SENSIBLE ADVERTISING

Authors can now advertise their Kindle Select books on Amazon.com.

But is it worth it?

The minimum KDP ad campaign budget is $100 and the minimum bid is 2 cents.

You can also advertise on Facebook, Twitter, or Goodreads.

Or you can advertise a promotion with BookBub, E-reader News Today, and a host of similar sites.

Will this be money well spent?

Or would it be better sitting in your pocket?

CONTENTS

1. Temptations
2. Advertising Goals
3. Advertising Budget
4. Short-term ROI Expectations
5. Other Considerations

1. TEMPTATIONS

If you try an ad with bidding options, you may find yourself tempted to make potentially foolish decisions.

Here’s what might happen. You might place an ad with a 2-cent bid, but when you check your reports, you might see very little activity.

So you might raise your bid to 5 cents. You might see a little more activity, but still very little.

Then you might try 10 cents.

You want to see something happen, right? This is the age of instant gratification, after all.

So the natural tendency is to keep raising the bid until something happens.

And when it finally does, you might suddenly get thousands of impressions and hundreds of clicks.

And before you realize it, your $100 is all gone.

With little to show for it.

Amazon Marketing Services is new to KDP, so thousands of KDP Select authors are playing with it. Many are bidding higher and higher just to see some activity in their reports.

Also, there may be delays, stalls, or bugs in the reporting. It may not be instant feedback.

Before you make a rash decision, you want to think this through. Try to make a wise and informed decision, with specific goals in mind.

Be patient. Especially with Amazon Marketing Services, since it’s new, if you just wait days or weeks, eventually things will settle down and a lower bid will get you more impressions for your money.

Thus, waiting may get you more bang for your buck. Remember, Amazon recommends a CPC (cost-per-click) bid of 5 cents, so in the long run, lower bids are likely to make many more impressions than they appear to be making right now.

2. ADVERTISING GOALS

The first step is to identify and rank your advertising goals.

Unfortunately, most advertisements do not pay good short-term returns when it comes to books.

So if your primary goal is to make a quick buck, advertising probably isn’t the tool you’re looking for.

You might take a sizable short-term loss when you advertise.

That’s the risk you take, with the hope that other benefits will outweigh the short-term loss.

But the short-term return is also worth figuring when weighing benefits against risks. Look later in this article for help figuring this.

Here are examples of goals that you might have with your ad campaign:

• branding your book
• exposure for a new book, series, or author
• help promote a short-term discount
• landing on a hot new release or bestseller list
• initial sales
• improved sales rank
• long-term sales, recommendations, reviews
• establishing a reader base

The hope is that if you take a short-term loss with paid advertising, there will eventually be long-term gains to make up for it.

If paid advertising always returned your initial investment, everyone would do it.

Here are some of the possible long-term benefits:

BRANDING

The ad itself is likely to create impressions. These impressions help with branding.

People who see your book multiple times over a long period are more likely to recognize it. People are more likely to buy products they feel familiar with.

Branding can lead to long-term sales, sometimes several months down the line.

SALES & RECOMMENDATIONS

Advertising tends to bring very many impressions, some clicks, and few sales.

The short-term sales may seem dismal. If so, you hope that branding makes up the difference several months later.

If you have a hot promotion going on, an ad may be somewhat more successful. But then you earn less royalty on the short-term sales.

Some authors actually pay for ads to promote freebies, often hoping to help build buzz for a new book and to generate word-of-mouth recommendations and reviews from early readers.

If your ad is successful at generating sales, long-term if not short-term, eventually those sales can add to your reader base, post reviews (only a tiny percentage though), recommend your book to others, buy more books you’ve written, follow you online and buy your next book, etc.

Every follower you add may potentially buy several of your books (but your book has to really merit this).

3. ADVERTISING BUDGET

How much can you afford to invest in advertising?

You’re obviously limited by the finances you have on-hand.

But even if you have money to invest, you should also ask yourself:

How much do you currently net in monthly royalties?

It’s a lot easier for an author earning $1000 or more per month on royalties to invest 10% of that in advertising than it is for an author earning $50 per month to part with $100.

