Dec 122015
 

advertising-research

Chris McMullen, author of A Detailed Guide to Self-Publishing with Amazon, brings us an informative guest post for writers interested in advertising their books through Amazon KDP.

ADVERTISING BOOKS WITH AMS

KDP now lets indie authors advertise their KDP Select books directly on Amazon.com through AMS (Amazon Marketing Services).

I’ve now placed 36 different ads through AMS on over a dozen books in multiple author names, with different targeting and bids from 2 cents to $1.01 per click. So I have quite a bit of firsthand experience with this. Although I publish nonfiction, I’ve also discussed AMS with several fiction authors who have used it—including some who love it, some who hate it, and more with mixed feelings. Many of these authors have shared their AMS numbers.

EASY MONEY, HUH?

Well, not ‘easy.’

Marketing books is never easy. But advertising books on Amazon through AMS, like other marketing tools, has potential; the trick is learning how to use the tool effectively, and whether or not this tool is a good fit for you and your books.

BENEFITS OF ADVERTISING WITH AMS

  • Prime real estate. Your ad shows directly on Amazon product pages, where customers are already shopping for books. You’re not trying to make people leave one site to visit another.
  • Optional product targeting. You can hand-pick specific books (and even movies and other products, if applicable) to target. This allows you to tailor your targeting to your unique book.
  • Budget-friendly. Although you must set an advertising budget of at least $100, you’re not committed to spend one penny. You can pause or terminate your AMS ad campaign at any time. (However, the ad report does not show in real-time, so when you pause your campaign, the expenses may be higher than you realize. If you bid low, this won’t be an issue, but if you bid very high, you can be out of budget before you realize it.)
  • Free impressions. You only pay for clicks. If 2,000 people see your ad, but nobody clicks on the ad, you don’t pay a penny.
  • Product page data. The AMS ad report shows impressions, clicks, detail page views, and sales generated through the ads. This lets you see what percentage of traffic to your product page actually buys your book. Even in the worst case that your ad is an utter failure, learning your sales-to-clicks ratio can help you assess the effectiveness (or lack thereof) of your book’s product page at selling your book to your target audience.
  • Improving. AMS at KDP is improving. For example, you can now enter a phrase designed to catch interest and at least one of the possible ad locations shows this as an orange headline directly above your ad.

CHALLENGES YOU MUST OVERCOME

  • Competition. Many other authors bid high (often, much higher than they should), which can make it challenging to get impressions with an affordable bid, especially in competitive genres. However, there are ways to deal with this (like wise targeting).
  • Tiny thumbnail. The ads show a tiny image of your cover thumbnail. The ads come in a few different sizes, but many book covers are difficult to make out in the ads. (Obviously, if you design a cover that stands out well and is easy to read at this tiny size—possible, as I’ve seen it done—you have a distinct advantage.) So although impressions are free (you only pay for clicks), possible branding benefits from those impressions are somewhat limited.
  • Click-throughs. The CTR (click-through rate) can vary considerably from one book to another, but often it’s in the ballpark of 0.1%. That is, for every 1000 times your ad displays, 1 person will click on your ad. This isn’t really a downside though, since you only pay for clicks; impressions where the customer ignored your ad don’t cost you a penny.
  • Closing rate. The closing rate and your average CPC show whether or not your ad is a success or failure. The closing rate is your sales-to-click ratio. The books with the most marketable product pages and wise targeting can achieve a closing rate of 10% or better, but some books achieve a much lower closing rate.
  • Not real time. The ads do not show in real time; there are often delays of several hours (or more). So you must be patient and wise. Too many authors conclude prematurely that nothing is happening, so what do they do? They raise their bids to make something happen. That’s a great way to lose money fast.
  • Targeting. Take time to target wisely. This is one thing you have much control over, but you have to take the time to do the research. And when things don’t seem to be working, this is one area you can try to improve. The more frequently your ad shows to customers who are likely to be interested in your book, the better your chances of achieving a better closing rate.
  • Stoppage. Your AMS can actually be stopped due to low relevance by Amazon. Low relevance is either a sign of poor targeting, or a product page that has room for improvement (cover, blurb, Look Inside, even the book idea comes into play here). Your ad is likely to be stopped due to low relevance if your CTR is well under 0.1%. If only 1 out of 3000 people who see your ad click on it, there is a good chance that your ad will be stopped. If your ad is stopped, you can create a new ad, but be sure to strive for more relevant targeting.

RESEARCH & EXPERIENCE WITH AMS

I placed my first ad through AMS on January 29, 2015, shortly after the program was launched at KDP. I have now placed 36 different ads through AMS on several different books under a few different author names.

In February and early March, I had bid too high (upwards of $1 per click). But my primary goal was to get valuable data, even if that meant cutting into my ROI.

