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KDP AD CAMPAIGN
Amazon recently launched a new tool for KDP Select authors.
- Find it on your KDP Bookshelf.
- Look under the KDP Select column.
- Click the Promote and Advertise link.
- Click the Create an Ad Campaign button.
Advertising is a risk. You want to monitor your ad campaign at Kindle Direct Publishing.
And you want to know how to assess your risk. I’ll show you what, exactly, to look for.
There is a $100 minimum budget for the ad campaign and you must bid at least 2 cents.
However, once your campaign is up and running, you can click Pause or Terminate if you’re not happy with the results.
(What about the $100 minimum? Good question! They don’t bill you up front. They bill you incrementally as you get clicks. I don’t see how that $100 will get charged if you terminate the ad early, though if this concerns you, perhaps you should contact KDP support before you begin an ad.)
ASSESSING YOUR AMAZON AD CAMPAIGN
If you place an ad, you’ll want to monitor its progress.
IMPRESSIONS
Unless you choose to target your ad based on a small number of similar books, you’ll probably see impressions not too many hours after your ad begins.
That’s kind of cool.
Until you see hundreds of impressions, but no clicks.
But don’t worry. Impressions are free! You only pay for clicks. If I could have 1,000,000 free impressions right now, with zero clicks, I’d take it. Don’t sweat free exposure. Impressions are good.
CLICKS
Then you’ll notice that you’re getting very few clicks from those impressions.
Don’t sweat a tiny percentage of clicks.
You don’t pay for impressions.
You only pay for clicks.
The fewer clicks, the less money you pay.
More impressions per click actually works in your favor. That many more people saw your book without you having to pay extra.
The click-through rate (ctr) may be about 0.1%. That’s 1 click for every 1000 impressions. It varies from book to book, but it’s typical of advertising on the internet to get a ctr of about 0.1%.
Most businesses sweat the ctr because most businesses pay for impressions, not for clicks.
We don’t have to sweat the ctr because we only pay for clicks.
SALES
The number you should sweat is the conversion rate.
Take the # of sales and divide by the # of clicks. That’s your conversion rate.
The conversion rate shows you how well your ad is paying off in the short term.
Sales reporting may be delayed compared to impression and click reporting. So when you look at your ad campaign report, you may have sales on there that you don’t know about.
Also, a customer may click on your ad, but might not buy your book until a later date. The customer was busy doing something else when your ad came along. There is a good chance that the customer will add your book to your cart, if the customer wants to buy it, but wait days or weeks to actually make the purchase.
If the customer buys your book within 14 days of clicking on your ad, the sale will show in your ad campaign report. Thus, sales reporting could be delayed up to 2 weeks.
Multiply your conversion rate by your royalty. Let’s call this Z.
- If Z is less than your average cost-per-click (CPC), then you’re losing money short-term.
- If Z is greater than your CPC, then your ad is paying off short-term.
Your ad might not pay off short-term.
But that may be okay.
The question is: How close are you to breaking even short-term?
- A small short-term loss is likely to be rewarded by long-term gains.
- If you’re taking a large short-term loss, it may be in your best interest to pause or terminate the campaign.
And what about Kindle Unlimited? Suppose the customer clicks on your ad and reads it through Kindle Unlimited? Will that show up as a “sale” in the ad report? That’s a good question. Unfortunately, at this time, I don’t have the answer. But it’s something to keep in mind.
EXAMPLE
Suppose that you have:
- $2.99 list price
- $2 royalty
- 2-cent bid
- 300,000 impressions
- 300 clicks
- 3 sales
The impressions look great. But just 300 clicks out of 300,000 impressions may freak you out at first. But that’s typical. Remember, impressions are free, it’s the clicks that you pay for. The more impressions, the merrier.
Your conversion rate is the number of sales divided by the number of clicks: 3 sales divided by 300 clicks equals 0.01. Your conversion rate is 0.01 (or 1%).
The quantity I called Z is the conversion rate times your royalty: Z equals 0.01 times $2. In this example, Z equals 2 cents.
Hey, Z equals your bid.
That’s ideal!
Look, it cost you $6 for those 300 clicks. To make 300,000 impressions for a mere $6 would be a great deal.
But you only made 3 sales. However, those 3 sales earned you a royalty of $6.
You broke even. Your 3 extra sales compensated for your investment.
That’s actually very good. If you can break even short-term, it’s worth it for the long-term benefits.
Even a small short-term loss is worth taking for long-term benefits.
Don’t worry about a small ctr (i.e. very few clicks compared to impressions).
Don’t worry if sales are low, as long as your value of Z is comparable to your bid.
If your bid (CPC) is much larger than Z, then you should worry!
POSSIBLE LONG-TERM BENEFITS
Here’s why it might be worth taking a short-term loss to run an ad campaign at Amazon.
These are some possible long-term benefits:
- If you generate extra sales through the Amazon ad, if any of those customers enjoy your book enough to recommend it to others, this gives you possible long-term sales growth.
- One extra sale now might result in many extra sales later, if the customer likes your book enough to want to buy more of your books.
- A customer who clicks on your ad, but who was busy doing something else at the time, may place your book in the shopping cart and check it out days or weeks later.
- Customers who saw your ad may recognize your book the next time they see it, and, thinking, “I’ve seen this before,” may be more likely to buy your book through branding.
