Use AI to Optimize Your Marketing | #132 Josip Begic

In this episode of the Ecommerce Coffee Break Podcast, I talk with Josip Begic, founder of Lebesgue.io. We discuss how to use AI to combine your business data, your competitors' data, and overall marketing trends to figure out how to optimize your marketing.

On the Show Today You’ll Learn:

• Mistakes people make when spending their marketing budget
• The best ways to optimize your ad spend
• Strategies for competing in the market
• The most important reporting tool for Shopify merchants
• Facebook, Google, Shopify. What is their relation?
• And more

Josip Begic is a mathematician who spent $20M on Facebook and Google ads for Shopify stores. Worked as a head of growth for 3 YC companies (all on Shopify). Now he is the founder of Lebesgue: Smarter Marketing - an app that works as your Artificial Intelligence CMO.

Links & Resources

Website: https://lebesgue.io/
Shopify App store: https://apps.shopify.com/advertising-insights
LinkedIn: https://www.linkedin.com/company/lebesgue/

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Transcript

Claus Lauter: Hello and welcome to another episode of the E-Commerce Coffee Break. There's this famous quote of US retail magnet John we Maker, which is said half of my [00:01:00] advertising spent is wasted to travel, is, I don't know which half. So that's a common problem with a lot of Shopify merchants. They have a marketing budget and they're spending it on different marketing channels, and then the problem starts that they do not really know which of these different channels performs the best.

So we're talking about marketing optimization and we see a lot of mistakes and. I have an expert today on the show, Joseph Begic. He's the founder of labes.io, and they have worked with more than 3000 Shopify stores and have seen a lot of mistakes that these stores do. Joseph is a mathematician who spent 20 billion on Facebook and Google ads, lots of experience there.

And he worked as a head of growth for three YC companies all on Shopify, and now he's the founder of the Best Smart Marketing in app that. you as an artificial intelligence cmo. So that should help find out more about on how you can optimize your marketing spend. Hello, Joseph. How are you? Hello. Hi. , very good thanks.

marketing optimization is a big topic specifically in times where cpm CPAs are [00:02:00] gaining really, really high, and most merchants are on more than one marketing channel. So they're splitting their marketing budget and are working with different dashboards and so on and so forth. So, let's dive into what are the most common mistakes that you see when people are spending their marketing.

Josip Begic: We can classify these, mistakes in several categories. One is most impactful mistakes and one is , most frequent mistakes. So for most impactful one, , we are seeing businesses around 10% of businesses. Optimizing for cheap traffic. Doing link clicks optimization, landing page optimization as to cart optimization.

But this traffic never converts and this has a huge impact on your return on investment. Something like, 80% lower return on investment when you're doing , this type of optimization. That's really a big, big mistake still, we are seeing around 10% of businesses are doing on TikTok ads, Facebook ads, even on Google Ads.

And most frequent mistake is having issues with conversions tracking on Facebook or Google. That's what we're seeing happening with 40, 45% of businesses. They implement Google Pixel twice. [00:03:00] Or they don't implement conversions API on Facebook. And then it also impacts your quality score, your ad performance, , you're seeing around 15 to 20% higher CPAs.

Claus Lauter: Yeah, I think that's very important topics. As you, , touched on there, obviously everyone wants to have the cheapest traffic question there. Is the cheapest traffic really the best traffic that you can do or the best what you can do with your marketing budgets? Let's start to dive in this first and then go to the second topic in a second.

what would be, your strategy, or what would you do or recommend to Shopify versions on how to optimize their adpa instead of, , spending basically on the link? 

Josip Begic: , you always want to get as many link clicks as possible, especially on Facebook. So on Facebook, you're paying for impression.

That means every click is free. Google is different. You're paying for click, so you only want the most qualified clicks to get on your page. But let's start with Facebook. So you're paying for impression and you want to get as good click rate as possible. the metric you want to hack is click to rate, but in a fair system where you're optimizing for conversions.

