love to get into, you know, as we progressed through the show and, and with that half the battle is Shopify, right?

00:03:06:09 - 00:03:36:05
Unknown
And what I mean by that is half the battle is your conversion rate. You can double and triple your traffic to site. But what ends up happening is if you're not optimized properly on site first, it's not a good use of a marketing dollars because you're spending to a site that doesn't convert. So something we do internally and it's you know, it's part of our services is we do zero audits at the start of any partnership and provide all of the feedback designs.

00:03:36:05 - 00:03:59:06
Unknown
The mock ups right. So that we can ensure conversion rate is tiptop because the higher the conversion rate, the better it is for all channels. I think it's a very important point that you made there. And so very smart move to start really from working your way from the check out sort of category pages to the product detail pages and make sure that you convert that because otherwise you're just throwing money out of the window when it comes to paid advertising.

00:03:59:08 - 00:04:20:16
Unknown
And I want to dive into the matter because matter has I know I'm spending on that on myself for, I don't know, the better part of ten years has gone through several or multiple of iterations and changes in their strategy. And now the latest is Andromeda People. Our listeners might have heard about it, but might have not really an idea of what it stands for.

00:04:20:16 - 00:04:48:19
Unknown
Can you explain in simple terms what Andromeda is? Sure. So, Andrew Armada is a new meta algorithm that focuses its targeting based on creative and the primary reason. Metacritic. This is with the advent of AI, a lot of folks started developing creatives for AB testing rate, like, let's say last January the year prior, you would run a very similar ad, maybe different copy on it.

00:04:48:19 - 00:05:16:01
Unknown
To understand what messaging is working, is it benefits? Is it this specific hook? Right. And so because there were so many ad launches happening, the environment like Meta decided to build this Andromeda system where it instead of us using the old way of, Hey, here is an audience, let's say it's biohackers with this five creatives in these five different headlines, right?

00:05:16:03 - 00:05:43:23
Unknown
And we figure out which one works. Then we develop other creatives using the same headline or vice versa rate. What meta is now doing is it's taking all similar creatives and bucketing it together. It's analyzing the whole creative and then using that to find the persona or the user that fits what meta has categorized. So why that is challenging for a lot of marketers is one half.

00:05:43:23 - 00:06:06:27
Unknown
The marketers don't know that the system change. They're like, Oh matters. Doing bad matters doing bad is better. Doing bad for you in this moment. Yes, but it's all about setup and structure, right? Like just like how you run Google campaigns in a specific structure and over time that evolves and changes, right? Like from single keyword ad group to multi keyword themed ad groups.

00:06:06:27 - 00:06:31:19
Unknown
Right? To get more volume, you have to do the same thing on Meta. It's going to start with the structure of how you are testing what you are testing and understanding that the algorithm's creative take rate is about variety. It's not. It's no longer about AB testing and getting spend behind creatives that are, you know, almost identical. Mm hmm.

00:06:31:21 - 00:06:50:03
Unknown
Now, obviously is a complete mind shift there. And as I said, half of the people don't know that Andromeda is working that way. And the other ways are sort of trained to think in audience and custom audiences, and I don't know them really nailing it down, which was true for a long, long time. Now it's working in other ways.

00:06:50:05 - 00:07:13:10
Unknown
A lot of friends might have issues trusting the algorithm. What what's your take on that? I mean, we have an issue trusting the algorithm, right? But in our business, because we're working with a multitude of clients and, you know, we're managing a lot of money, like annually, we're managing upwards of $40 million this year. And so, like, what I'd like to call out is no.

00:07:13:15 - 00:07:36:24
Unknown
Two accounts for in exactly the same matters. Entire goal, which is kind of contradictory and nuts to me is their entire goal was, Hey, let's set up this system. You don't have to think about targeting. You just upload your creatives. The system will go find the users and convert. Right. And why I'm bringing this up is because sure, that's what the system is supposed to do.

00:07:36:24 - 00:08:07:19
Unknown
The but the actual impact of it for brands of all sizes, the way we are running campaigns for each brand is different because the structure is different. The take rate on a vertical for a creative is different and of course each partner's goal is different as well, right? So like structurally, what we have set up initially is we have our initial campaign, which is our testing campaign, and we're launching ads in batches by week.

00:08:07:21 - 00:08:34:06
Unknown
So before you might set up, you know, a campaign, have all of your audience targeting broken out and run similar creatives across them. The way we're doing it to get around this is you have your batch let's say this is the week of April 20th. We launch a batch of ads on Monday, let's say ten ads, and that's what the ad said defined as in we're running broad audiences, right?

00:08:34:06 - 00:08:59:16
Unknown
And then from there, Matt ends up taking creative. Some will perform, of course, some won't spend it all. And some won't convert. Right. So as as we're getting data behind this, we have a second campaign that is called their scaling campaign and that's evergreen. That is where our budgets are highest. And first, we need to build out these the testing campaign.

