Success with Amazon Ads: Analyzing CTR vs CVR
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Welcome to the Author’s Mindset Podcast. I’m Dan Padavona, your partner on this amazing journey to becoming a successful author. If you haven’t already, please click the Subscribe button so you receive all my tips and motivation. And while you’re at it, head over to my website at DanPadavona.com and click on my Advice for Authors blog for my latest tips and tricks and new techniques I’m using to advertise my author brand and generate higher earnings in my writing career. Once again, that’s Dan Padavona.com.
First off, Happy Holidays and well wishes to you and your family. I hope that however you spent the holidays, you spent it with your close loved ones, your family, your friends, and you had an opportunity to recharge and reconnect and just enjoy the get togethers which the holidays are so special for.
But since it is the day after Christmas, we have to ask the question, Did you let your goals go by the wayside? I know that this time of year, we want to spend time with our families, and that is our priority. It’s easy to let go of your habits or develop bad habits. I’ll tell you for sure I ate far too many cookies on Christmas Eve and on Christmas Day. So yeah, your diet probably took a hit over the Christmas holiday. But you know, professionally, maybe you fell behind on your writing. I took a day off. I wanted to spend the day with my family. So I wrote a little bit extra on Christmas Eve day so that I was ahead of schedule heading into Christmas Day, and I could get by with a day off and still meet all of my publishing goals.
So the question which you may be asking now is, how do I get back on track? What strategy should you employ heading into this next week? Should you write more to catch up? And my advice on that is you don’t need to. This is a personal choice. If you want to knock out more words this week to make up for lost ground, feel free. But don’t push yourself so much that you are going to get overwhelmed. The best thing you can do is jump back into your positive habits and simply move forward.
Another thing which may be on your mind is, Wow, the sales numbers are usually pretty meager on December 24, and 25th. Unless you have a new release or you’re running some type of promotion, these can be difficult days to check your numbers. You’re probably better off just hanging out with your family and not paying attention to Amazon KDP’s dashboard or your Book Report or whatever. Christmas Eve and Christmas Day are both low value sales days. So don’t panic. My records show a big rebound on the day after Christmas, which is today as I’m recording this. And that especially takes place once we get past dinnertime. So hang in there. If you had a rough couple of days selling your books, if your page reads are way down, don’t worry about it. People were spending time together and they weren’t doing a lot of reading or book buying. They’ll get back into it. And this tends to be the big ramp up between December 26 and the new year. Why is that? Is there a reason for it? Sure. There is a lot of people bought new Kindles. Maybe they got them for Christmas. And now they’re looking for new books to read. So hang in there. We are through the worst of the low volume sales days, and good times are ahead.
Especially if you have a new release coming out as I do tonight. Yes, my new book, Grave Girl – the first book in the Thomas Shepherd mystery series – hits Amazon at midnight PST tonight, and I can’t wait. I just love having a new book to share with my readers. And of course, to have the calendar working in my favor just makes things so much better.
On the last episode of The Author’s Mindset podcast, I gave you a preview of a study, which I recently conducted on CTR versus CVR. And what are we talking about? We’re talking about click through rates versus conversion rates in Amazon AMS advertising. This is a study which is based on a smaller study I did a few years back. And the data came out a lot differently this time around. And I think it’s very important that I share this with you. Word of warning word or advice. If you’re kind of a math phobe – I used to be when I was younger, I’m really into statistics and mathematics now – I’m not going to get too deep into the math. I’m just going to tell you about the conclusions, which I drew from this study.
Why is any of this important? The assumption is CTR success or failure will predict your CVR results. In other words, if you are having a high degree of success with your click through rate, in other words, a lot of people who see your ads impressions are clicking on your ad clicks (we obviously get a lot more data from impressions). This is something which would help us, wouldn’t it? If you want to decide ahead of time to bid up or bid down on a key key phrase, you could use CTR to predict where CVR is going to be for you. Now, if you have a click for 100 impressions, that means that you have a very high CTR. And obviously, you have 100 times the amount of data from your impressions than you do from your clicks. In many cases, you’ll have 1000 or more impressions, or even more than that per click. As you get too high per click, now you’re starting to get into an area which you don’t want to be. Your CTR is too low. And that could get you into trouble with AMS ads.
We’ll we’ll discuss a little bit more about that as we head into the conclusions. But the important thing is, there is so much more data when you’re looking at click through rate than there is at conversion rates, that it would be wonderful if we could draw these conclusions very early in the study so we don’t waste money on wasted clicks. Back on September the 22nd in 2020, I ran a study of data based on my Darkwater Cove series. I broke down click through rate and conversion rate into four quadrants, and I found that click through rate was very predictive in that small data set on conversion rate. And therefore, I had encouraged everybody to look a lot more closely at click through rate than they do at conversion rate. I got some pushback from other authors on that, although there are two very fine books, which I’m going to mention very shortly, which completely agree that we should all begin with CTR and that CTR will inform future CVR.
Now, I didn’t have enough data in that study. As the months and years passed, I noticed several times on my dashboard instances where CTR was very poor, but conversion rate was quite high, making it a very profitable keyword. And I’ve seen the exact opposite too many times to look away, where CTR was fantastic in some cases, like 5% or 10%. I mean, it’s almost unheard of. And yet, those clicks almost never converted into orders.
I decided, the only way to find out was to conduct a new study and this time ensure I had a lot more data to work with. I went through every advertisement campaign that I ran through AMS since I joined back in I think, 2017, or 2018. I took all that data, and focused on keywords or key phrases, which received 200 or more clicks. That’s a lot of clicks. I know people who struggle just to get 200 clicks total in a campaign. But I had 53 different key phrases spread across multiple years and multiple campaigns. This was a good data set to work off. But I will say ahead of time, this was all based on my data. Your mileage may vary. You want to look at your own numbers if you want to draw a conclusion about CTR and CVR. But I’m pretty confident in the numbers which I came up with, and the amount of clicks and impressions which I had to work off of the scatterplot for this study is available on my website. I got into regression analysis when I went back to school for meteorology many decades ago.
Just to put it into layman’s terms, which is about as well as I understand it, regression analysis mathematically identifies correlation and the impact, or lack thereof, of variables on a result. In this case, I’m trying to determine how much impact or correlation CTR has on CVR. The scatterplot shows there is almost no slope to the line at all. It just looks like a random pattern of dots. And when you see something like this, it visually tells you there’s almost no correlation at all to work off of. The R-squared was 0.0007. That tells me no correlation. There is basically little or no impact of CTR on CVR. For my dataset, based on this knowledge, should we just toss out CTR? I know successful authors who don’t even look at CTR; all that matters to them is CVR. If I’m getting a strong conversion rate on my key phrases (in other words, those clicks are leading to orders), why should I care what the CTR says?
Well, Robert Ryan wrote an excellent book, the best book on AMS ads, and it is called Amazon Ads Unleashed. He stated in his book that he believes CTR determines how often Amazon shows our ads and what our cost per click actually is. And if you read the guidance in AMS, it bears out everything that Robert Ryan says. Another excellent book was written by Janet Margot. Now Janet Margot, and her last name is spelled M-A-R-G-O-T in case you go looking for her in Amazon – and I I highly encourage that you do so if you’ve not read her book yet – spent over eight years working in Amazon advertising with a focus on author’s book sales. So she knows from firsthand experience from actually working behind the scenes that yes, AMS uses CTR, in its bidding auction. and a high CTR can actually win an auction despite a lower bid. So this is very important in that you can lower your cost per click and get your ad shown more often. If you have a very high CTR.
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