So what we are seeing, people want to get a lot of clicks [00:04:00] through the. And they just do the link click optimization. thousands of users come to the website, but bounce rate is 90%. Every session duration is like 10 seconds, and it's a really cheap traffic that you will never convert in the future.

we did test that and , it doesn't work. So what does work is that you optimize for purchase event so that Facebook really finds qualified users and on these types of campaigns, you want to get as good click rate as possible. 

Claus Lauter: Now we are in the middle of q4, so every retailer out there is spending the last marketing budgets of the year on Facebook or any other kind of paid, , platform.

What would be your recommendation as a small and medium enterprise kind of your bit strategy to compete against or to compete in the market right now? 

Josip Begic: That's excellent question. And I think there's a one big mistake with this quarter four thing, and it's if you are not a seasonal brand, so if you don't depend , on Christmas or , black Friday, it's much better , to run ads in January and February because CPMs are 50 or 60% lower, , just because no one else is doing advertising, [00:05:00] online advertising is an auction, and in order to show your ad you need to outbeat everyone. , more budget. There is more you're going to spend , for an impression. So if you are not a seasonal brand, you should rather focus on January, February, March. And if you are a seasonal brand, then you should just optimize your, offer and get conversion rates as high as possible, with urgency and, count timers and really, good offer.

, as you need to compete with really, , everyone else with huge budgets and really high CPMs. either focus on high conversion rates and really good offer or wait for January because you can achieve awesome, , incredible results in January and February. 

Claus Lauter: Yeah, that's an awesome tip and that's a recommendation that I also give to my clients.

, and sometimes they're not really believing me. So I have a Shopify for the last seven years and January is usually one of the best months in the year. Cause you're getting through to your clients much cheaper now. On the other notes, you said that a lot of stores have the implementations of the pixels wrong.

So basically they're fire twice or they're don't fire at all. what's your [00:06:00] recommendation or what's a way to make sure that this does not happen? 

Josip Begic: What you can do is Shopify and Facebook really built this good native integration between Facebook and Shopify.

best solution on Shopify is to install a Facebook app. And via Facebook app, you can implement the Conversions API and you can, select maximum data sharing and that's the best and the most precise thing you can We are often seeing businesses hiring, Upwork or Fiber freelancer that starts building with super complicated solutions with Google Tech Manager, with custom integrations with manual code, and then business is not happy with solutions, so they hire another freelancer and he does something else.

And you end up with three completely different solutions all on your website, all decreasing the page load time and they just hurt your performance. But Shopify and Facebook are huge companies and they really built a good native integration. There's nothing better than using the Facebook app.

Claus Lauter: Okay, Now, once you have these basics, right, you want to benchmark your Facebook on your Google Ads compared to other e-commerce businesses, just to find a baseline on where you're [00:07:00] standing in the market, and I understand that you're helping with that. Tell me a little bit more about this.

. 

Josip Begic: What I've seen a lot is the focuses on one channel, or they try to brute force one channel to work. For example, they just come and say, yeah, we need to do Facebook ads. They're doing Facebook ads for six months, but they then don't take a look at their website.

So what I feel is a, good rule of thumb doing 10 AB tests on a platform. If it doesn't help improve your results, switch to a different channel so you can have the best Facebook ads in the world. But if your website doesn't have a call to action button or you're out of stock, you'll not see a conversion.

So Facebook lends your traffic to the website. So they both need to work correctly. , what our software does. It analyzes your Facebook ads, your Google ads, your TikTok ads, and your website performance, and figures out what is the weak link in your marketing, channel. maybe you are always spending on Facebook.

Maybe you're not utilizing TikTok and you should, or maybe you just have a low add to cart rate , on the website, and you should stop everything else and focus on, , figuring out, , add to cart rate on the website. Does this answer your question? 

Claus Lauter: [00:08:00] Yeah, absolutely. Now customer lifetime value becomes more and more important, specifically as the first time customer also becomes more expensive, and having the right reporting tools in place and to analyze the data obviously helps with that.

Now talking about marketing optimization, how does your tool, your app, or your solution, help with that? 

Josip Begic: Our tool also analyzes customer life and value. , and it does , all possible customer life and value breakdowns per different state, per different country per different discount codes that you used.