Spending a fraction of your royalties on advertising is a reasonable investment. You have something substantial to show at the end of the month even if it’s a bust.

Spending more than your monthly royalties on advertising is risky. You might face a net loss, for all your hard work to write the book.

But you’re hoping to advance from low monthly royalties to medium or high monthly royalties, right? You’re hoping that the investment will help you move on up.

So consider my next question.

Do you have compelling reason to expect significant growth in your royalties (aside from the possible benefits of advertising)?

Will you be writing more similar books? If so, are you getting some consistent sales (even if it’s a very low frequency) with your current book?

Are you presently seeing an overall trend of growth in sales over a long period of time?

Ideally, you’d like some sort of evidence to suggest that your future royalties will help cover a possible investment today.

If not, it might be worth starting out with free marketing and publishing more books, to help build consistent sales.

Once you see evidence that future royalties may be enough to warrant your advertising expense, then you’re in a better position to try it.

But there are a few authors who really do their research (comparing similar books in the beginning), who have some marketing experience, etc., and who launch their books with a bang and have the confidence that it’s going to work out. Advertising is a risk, but if you have done your homework and you have such confidence, you must decide if you an afford this risk. The worst-case scenario is that it’s a bust. Can you afford that?

What are your book expenses?

Some authors invest a large sum of money on editing, cover design, formatting, and other publishing expenses.

(Maybe I should have written a post on $en$ible publishing expenses before writing this one…)

It’s tempting to think, “I’ve already spent several hundred dollars, so what’s another $100 on top of that?”

Well, if your book will make a $2 royalty, for example, that’s an extra 50 books that you have to sell to recover your expenses.

Especially, if it’s your first book, knowing that many stand-alone books don’t sell too many copies, that’s making an already big risk even bigger.

If you have more modest expenses, you still must factor them in when setting your advertising budget.

Your goals may factor into this, too.

Some authors invest a lot of money into their books and honestly don’t care about royalties.

A few authors actually donate their royalties to charity. A few don’t need the money, write merely as a hobby, and just want the readers, however they may come.

Most authors want or need those royalties for one reason or another, and so the financial aspect is significant to them.

But if you have unique goals, that can change your perspective on setting an advertising budget. (But at least consider things like living expenses, income, retirement, etc., i.e. make sure that you can afford to invest in advertising.)

Investing a fraction of your net monthly royalty income on advertising is reasonable.

The more consistent your monthly royalties have been and the more compelling reasons you have to expect growth, the better you can afford to invest a higher percentage of your monthly royalties.

4. SHORT-TERM ROI EXPECTATIONS

Short-term return-on-investment (ROI) can sometimes be quite low for book advertising.

For this reason, it really helps if you have other strong goals besides quick sales. You might not get any extra sales from your ad, and if you do, they might be fewer than you’re hoping.

Here are two typical numbers to be aware of:

• 0.1% ctr (click-through rate). You may average 1000 impressions per click. Some ads do better, some worse, but this is fairly common.
• 1% closing rate. You may average 100 clicks per sale. This figure can vary quite a bit, but 1% is respectable.

So if you run an ad and it creates 100,000 impressions, for example, you might get 100 clicks and 1 sale (on average).

Ideally, if you’re investing $100 or more, you’d like to create several hundred thousand impressions so that you might receive hundreds of clicks and hopefully a few sales.

The impressions and clicks help you with branding and exposure, so the hope is that these numbers will help in the long run, even if the short-term ROI is quite low.

Or, for authors running hot promotions, trying to climb onto hot new release or bestseller lists, those few extra sales, if they can get them, may make the difference.

With KDP’s ad campaign through Amazon Marketing Services, you only pay for clicks.

In this case, if you aim for a 1% closing rate (sales divided by clicks), with a $100 budget, here is how your short-term ROI relates to your average CPC (cost-per-click) bid:

• An average 2-cent bid gives an estimated ROI of 50 times your royalty.
• An average 3-cent bid gives an estimated ROI of 33 times your royalty.
• An average 4-cent bid gives an estimated ROI of 25 times your royalty.
• An average 5-cent bid gives an estimated ROI of 20 times your royalty.
• An average 10-cent bid gives an estimated ROI of 10 times your royalty.
• An average 20-cent bid gives an estimated ROI of 5 times your royalty.
• An average 50-cent bid gives an estimated ROI of 2 times your royalty.

