Have you ever thought of using Geo-Targeting to make more sales?
Some of you may not be familiar with the term, so today I discuss how Geo-Targeting can affect your branding and increase your sales.
If you have any questions or suggestions, feel free to leave a comment below.
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What's up, everybody? Anton Kraly here, and welcome back to the Drop Ship Lifestyle YouTube channel. What you're about to watch is the video version of my podcast, which is called E-commerce Lifestyle. We post two new episodes on this channel every single week, where the goal is to help store owners increase their revenue, automate their operations, and become number one in their niche. So if you're running an e-commerce store, I would highly recommend that you click that subscribe button, turn on notifications, so you can be notified every single time we release a new video, just like this. So with that being said, let's go ahead and get into the podcast.
What's up, everybody. Anton Kraly here from e-commercelifestyle.com, and welcome come back to the podcast. In today's episode, I am going to be talking about geo-targeting, and specifically, if it can make you more money. I'm going to be doing this by answering a question that was submitted via a live stream that I just hosted on last Monday. So this question came in, I apologize if I butcher your name, from Veselin Medinica 00:01:06]. It sounds like a cool Italian name. But what he asked is, "Does it make any sense to target a town with 15,000 people and try to build our brand with ads," then he continued on that question and said, "or target 1 million people, but in one city?"
So what he is referring to is something that is called geo-targeting, and if you're not familiar with geo-targeting, it's something you can do if you're running Google Ads, any type of campaign, whether that's shopping, search text, display, video, anything, also with Facebook Ads and really any other major ad platform. The way that geo-targeting works is, when you're setting up your ad campaign or your ad sets or ad groups, you can choose the location you want to target, and you can typically do that by either putting in a ZIP Code or even a city name, and then by putting in a radius around that area that you want to target.
So let's say you chose a ZIP Code in Manhattan, 10010, and you said, I want to target people within a five mile radius around that ZIP Code. Then all of your other ad settings will hold true, so if you wanted to target a certain keyword or a certain audience, but the ads would only show to that segment of people.
Now, the way that this question was asked is, should we do it for branding, and in my opinion, the answer is definitely not, not with geo-targeting ads. In general, we actually don't use geo-targeting, I would say, close to 99% of the time, because there's really not many good reasons to use it if you're following the methods that I use, the methods that I teach, and you're selling products to an entire country. I mean, that's one of the main benefits of e-commerce, right?
But with that being said, there are times where geo-targeting can make you more money and where you can definitely consider it. The example that I'll give you is, let's say you're running a Drop Ship Lifestyle store built with the Drop Ship Lifestyle model, and you have 20 different brands that you sell for. Let's say 19 of those 20 brands, you have great margins when you sell them, regardless of where the product is shipping to, and it's fine. If somebody orders in New York, great. If somebody orders and they're in California, great. Your margins will vary a little bit because shipping costs will be different, but if your built-in margin between the wholesale price and the map price that you sell for, if there's a big enough spread, then to you, it's all great. It's all the same, regardless of where you sell to and where you ship to.
But let's say one out of your 20 suppliers, your margins aren't exactly there, and that spread between your wholesale cost and the map price that you sell for isn't really big enough for you to be able to absorb the shipping costs from, let's just say, a warehouse in New York to a customer in California. Let's say you're running ads for that one brand and you realize this, right? You get a sale, it's going to California, you get the shipping quote and you realize, wow, I'm only going to make 5% on this order, or, I'm only going to make 10% on this order.
Well, what should you do? Well, if you get that initial order where you're, I guess, learning that lesson, I would recommend you go ahead and you fulfill it, you just make that smaller margin. But then what you can do, if you can't first negotiate better shipping rates, is go into your Google Ads campaign, because Google Ads kind of kicks everything off for how our funnels work when it comes to paid traffic. So you can go into your Google Ads campaign, and let's just say, hypothetically, you have one Google Shopping Ad campaign that has all of your suppliers in it, has all of your products in it, you can duplicate that campaign, and in the duplicated version, you can remove all of the products that aren't coming from that one supplier that, let's just say, is in New York. Then in your main Google Shopping campaign that was already running, you can remove that one supplier that's in New York.
So now what you would have is one Google Shopping campaign with 19 brands that's being targeted worldwide, and you would have that duplicated version with just the one brand's product that the margins aren't there with, that's in New York. Now, in the one for the New York only brand with the smaller margins, you can use geo-targeting there. The benefit of this is now you're only proactively spending money to get customers from that supplier if they live in ... you could figure out what the shipping costs are for you because it varies, but let's just say, if they live within 200 miles of wherever that warehouse is, right, that supplier's warehouse if you're drop shipping.
Now what will happen is, you can still capitalize on having that supplier, you can get the people that are within that radius to see your paid ads, to click through, to buy, and your shipping costs will be reasonable and your margins will still be extremely healthy. So that is when geo-targeting makes sense. It does not make sense, in my opinion, just for branding. If you're just going to be branding your store and trying to build up your remarketing audiences by getting people to know about you, about your company, what it is you do, then you want to go and target the whole entire country. For you, whatever country that is. But geo-targeting, for us, when we've used it, has been that specific scenario where we still want to capitalize on the paid sales for a specific brand, but we know the margins aren't there when they're shipping too far away, again, because we offer free shipping on all of our stores.
Now, the other thing I'll say, because you might be thinking, well, let's say that one supplier's products, right, the one in New York with the margins that aren't there, what if somebody just finds me organically and they're in California and they buy, then what happens? Well, then I would say that's still a good thing because what you're trying to avoid is the paid ad costs to acquire customers where the margin's not there.
So let's just say you do what we do and shoot for, at a minimum, a 10X return on ad spend, and let's say you are selling $1,000 products to keep the math simple. That would mean, for the customer in New York, shipping around New York, you'd be willing to spend a hundred dollars to acquire that customer in paid traffic and your margins are still be there. But then if somebody in California buys and they found you organically, right, for that one brand, then that $100 cost is gone. Your return on ad spend is basically infinite because you spent zero money to acquire that sale, and then that extra $100 that you didn't spend on ads to acquire that can go towards that shipping cost, and again, your margins can still be healthy.
So I hope you found that helpful, and I do apologize to Veselin if I butchered your name. Hope that answers your question, and as always, guys, what I've been doing with the podcast for probably a couple months now is using this format where anything that you guys talk about on social, things you tag me in, things you post on my live streams, if I think it makes sense to do an episode like this and try to share the message with our community, then I'm more than happy to do so. Also, if you have any questions that you would like to see answered on the podcast, be sure to go to ecommercelifestyle.com and then click on contact in the header menu. That's going to take you to a form where you can submit any questions. Again, if I think it makes sense to benefit the whole community, I'll answer in a format that does, and if it's something I can just shoot you back a quick answer, I'll do that too.
So thank you everybody for tuning in, as always. Hope you have a very successful week. Hope you have a bunch of sales. Hope you use geo-targeting the right way and make more money with it. And, as always, if you're just getting started, you want to know how we build highly profitable semi-automated stores, be sure to go to dropshipwebinar.com to get a free two hour training that I put together, and in addition to that, I'll give you a list of 237 profitable products to sell in 2020. So check that out. With that being said, I will talk to you on Thursday in the next episode of the podcast. See ya.