So you can analyze , what we've seen recently is when you give welcome 10 code, like , 10% off on your first order, customer lifetime value is around $200. And when you give 40%. Customer lifetime value is a hundred dollars, so a hundred dollars lower. So what you can see through this analysis that discount codes don't make sense for you.

You will get a lot of customers, but they will churn, second mile that you start, , advertising they just won't use your products anymore. You need to use a tool or you can do it manually, but it's a huge amount of work to figure out, which discount codes, which [00:09:00] states, which marketing channels work the best for you.

seeing a mistake here. You know, that business, , does a big sale, gets a lot of customers, thinks that's best thing they could do. They do another sale. They do another sale, and six months later , they don't know what to do else. Because they have low retention on these customers.

They're not reordering and they got some customers, but they didn't grow the business. 

Claus Lauter: Now, a lot of businesses nowadays struggle to understand, , multitouch point marketing because it's omnichannel. So the customer might see you on Facebook or on TikTok, but then finally they click on Google Ads and then they only buy from you.

So how does your app help with that? Is there any kind of way to optimize that from that side? 

Josip Begic: excellent question. , not in a summer. So what you can do in our rep is you can put all the metrics one next to other, your Shopify, , first time orders, your Facebook purchases, Google purchases and TikTok purchases, something like that.

But there is no different algorithms that try to figure out how these channels interact. I tried to build something like that six or seven years [00:10:00] ago since I'm mathematician. I was really interested in that kind of solution. But I was never convinced , into it, to be fully honest with you.

I just think, the, dump strategy, just put each metric one next to other works the best. Maybe a thing that works is that you try to, pause yourt ads for two weeks and see what happens. Pause your Facebook ads for two weeks and see what happens, and try to manually get feeling of what is the best.

And out of that data, maybe you can start building something. But I haven't seen this, multi attribution systems usually what you get with this is that email is the best possible channel. , but someone had to drive this email signups, so it's always Facebook or TikTok , or Google in the end, driving users to sign up on your website and convert 

Claus Lauter: later.

Okay, that makes perfect sense. In a recent situation, and with the iOS updates last year, obviously there's a huge shift in the market. Now you're working with a lot of Shopify businesses. Do you see some kind of trends that people are moving away from Facebook more to Google or more to TikTok, or , what's happening there?

Yeah. 

Josip Begic: Good question. So [00:11:00] first we have seen around 20 or 30% drop in conversion rate because of the iOS falling change. And that doesn't mean that people are not purchasing anymore, it's just that Facebook does not see these purchases anymore. So that's a subtle difference. . Most of businesses try to switch from Facebook to something else, but we still haven't seen, , someone majorly replacing Facebook with TikTok.

TikTok is a very good addition to Facebook and you should test most of these channels, but same problems that you will have with Facebook. You will also probably have on TikTok, if your edge to cart rate is low or there is a big drop of an initial checkout step. Or you don't have a product market fit or something.

If it happens on Facebook, it will also happen on TikTok. , Google is really interesting and I think long tail keywords on Google are awesome thing to do. And YouTube is really incredible for brand awareness, but it's super, super expensive. So whoever tries to shut down face completely and switch to something else, they weren't very 

Claus Lauter: At Labes you are also offering reporting tools. , what, in your opinion, is the most reporting tool that a Shopify merchant, or what kind of report should they look , as the [00:12:00] most important tool? 

Josip Begic: It is just important to be very, Checking data all the time, every day.

You know, not more than every day, but you need to see every day what is happening. , if you see a big jump in Facebook purchases and it's not reflecting on a big jump from a Shopify store, it means you are, , over targeting your existing customers. Or you didn't exclude your previous purchases from your campaign, so you just need to look at this data every day to get a sense of basic stuff.

Facebook, Google, Shopify. What is the relation between these three channels? Our tool does offer this reporting so you can open the app every day. You get to weekly new sliders with your performance on Facebook, Google, and Shopify. It's not important how heavy weight tool is.

It's just important to get used to reporting. Even Excel sheet is good if you just put proper data every day in the Excel sheet. So Facebook data, Google data, but super important. First time orders, Shopify data. 