Most of my early ads were making many impressions (as many as 461,673 impressions). I received as many as 661 clicks (on an ad with 108,689 impressions). Most of my CTR’s (click-through rates) were in the neighborhood of 0.1% (1 in 1000), though I had a few above 0.5%, but also a few below 0.05%. But the CTR really doesn’t matter, since you only pay for clicks. (Well, it does matter now: If your CTR is well below 0.1%, there is a good chance that your ad will be stopped for low relevance.) From my numbers and stats that other authors have shared, 0.05% (1 in 2000) to 0.5% (1 in 200) is typical; if your CTR is below this, you can probably improve it through targeting (well, your cover matters, too).

I had a few ads with a closing rate (sales to clicks) of 10% or more, but most of my ads had closing rates below 10%. I had some closing rates of just a few percent. This stat is very important, as it determines how much you can afford to bid and whether or not your short-term ROI (return on investment) is worthwhile. With a variety of books, success rates, and targeting strategies, I’ve learned some ways to help improve my closing rates (reflected in my more recent ads). I’ve met a few other authors who achieved closing rates above 10%, but many more authors with closing rates closer to 5% or less.

I’ve placed 12 new ads since April 19, 2015, with wiser bids and targeting, based on my prior experience. The new ads are much more successful in terms of short-term ROI. I now have more ads where the short-term royalties exceed the amount spent on the ad. I also have some slower-running ads that are getting very cheap exposure. For example, I have one ad that’s been running for 31 days, which has cost me a total of $2.16, but has generated 177,537 impressions, 73 clicks, and already returned over $4 in royalties. That’s not much in terms of sales for a whole month of advertising, but look, that’s not bad for having invested a whole two dollars. I have some ads generating activity with as little as 2-cent bids. A low bid may not make many impressions (though occasionally it does), but it’s also more likely to earn a short-term return rather than a loss (and if it earns a loss, imagine how much you would have lost bidding high).

Another thing that I’ve seen are indirect benefits. Many other authors have seen similar indirect benefits. Several authors have seen an increase in borrows. A couple authors reported an increase in borrows, then a decrease in both sales and borrows when the ad stopped, and a return when a new ad was run. A few series authors have reported improvement in other books in the series. But not all authors have seen such improvements; indirect benefits are not guaranteed.

I sell about 9 paperbacks for every Kindle e-book, overall (I have a few books where it’s the other way around). When I ran my ads in February and early March, I saw a substantial increase in related paperback books. I toned down my advertising significantly in late March and early April (I had been bidding upwards of $1 per click; I stopped some of my ads, and lowered my bids in others). My paperback sales declined. Around April 19, I placed several new ads (remember, the ads are for Kindle e-books), but with lower bids, and I’ve seen sales of paperback books improve again.

I’ve tried a variety of targeting strategies. I only used category targeting for a couple of ads, and didn’t generate many impressions that way. The problem is that every other book with the same targeting category is competing for the exact same list of books. Product targeting seems to give you an edge, even when all of the books on your list seem to fit into the same broad category. But product targeting also lets you select specific books outside your genre or category, and even other kinds of products, like movies. I’ve tried compiling narrow lists of 50 books, long lists with 1000 books, books of very popular and very similar products, movies and other products likely to interest my target audience, and lists of books that aren’t too popular and which are more likely to appeal to an indie audience. There are a lot of possibilities when it comes to targeting.

If you select fewer than 50 products, it will be tough to make impressions (unless you pick some hugely popular products, even then, you have to outbid others). If you target movies or other products likely to interest your target audience, but they only interest a small fraction of your audience, this can greatly diminish your CTR, putting you in danger of low relevance (so your ad may be stopped), especially if those movies or other products are hot items. You really have to judge your target audience well to make the most of your targeting (you can go back and change product targeting; but if you select category targeting, the only way to change it is to pause your ad and start a new one). If you target books where the readers are more likely to actually purchase your book once they reach your product page, this can help your conversion rate. It pays to spend extra time contemplating the probable habits and interests of much of your target audience (and it may take some trial and error).

But you probably don’t care so much about my experience, as what I’ve learned from it. So let me move onto tips and suggestions, based on my experience with AMS.

