AMS SP Ads for Authors in Germany and UK

As of sometime yesterday or this morning Amazon announced that authors can now access Sponsored Product ads in the UK and Germany. I’ve been running ads in the UK using an Amazon Advantage account which has a few more options than this, but it’s still a nice development for those authors who hadn’t managed to set up an Advantage account.

Keep in mind that each market is different and they’re going to respond to different bids and different keywords than the U.S. market. Think spelling differences, for example.

Also, in both accounts I had to fix my payment information. They had my credit card on file but I had to provide my address and legal name before I could run an ad. For those not in the EU, I just skipped the VAT field and checkbox at the bottom.

And in the German version it originally came up in German. Click on the top right corner dropdown just like you would for .com to change the language to English.

I’m not sure of the reporting delays in those markets. I had a German sale today that is probably from my AMS ad that I started there this morning but when I checked the dashboard it wasn’t even showing impressions yet let alone a sale.

As with everything this is good and bad. For those of us already advertising in the UK it’s going to hurt some. But it also levels the playing field a bit more which I think Amazon needs to do more of.

Also, those who are willing to poke around and figure things out on their own will do better initially as they get up and running first, but that’ll level out as information percolates down.

Expect click costs to go up over the next couple months. If you don’t stay on top of that expect impressions to drop significantly as more people enter the market.

Enjoy.

 

Some Random Advertising Thoughts

Once a month I load all my sales reports into an Access database and then proceed to generate a bunch of different reports and graphs to see where I am. For me that’s as fun as the writing so it’s never something I have to force myself to do, but I do think some sort of analysis is important to anyone working to run a writing business. (As opposed to just writing books and seeing what happens.)

So a few thoughts from the most recent analysis.

One of the metrics I was looking at this time around was the percent of revenues that was spent on ads for each series.

So let’s say I have a series that earned $10,000. And I spent $3,000 to make that amount. Then my ad spend would be 30%. That to me is an acceptable cost of doing business.

But I had a few that were higher than that. When that happens I think it’s important to dig in deeper and ask why, because understanding that why is going to drive what needs to happen to fix it.

In one case, it’s increased competition which means I can either hang in there and take the additional costs and know I’ll earn less on each sale of that series or I can step back and let the big spenders take part of my share of that market. Which way I choose to go will depend on how committed I am to that series and how committed I think those competitors are to entering that market.

In another case though, it’s because the series simply isn’t developed enough yet. The more books that readers can go to after an initial purchase, the more effective the ad spend.

For example, if I spend 75 cents to make $1 on the sale of a book and that book is all I have then my ad cost is 75% of the money I receive, which is higher than I ideally want. (If I could scale that sufficiently it’s doable, but the question is how much you can scale.)

But if I spend that same 75 cents and make $1 on that book sale plus $2 on two other book sales then my ad cost for the same ad spend and same initial transaction is only 15%. Much better.

Which means that often what seems like “I should abandon this and move on because I can’t make money at this” is actually “I need to write more books in this series so I can properly recoup my ad costs.”

Of course, there’s another option which is that something is off about the book that needs to be fixed to make it sell better.

Let me give a concrete example. I published a cookbook a while back and being too clever for my own good I called it “You Can’t Eat the Pretty” because it wasn’t about fancy cooking it was about cooking for yourself without burning down your kitchen.

But advertising that book was like pulling teeth. Every sale was a struggle. I thought the cover was good. I thought the content was good. But it barely broke even. Ad cost was probably 90% of money received.

So I changed the title. It’s now called “Quick & Easy Cooking for One”. I made one edit to one line of text in the introduction and changed the title but kept everything else the same. This year ad cost is 26% of money received.

That’s not the only time I’ve retitled a book and seen significant improvement in sales.

It isn’t always going to be the title. It could be price. It could be the cover. It could be the blurb. It could be the category. It could be who you’re advertising to. All of those deserve a hard look if you’re spending too much to sell your book.

And then you have to decide if you’re willing to make that change. Sometimes you won’t be. My YA fantasy books are currently at $7.99 each in ebook. I could probably sell more at a lower price point, but I’m okay with where they are at the moment. I can drop those prices when I finally release a new book under that name.

The key I think is to make these choices deliberately instead of just letting things ride and hoping for the best. Especially as we enter a maturing market.

I saw a flare up recently of “oh Amazon hates us and pits us against each other” when in reality it’s just that this is a maturing industry. Ironically we are trending back towards publishing houses even on the indie side. Because that’s an effective model for running a publishing business. And people are going to be less open about what works because there’s enough supply now to meet demand and we are in fact competing with one another for customer attention and customer funds.

Which leads me to another discussion that recently happened on one of the author forums that I wanted to address here.

Someone shared AMS numbers where their ad dashboard showed let’s say $90K in sales and $45K in ad spend. And someone else on that board somehow extrapolated that spend to the person running their business with a 90% ad cost, which was horribly inaccurate.

I wanted to walk through why that is. So let’s talk about what happens when you advertise.

One, your product is seen by new people. Someone becomes aware of your product even if they don’t buy it right then. That means an ad today results in a purchase a year from now.

Two, there’s direct sales. So in the case of AMS and how those are reported a $5 ebook sale means $3.50 received and $5 in sales showing on the ad dashboard.

Three, there’s follow-on sales. So if you run an ad on book 1 then (hopefully) a certain number of people will either immediately or eventually go on to buy other books from you. The more other books you have that are related to that first book and the more people like that first book, the more you will earn in follow-on sales. This is key. It’s what determines the winners from the losers probably 95% of the time.