00:08:59:16 - 00:09:25:03
Unknown
Then second step is the scaling campaign. We're graduating all of the winners from each batch into scaling and letting it run there at scale. Scale can mean different things for some partners of ours, it's $30,000 a day on matter. For other partners, it's $1,000 a day. But the system is similar, right? And then with partners that are like, Oh, we need creative, we need creative, we need creative.

00:09:25:03 - 00:09:49:22
Unknown
It's not just about creative volume. What we've also learned is once you have this system set up and then there's also another layer to add in CBO versus ABO, right? Where do we want to get ad spend behind? What are our minimums? Are we using cost, cost, cap or target row as campaigns? Right. Yes. Over time, each client, we're building in a different strategy that works.

00:09:49:25 - 00:10:13:02
Unknown
The algorithm or the algorithm, once you have the structure works, it's it's our responsibility as media buyers to figure out what structure works for the account. Yeah. And I think it's it's important because of all these changes and I think a few of our listeners will be also confused right now because of this, all the moving parts that are involved there in this kind of building and building a scaling system.

00:10:13:02 - 00:10:33:25
Unknown
There is in the past there was always this fear and some might have struggled, as does the ET account will be bent or the account will break. Is that still something that happens or is this something different from the past? It depends on what vertical you're in, right? If you're in health and wellness and you're making some wild claims, your account, your ads will get rejected.

00:10:33:25 - 00:11:02:15
Unknown
You might get banned for sure if you're in a like, for example, a CBD vertical. Right. And you're talking about CBD instead of hemp and your pages are clean, you'll get banned. Right. But if you're running skin care or pet products and you know, you're you're cleaning aren't wild and you shouldn't be running wild claims, it's just, you know, not not good for your brand, running something that's kind of clickbait and that's my personal belief.

00:11:02:15 - 00:11:27:20
Unknown
But yes, the answer is yes, that can still happen, but it fits in a very specific category. You know, or if you're running specific ad styles like before and after is on humans Matter doesn't really love that, right? So sometimes it will reject and at other times it won't make sense. I want to move it a little bit back or away from meta and have a bit of a bigger picture.

00:11:27:20 - 00:11:52:12
Unknown
So obviously there's Google ads, tech talk ads. How does that work all together in the mix when you run a brand? Okay. So when we're thinking about media mix, right? First is Matt and Google have the best data, right? And yet we hear we all hear about the brands that launched on Tik-tok and went from like 0 to $100000 in a month in six months.

00:11:52:12 - 00:12:18:10
Unknown
Right. And but that's not every brand. That's like one in like 10,000 brands, right? Like it's just it happens. You hear about the great story, but it's it's not as often as as most folks thinks. Right. So I just want to start off with that. When we're thinking about brand launches or what platforms they should be on, we're thinking meta in Google first.

00:12:18:10 - 00:12:51:25
Unknown
The primary reason is the audience, the data, the information to target, to convert, to test. Nobody does it better than matter in Google, right now. Right. And there will be there will be competitors that sure maybe will one day outperform. But right now that's not the case. So when we think about it, if you think about a pie, right, a pie chart, marrying Google each with their audiences have, let's say, 20% of folks on their platforms that can convert in any given time.

00:12:51:28 - 00:13:28:29
Unknown
We want to figure out how do we hit a specific row CACC and meet our target rate ultimately, but ROAS, Cox, CPA Target first on platform or using an attribution platform like Will or North Beam and hit the 20% rate, let's maximize the available market there. And that's a lot. It's a huge market share, right? And now when your budgets start to scale and you're at 50 K, then 100 K, then 200 K, then 500 k, you know, like a million that we have partners where we're spending a million plus a month, right?

00:13:28:29 - 00:14:00:20
Unknown
So with those partnerships, it's a then it's about all about incrementality. And so how do you get incrementality? It's sure you can keep scaling, but you eventually hit a point of diminishing returns on the ad platforms. Depending on the vertical you're in. And with that, we want to expand into other platforms, right? So can we tap into a new audience on Tik-tok, on Reddit, on Pinterest, on retail, on AdRoll Vibe, right?

00:14:00:22 - 00:14:41:06
Unknown
Applovin There's all these other platforms where we can tap into new audiences, but those audiences, just because they exist doesn't mean that they're the same as matter in Google. So like, you know, I'll give a tick tock example rate tick tock, tick tock. Audience is much younger versus matter in Google like just typically. So if you're selling a $200 product and you're using, you know, some form of GMV campaigns on on tick tock, you might not be able to scale it, right, because that audience doesn't have buying power.

00:14:41:06 - 00:15:03:23
Unknown
So when you're thinking about where should I expand, it shouldn't just be, Oh, everybody's doing tick tock, it should be, Hey, here is where my audience exists. Here is where incrementality can happen. And when I'm running this test, I'm going to run this test for a month, six weeks, eight weeks to crack the code just like you did on Meta and Google in the early days.

00:15:03:26 - 00:15:22:22
Unknown
Yeah, I think it's very important. In the beginning you mentioned understand your audience first specifically for new brands. That takes usually much longer than you might anticipate in the beginning and once you figure out who your audience is, get really good in one platform and then move to the next one. I think that's a really good example that you gave there, though.