TIPS & SUGGESTIONS FOR USING AMS

  • Create a short catch-phrase likely to interest your target audience (and sound relevant to the subgenre, subcategory or content) to use for your headline. Don’t simply copy your title into the headline. This shows above your ad (when the headline displays).
  • Click the option to display your ad as quickly as possible (don’t let Amazon spread it out evenly). Unless you’re overbidding, it’s hard to make impressions, so get as many as you can.
  • Change the month of the end date. Set the end date as far into the future as the system will let you (several months). You can end it anytime manually.
  • Choose product targeting instead of interest targeting. Check the box to include similar products.
  • Devote some time to research books (and perhaps other products, like movies) to target. Think about whether the majority of the target audience for those books (or products) is likely to be interested in your book. Browse for similar books and products on Amazon before you start working on your ad campaign so that you have ideas ready. Select a minimum of 50 books, perhaps several hundred is better, but it really depends on your book and audience.
  • Some of the books you target need to be popular enough for your ad to show enough times to make impressions. Some need to be not too popular, otherwise you’ll be consistently outbid (or you’ll be overpaying). Select several less popular books too, as there may be less competition for those ads.
  • Enter specific keywords, even key-phrases, highly relevant to your book, in order to help find more books like yours. Try a variety of keywords and phrases, but remember that relevance is key.
  • Relevance matters when targeting, not only to get the most out of your ad (you want it to sell once you get traffic), but also to prevent your ad from being stopped.
  • Bid low to begin with. You can always raise your bid later. If you do, only raise it a little at a time.
  • Don’t raisee your bid more than once in a 48-hour period (better yet, wait at least 1 week). Stats don’t show in real time, but can actually be delayed by several hours (even more than a day). Don’t let your impatience squander your money.
  • Be patient. What’s the hurry? Why pay $1 to spend your money fast, possibly with little to show for it? Let your ad run for weeks, or even months, if necessary. The most common way to lose money with AMS is to bid too high too fast.
  • Remember that there are many other authors, and their bids and targeting change over time. So if you aren’t getting many impressions now, a few weeks from now when other ads run out, you might get more. Sometimes, simply waiting out higher bidders can help you generate impressions at a lower cost.
  • Remember that you can go back and change product targeting. Try to find wiser ways to target effectively before yielding to the temptation to raise your bid.
  • Keep an eye on your ad report. You can lose a lot of money fast if you’re not careful. Out of the blue, an ad that had been going slow can start getting several clicks. If you’re spending tens of dollars, but not generating sales, stop your ad before you lose more money. Try to improve your ad before running it again.
  • Look at your short-term ROI (return on investment). Compare your royalties (the report shows sales instead; you have to figure this out) to the money spent so far. If you’re losing money (more than you wish to risk), pause the ad. You can try changing your targeting. Try bidding less. Something isn’t working, so either stop the ad or try to improve it. (Or if it’s only a small loss, maybe indirect or long-term benefits will offset this; that’s a tough decision that you have to make.)
  • If your closing rate (# of sales divided by # of clicks) times your royalty exceeds your average CPC, your ad is making money; if not, your ad is losing money short-term. Example: 100 clicks, 8 sales, royalty $2.10, average CPC is 15 cents. Divide 8 sales by 100 clicks to get 0.08. Multiply 0.08 by $2.10 to get $0.168. This exceeds the average CPC of $0.15, so this ad is yielding a short-term ROI (so any indirect or long-term benefits will be gravy).
  • Bidding much less can improve your short-term ROI. If you’re losing significant money short-term, first try lowering your bid significantly. Your impressions, clicks, and sales rates may go down, too, but your short-term ROI is likely to be better. It’s better to make a small profit at a slow rate, than to lose money at a fast rate. Only bid what you can afford to bid.
  • The alternative to lowering your bid is improved targeting (or improving your product page and Look Inside). In some cases, it may take a combination of a lower bid and improved targeting. And we know that not every book can be saved, so the same is true with ads. Sometimes, it’s just not in the cards.
  • If your CTR (clicks divided by impressions) is less than 0.05% (1 in 2000), your ad is in greater danger of being stopped due to low relevance. Try changing your product targeting. (If it does get stopped, you can start a new ad, but again you’ll want to try to improve your product targeting.)
  • If you plan on using this in the future, when designing your next cover, strive for a layout and color scheme that will catch attention even at this tiny ad thumbnail size (and still look good as a regular thumbnail and also full-size).
  • You’re not obligated to spend your whole ad campaign budget. You can pause or terminate your ad at any time.
  • Imagine you’re at a casino. If you’re having bad luck, get out fast! Walking away when you’ve lost $15 is a lot better than losing $100.
  • Don’t place ads for multiple books simultaneously, unless you can do so with significantly different targeting.
  • If you have multiple books or plan to run multiple ads, change the name of your ad campaign to help you remember which book the ad is for. The default names aren’t helpful at all.
  • Create an ad with limited, focused targeting. After getting appreciable data, stop the ad. Start a new ad with different, but still limited, focused targeting. Compare your results. You can learn a lot with brief controlled experiments like this.

Write happy, be happy. 🙂

Chris McMullen

Copyright © 2015

Chris McMullen, Author of A Detailed Guide to Self-Publishing with Amazon and Other Online Booksellers

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