- Any extra sales can help improve your sales rank, which can help with exposure in many ways, such as customers-also-bought lists, improved visibility in search results, landing on bestseller lists, etc.
IMPROVING YOUR CHANCES
Following are some factors that go into whether or not your ad will come close to breaking even.
LOWER BID
Just bid 2 cents. What’s wrong with that?
If you pay $100 for 2-cent bids, you’ll get 5000 bids if you spend the entire $100 over the course of the campaign.
If you bid higher, you get fewer clicks and fewer impressions.
Don’t bid higher unless there is some urgency with enough benefit to offset the cost. If you really need to advertise RIGHT NOW for some compelling reason, you might bid more.
Otherwise, what’s the hurry to spend your money?
Whether you spend $100 in 2 weeks or 2 months, it’s still $100 spent, right? My recommendation is to bid 2 cents.
Just take whatever clicks and impressions you’re getting, and be content with that.
Focus on Z and comparing Z to your CPC. If Z is close to your CPC, be happy.
If you raise your bid, it will be harder for Z to compete with your CPC.
HIGHER ROYALTY
A higher royalty means you don’t need as many sales for Z to match your CPC.
If you’re earning 34 cents per book with a 99-cent list price, you need 1 out of 17 clicks to result in a sale just to break even on a 2-cent bid.
If you’re earning $2 per book with a $2.99 list price, you just need 1 out of 100 clicks to result in a sale in order to break even on a 2-cent bid.
The list price does show in the ad. So more customers are likely to click on the ad if the price is more compelling.
But that’s actually not important here.
Why not? That just spends your ad money faster. It’s not how fast you get your clicks that matters. You pay for those clicks whether they come quickly or slowly.
What matters are (A) how likely the customer is to buy the book after clicking and (B) how much royalty you earn for the sale.
Maybe customers are, in general, more likely to buy a 99-cent book than a $2.99 book. But probably not in this case. Remember, they see the price before clicking on the ad. They’ve already factored in the price.
You may get your clicks faster at 99 cents, but that just means that your campaign will end sooner. It doesn’t matter how fast you get your clicks. (Unless you have major URGENCY with benefits that outweigh the added cost.)
COMPELLING PRODUCT PAGE
This is where the $$$ is whether you’re advertising or not.
People are visiting your product page.
One thing running an ad campaign will show you is that only 1 out of 1000 people who glance at your book will check it out, and only 1 out of 100 people who visit the product page will purchase it.
Well, it could be 1 out of 50 who visit your product page make the purchase, or it could be 1 out of 5000 who make the purchase.
The conversion rate is something that you can impact:
- Did the cover and title shown in your ad signify the correct genre? If not, your conversion rate will be awful.
- Does your blurb wow the customer? If yes, they’re looking inside. If not, they’re outta here. Typo in the beginning of the blurb? Facepalm!
- Does the Look Inside magnetize the customer to read the beginning? Does the beginning grab the customer and make the customer want more? Or does it bore the customer, or deliver something that wasn’t expected?
- Does the Look Inside appear professional?
- Is your book a great value? Does it appear to exceed the customer’s expectations?
- Was the book good enough to generate some good, honest reviews? (This is NOT the MAIN point.)
If you have a low conversion rate (sales divided by clicks), one of these areas can be improved.
If you improve your product page and run another ad in the future (or pause it now and resume it after making the improvement), you’ll be able to compare conversion rates and see whether or not the change appears to have any impact. One great thing about these ads is that we get valuable DATA.
One great thing about investing a little money in a KDP campaign ad is that you can find out what your conversion rate is. A rate of 1% is fairly common. If your conversion rate (sales divided by clicks) is much lower than 1%, it may be a sign that you need a more marketable book or a more marketable product page. There is something to improve. Once you make a change, you can run another ad to measure your conversion rate again. This way, ads can help you perfect the marketability of your book and product page.
ABOUT THE AD
The ad is automatic. It includes:
- your cover thumbnail
- the first few words of your title
- the average star rating (shown visually, like ****)
- the number of reviews
- the list price
A compelling ad gets you clicks faster, but you’re going to pay the same amount regardless of how fast you get your clicks. Your ad will just run out sooner if you get the clicks faster.
Yet it’s still worthwhile to make a compelling ad:
- If your thumbnail is more attractive to your target audience, that will help your conversion rate once they reach your product page.
- The more effective your ad, the better the branding impact your unclicked impressions will make.
However, the ad is pretty small. See this example:
It’s just a couple hundred pixels across.
To really stand out and aid with branding so that you benefit from all those unclicked impressions, you need:
- a cover that’s still visually attractive at super small thumbnail size
- a cover with a very simple, yet effective design
- a color scheme that sends the right message
- 2 HUGE words in your title so they can be read even in mini-mini size
- a short title so that part of it doesn’t get cut off
- enough good reviews (getting reviews is NOT the MAIN thing)
Another important factor is targeting. If you choose product targeting and research your product list well, this can improve the effectiveness of your ad.
Chris McMullen
Copyright © 2015
Chris McMullen, Author of A Detailed Guide to Self-Publishing with Amazon and Other Online Booksellers
- Volume 1 on formatting and publishing
- Volume 2 on marketability and marketing
- 4-in-1 Boxed set includes both volumes and more
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