So if your book royalty is $2, if you can achieve a 1% closing rate, you could actually break even. Not all books will achieve a 1% closing rate though.

Amazon’s recommended CPC bid is 5 cents. If your average bid is 5 cents, you earn a royalty of $2, and you achieve a 1% closing rate, your estimated short-term ROI would be about $40. That’s a $60 short-term loss, with potential long-term gains. If your ad runs its full course and you get all 2000 clicks, you might make a couple hundred thousand impressions, which may help with branding.

If you earn a higher royalty, like $3 or $4 per book, this allows you to bid somewhat higher, or you can go with the recommended bid with higher hopes for returns.

Especially, if your book normally sells on its own. If not, you’re probably less likely to see that 1% closing rate. Advertising probably isn’t the answer to, “Why isn’t my book selling?”

If you can achieve a higher closing rate, like 3% to 5%, this nets you a higher short-term ROI, or you can afford to bid more. But you won’t know what your average closing rate is until you’ve run ads and have received several hundred clicks. If you get a lower closing rate, like 0.1% to 0.5%, this will give you a much lower short-term ROI.

Bidding higher will probably help your ad make impressions faster and get clicks faster, which means that your ad will be over sooner. You also get fewer clicks overall with higher bids, which means a much lower short-term ROI.

If you have a hot short-term promotion to advertise, it might be worth bidding high enough to make all of your impressions while your book is on sale. But remember, you get fewer clicks and a much lower short-term ROI by doing so. More of your hope is on long-term dividends.

If you earn a small royalty, like 34 or 70 cents, your ROI is much less. Your ad is much more likely to have a dismal short-term ROI. But if you succeed in getting many extra sales, albeit at lower royalties, there could be some long-term benefit. Your lower price won’t necessarily net you significantly more sales, though. You really need to supplement freebies and Countdown Deals by free marketing (e.g. relevant bloggers helping to spread the word) or other directed paid marketing (like BookBub and E-reader News Today) to get the most out of a free or sale price. In this case, a KDP ad campaign should just be one of your promotional strategies.

High bids, like 20 cents and up, are very risky. These eat up your clicks faster and pay much smaller ROI’s. You really need a compelling reason to take this large short-term loss. Maybe if you have a large following, the next book in your series has good prospects of hitting the hot new release or bestseller lists, and you want to go all out for every last sale in case it makes the difference.

5. OTHER CONSIDERATIONS

There are many factors involved in advertising, including:

• more books: The more similar books you have, the more potential benefit there is. Customers might buy more than one book.
• current sales: Books that sell on their own are more likely to benefit from advertising. Spending money on ads isn’t likely the magic cure.
• reviews: Do you have enough to attract readers and to minimize the risk from one bad review?
• targeting: Advertising tends to be more effective when you reach your specific target audience. On the other hand, if your targeting is too narrow, you might not make a significant number of impressions. It pays to do some research.
• cover: A cover that clearly signifies the genre and attracts your specific target audience (even in the tiny ad thumbnail) has a distinct advantage.
• product page: The better your blurb and Look Inside, the better impact these will have on your closing rate.

Monitor your ad. You can pause your ad if things aren’t progressing as desired. You can even terminate your ad, if necessary. If you’re not happy with the results, try editing your ad (though not every option may be editable).

Keep an eye on your product page and on your ad stats. You might see the money vanishing rapidly without results to show for it, for example. If you catch this early on, you can at least try changing your ad up or pausing it, rather than just let your entire budget run its course.

SICK OF AD ARTICLES YET?

I’ve been fascinated with this new option to advertise KDP Select books with Amazon Marketing Services, and so I’ve now written several articles on the subject.

You’re probably sick of reading about it on my blog.

Well, don’t worry.

I have some different topics coming up. 🙂

Though eventually when I have a good statistical sample of data, I’ll probably report it. It will be a while before that day comes, however.

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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