Claus Lauter: Yeah, I think a very good tip there and gold nugget is check your reports every day. I see merchants who are doing that every two weeks and then are wondering the [00:13:00] market and then the fan.

Yeah, . Yeah, exactly. diving a little bit deeper in your tool, how does the implementation work? So how does it work together with these different platforms and the Shopify. Yeah, 

Josip Begic: , it's super simple. Software is available on the Shopify store, so you can just install it by clicking add app button.

You have a two weeks free trial. , and for Facebook and Google, you just connect your account and it automatically pulls the data. And, you can see dashboards from installing our software. So everything goes automatic. It's like five minutes. Installation process is just clicking, connect account, , 

Claus Lauter: and that.

Okay. Is there any kind of homework that a Shopify immersion needs to do before he comes to you to, , use the best? 

Josip Begic: There's one more thing. So you can also input your competitors into our rep. So what our software does , it analyzes your website, it checks keywords on your website.

It checks other advertisers who compete on these keywords, and it suggests, these advertisers as your competitors because they're, building on same keywords and it starts tracking your competitors too. So , that's one thing that we are also doing. , we just check [00:14:00] what your competitors are doing on all major social networks, because , if they found a new channel, new strategy, We will see it and you can start doing that too.

, but about homework, when you install our software, there's a lot of tutorials on Facebook ads, Google ads, competitors tracking to figure out , what to do with this. So you can just, educate yourself to , our videos, but you don't need to know some basics of, analytics, dashboards, revenue, , and Facebook and Google ads.

Claus Lauter: Okay. obviously having a competitor, , comparison in one tool, that's a massive benefit. , I think that will save you a lot of time because if you do this manually or with other tools, , it's just one step more. So if you can get all this information out of one tool, huge benefit. I really like this, , approach now.

Your app is it for free or , what kind of pricing is built in there? You 

Josip Begic: have a two weeks free trial and then pricing is, there is a free plan where you get the automated advertising audit, so we audit daily all of your ad accounts and we tell you what is wrong, so you get it for free.

Together with some basic dashboard on your Shopify numbers, Facebook numbers, [00:15:00] Google and TikTok numbers. And then you have a $29 plan, , where you can do the customer life and value analytics and you can see all of the benchmarks. And you have $79 plan where you also have AI copywriter, you have competitors intelligence.

And, you have forecasts of next six months. What's going to happen with your revenue and what's going to happen with a price on Facebook and Google. So we forecast based on our huge data sets, the edge price for quarter four on Facebook, That's what you can see to better plan, , marketing, for next quarter or next month 

Claus Lauter: Okay. Is there some kind of minimum that a, , marketer or merchants needs to spend on these platforms to make your tool worthwhile? 

Josip Begic: We actually have a $9 plan that's only for businesses who are getting started, who has less than 30 orders in 30 days. So really small Shopify store that only , is getting started.

So they maybe want to test a little bit Facebook, but basically if you have a $50 ad spent on Facebook, you can get some insights on our rep. Did you set up pixel in the right way? What are your benchmarks compared with other stores are [00:16:00] you missing some strategy on Facebook or Google or TikTok?

So that's what you get , for $9, 

Claus Lauter: That seems to be like a good investment cause it saves you a lot of time and obviously it gives you , the safety of knowing that your setup is correct and, , the right data is coming in. Where can people find more about esque? 

Josip Begic: APP is available on Shopify store, so you can just Google Le Smarter Marketing, , spelled L e e s G E. , but you can just type smarter marketing , and you will see our app. can find us on Shopify store or if you google, keywords like Facebook ads for Shopify store, you will probably see our solution.

So it's not too hard find us, even though name is really complicated to spell. And the. 

Claus Lauter: For that reason. I will put this in the show notes. Then, , you're just one click away and I think as well as a lot of good content in there, , on how to optimize your marketing strategy to get more out of your marketing budget, and I'm convinced that your tool definitely helps.

Was that specifically then knowing that your setup is correct and also seeing your competitor data, which I really like that feature to be honest, . Cool. Thanks so much. 

Josip Begic: Yeah. Thank you too. 

[00:17:00] [00:18:00]