00:15:22:22 - 00:15:50:16
Unknown
You said you're working with a lot of brands. Who's your perfect customer? What kind of industry verticals do you work with? We do a lot of business in health and wellness. We love working in the pet category, skin care, you know, beauty, CPG, We do a lot of work in CPG, everything from, you know, meal kits to foods to pasta to, you know, toothpaste, right?

00:15:50:18 - 00:16:28:09
Unknown
There's there's just quite a lot in the CPG category. We also work in travel essentially the verticals we work with or or the partners we work with. Right? And who's a good fit is brands that are typically spending 50 ish K or more. We again, like our media spends, go from around 20 K to all the way to 1.2 million a month and 33% of our business is, let's say 20 to 133 is between 100 to 533 is 500 and up.

00:16:28:11 - 00:16:59:07
Unknown
Right? So but what is most important is your Shopify store Shopify brand. Right? And with that you are a partner that also understands digital, right? You have some understanding of digital that is important because as we are speaking through conversion rate and why CPMs are high and here are the challenges we're seeing and here's how we're going to solve for it, right?

00:16:59:07 - 00:17:23:04
Unknown
It's great to have a partner that understands and we can have a great conversation about and with so that you can challenge our thinking. We can challenge your thinking and then we build a program together that is so important. In my best times, I spend about 50,000 a month on Facebook, and by then you grow into it and by then you should have a good understanding what you're doing there.

00:17:23:04 - 00:17:40:29
Unknown
And then it's important to really that's one of my key business guidelines that I understand the process and then find someone who's better than you and can scale. And this is exactly the growth plan that we see. Could you share some success stories or case studies of businesses that you have worked with? You don't need to name the brand.

00:17:41:02 - 00:18:08:03
Unknown
I'll talk a little bit about how we work with partners, right? Because like not every partner is the right fit for us. And it can be a number of different reasons. So what we always do with any brand before signing any contracts is we run a thorough media audit. We want to understand what's happening in Shopify, what's happening on your checkout funnels, what's happening in ad platforms, you know, matter Google, right in this example.

00:18:08:03 - 00:18:30:00
Unknown
And so we will audit and those audits are supposed to answer an internal question for us. Yes, we can hit your goal. Yes, we can hit your goal, but we need to do X, Y, and Z. No, we cannot hate your goal. Right? So these audits take us ten and a half hours to put together 212 hours. We cover them over a 1.55 hour recall.

00:18:30:00 - 00:19:04:05
Unknown
We don't charge for them specifically because we want to know if we can hit your goal. So we do all the legwork upfront and why bringing this up is we recently we did a webinar back in January and we audited we did a live audit for a partner on this webinar. And so that partner ended up working with us and towards the end of February, when we got to March, we were able to increase their ROAS by restructuring their campaigns, deploying creative properly, fixing their Google feeds.

00:19:04:07 - 00:19:41:08
Unknown
And we increased ROAS from essentially February to March by a 49% conversion rate skyrocket, did see peaks drop and that was a big structural shift and lift for them, right, Because they weren't set up for Andromeda and they had a lot of like issues on Google, which we fixed. And now that that brand is continuing to scale. So like the overall lift, this number, I don't have exactly, but we went from a 49% lift and then now I have to double check this number.

00:19:41:08 - 00:20:15:29
Unknown
But we're I am pretty sure we're around like 60 to 75% lift rate. And now what we're doing is we're actually scaling budgets significantly and we are adding in new ad platforms. Yeah, I think it's good to have someone external looking at what you do in your business because sometimes you don't see the forest because of the trees and then you have like organically grown chaos in the background and somebody coming with fresh eyes and expertise and really cleaning it out is definitely a huge benefit for your business.

00:20:16:01 - 00:20:45:29
Unknown
Now, how does your pricing structure work? How do you charge? We have a tiered structure. We have a growth plan, a core plan going all the way up to an enterprise plan. And our pricing structure is the greater of a retainer or media spend as our as our partners grow. You know, they will grow into the other tiers which eventually allows them to have more services at a greater discount.

00:20:46:03 - 00:21:15:12
Unknown
And in terms of the services rate, what we do, we don't allow cadre services. We we essentially act as our partners head of growth. We do budgeting and planning with them. We develop creatives in-house, we provide CRO and we buy the media across platforms. So it's very much encompassing. However, depending on the tier, it's X number of creatives or Y number of landing pages or yeah, that's that, that's essentially how we operate.

00:21:15:12 - 00:21:41:07
Unknown
Okay. So you know, and it depends what you get for your money, which is perfect. I went before our coffee break comes to an end. Is there anything you want to share with our listeners that we haven't covered yet? For anybody that is having a challenge on Metro or Google, I would love to run a free audit. Please feel free to reach out to us on Did you come out I o or one of the links on e commerce coffee break?

00:21:41:09 - 00:22:07:01
Unknown
Yeah, I would put the links in the show notes as always. Dan, you're just one click away. I mean, I could talk for hours about meter and paid ads. We will do this and continue this on another call and I'm looking forward to that. Thanks for your time today and hope to get to you soon. Thank you for having me on the show.