AMS adverts – an analysis

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I’ve been experimenting with AMS (Amazon Marketing Services) ads. There are two types of ads available: Sponsored Product and Product Display.

I selected Sponsored Product ads. These allow for Automatic or Manual targeting (by means of keywords).

Using Manual targeting, I entered as many keywords as I could think of that I could link with my book (The Black Orchestra, selling price $4.99).

I created the text for my ad and set the daily spending limit at $25. At this stage, the bid price for each keyword was set at the default $0.25.

I selected the most likely keywords and increased the bid, using various values: $0.31, $0.35, $0.41, $0.46, $0.51, etc. depending on the strength of the fit.

Here are some of the keywords that turned out to be productive for my book:

  • Espionage and spy thrillers 16.03%
  • Ben pastor 10.06%
  • Daniel Silva 47.09%
  • Joseph Kanon 20.42%
  • Spy thrillers 19.24%
  • WW2 historical fiction 35.12%

The percentage figures show the Actual Cost of Sales (ACoS) for each keyword. 68% represents breakeven for eBook sales. Anything less than that represents a profit. The overall ACoS for this ad is currently 38%: For every $100 of gross income, (for eBooks) the corresponding cost of the ad is $38.

At the time of writing, the ad had been running for 33 days. It had created 717,863 impressions at a cost of $12 per day. The gross sales figure for the period was $1,000 (that’s Amazon’s income). My royalty from that is 68% = $21 per day. So my profit works out at $9 per day ($21 – $12).

Consider the royalty per book, though. The ad cost is 38% of the selling price, which comes off the Amazon royalty of 68%, leaving a net royalty of 30%.

30% of $4.99 is $1.50. Which doesn’t compare very favorably with the usual royalty per eBook of (68%) $3.39.

There are other considerations, of course:

  • I have gained 200 new readers, many of whom will buy and read my other books
  • There’s another halo effect, producing additional KU activity
  • I have seen an increase in POD sales as well. In fact the analysis above is tainted by these sales, since the gross income figure includes POD sales, and therefore the actual number of eBooks sold is lower than 200. See below*

Note that, unlike FaceBook ads, these AMS ads charge per click, not per impression. This makes a huge difference. AMS ads that produce no clicks cost nothing, so those impressions are free publicity for my ‘brand’. Even the AMS ads that produce low numbers of click without sales have value as low cost ‘brand exposure’.

AMS ads have another big advantage over FaceBook ads: They target readers directly at a time when they are browsing the Amazon book catalog, looking to buy a book. Not only that, but, with carefully chosen keywords, your ad targets readers by genre, pretty much guaranteeing a good return on investment.

Those of you who are still awake will have spotted that the ad is costing me $12 per day, although I specified a maximum of $25 per day. Getting Amazon to spend your budget can be a problem. Another problem is a time lag between spend and resultant sales.

*POD sales: Dividing $1,000 gross sales by the selling price of the eBook gives me sales of 200 eBooks, and a profit of $300. But, given that my paperback sales are usually about 10% of my total sales, I can work out the probable breakdown of my sales figures:

eBooks 153, POD 17.

The Black Orchestra paperback sells at $14.99 with a royalty of $4.26. That’s 28%. So, for paperback sales, derived from these AMS ads, at 38% ACoS, I am losing 10% (i.e. $1.50) on every POD sale. And my profit on the combination is $1.50 x 153 – $1.50 x 17 = $204.

Are you using AMS ads? Are they working for you? Let me know in the comments.

 

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