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How do I reduce the size of the header image (which is above the menu on the left for the template I've chosen) so that the menu moves up?

Layouts come with a set header image size. If you know how to code CSS, you can adjust this yourself through the Advanced CSS editor.

The header image tool for the next release of Doodlekit will have much more flexibility.

Unfortunately, I do not know CSS. Thanks for the answer and I'm looking forward to the next release.

Any word on the release Heath?

Working on it :). We are making progress - its going to be few months.