Four, there’s another form of increased visibility if as a result of your ads your books do well enough to make a top 100 list somewhere or to be recommended by Amazon in one of their emails. These aren’t direct sales that will be reported on your AMS dashboard nor are they likely to be seen during a promotional period, but they are sales that resulted from that ad.

Five, specific to books advertised via AMS that are in KU, there’s the fact that the dashboard doesn’t show KU borrow revenue so each sale that’s seen on the dashboard can represent much more revenue. For example, my romance books tend to be 75% borrow revenue when they’re in KU.

So let’s work through this a little.

Say I pay $2.50 to get that first sale that’s worth $3.50 to me. That looks on the surface like I spent 71% of the money I received on advertising.

But if that book is in KU and 75% of its revenue comes from borrows then that $3.50 on the dashboard may represent $14 in revenue. In that case, then only 18% of money received was spent on ads.

What if the book isn’t in KU but is part of a five book series? And what if one purchase of book 1 means an additional $7.50 earned on sales of the other books in the series? Then in that case the ad spend is only 23% of money received.

Someone who looks at AMS dashboard numbers and doesn’t understand the impact of KU borrow revenue or follow-on sales is going to significantly overestimate the cost of those AMS ads to the user. Not to mention the visibility-driven sales which are almost impossible to quantify.

Which brings me back to the need to look at your numbers on a regular basis.

I look at total money received (which I call revenue for my purposes but technically isn’t since all the platforms take their cut before they send me a check) versus ad costs for each period for each title. I also do that by series and author because sometimes a loss leader first-in-series title can look horrible on its own even though it’s driving great sales for a series.

I also look at total profit and loss for each title, series, and author which incorporates cover cost, editing, etc. And I take that profit and loss number and calculate per hour and per word rates as well. (And when I get really bored I do a per hour or per word rate per day since the book was released since the longer a title is out the higher the total per hour and per word rate should be so you have to find a way to account for that difference between a title released this year and one released five years ago.)

But you can’t stop there. You have to put business knowledge on top of all of that. You have to ask why the difference between different titles. What can look bad today may actually be trending well. And what looks good today may not continue to look so good long-term. So you have to interpret the numbers properly.

You do all that and then you hope for the best.

There are no certain answers in this business (or in any business really.). All you can do is reassess after a bit, adjust, move forward again, and hope for improvement each time. If that happens, eventually you’ll get there.

More AMS Changes Coming

It never fails that I publish a book on AMS and then Amazon makes changes to how the ads work or, in this case, the navigation options. So for those of you who might have noticed a little note at the top of your AMS dashboard today that said changes were coming but that didn’t know how to find the Amazon Advertising blog, because who wants to provide a link for that sort of thing.

Here you go.

Short version: They appear to be moving all of the options at the top of the screen to the left-hand side of the screen.

Easy AMS Ads 2019 Edition

I hadn’t intended to update Easy AMS Ads because the pace of change with respect to AMS last year was so fast and furious it seemed like an impossible task to keep the book updated. But things hit a critical mass this month and I decided I either needed to update the book or unpublish it entirely because so much has changed with AMS in the last twelve months.

And since I’d just published the last cozy and needed a project before I started the next one, I figured why not go ahead and update the book.

So…

Easy AMS Ads – 2019 Edition is now live in ebook format and will soon be live in print as well. This one has some pictures in it and is also about 50% longer than the first edition which may give you some idea of just how much things have changed.

For those who read the first edition I’d say the information on portfolios, reports, and the new bidding options still make this one worth checking out if you haven’t already dug into those on your own yet.

Easy AMS Ads 2nd Ed V5

 

AMS and Pricing And Experiments

About a month ago I decided to take my romance novels out of Kindle Unlimited. Not because I necessarily expected them to sell on the other platforms, but because I just grow sour on KU and how it operates at times and I think there’s a growing schism in self-publishing land that somewhat revolves around KU and I’d rather be on the “people pay for my books specifically instead of borrowing them because what the hell” side of things.

(No judgement here on anyone who chooses or feels differently and not saying that there aren’t authors in KU who have name recognition and a loyal fan base, there definitely are. If you’re making money at this, go you.)

Anyway.

One of the things I try to do when I advertise a book that isn’t in KU is to also only target books that aren’t in KU. I do this because I think it cuts down on the number of clicks without buys that my ad gets because I’m not attracting buyers who are looking for a title to borrow.

When I was going through the list of authors who’ve been good targets for AMS ads on that first romance novel, I noticed that many of those authors were priced at $6.99 in ebook. My price on that novel at the time was $4.99.

Now, if you were to go to any of the author forums and suggest that you wanted to list your romance title for sale at $6.99 as a self-published author, you’d be laughed out of the building. Who on earth is going to buy a self-published romance novel at $6.99 when they can buy a box set of twenty romance novels for 99 cents? The market just doesn’t support that. Maybe you can get away with $4.99, but $6.99? No.

Well…

It turns out there are some readers out there who will buy a self-published novel at $6.99. And that I can still run successful AMS ads on a romance novel that’s not in KU at that price point.

I’m not burning up the charts by any means, but the outcome I’m seeing is pretty much the same as when this novel was in KU and priced at $4.99. In the 30 days before I pulled the novel it had 13 paid sales at $4.99 and 21,000 page reads. (Keep in mind this is a novel that’s been out for over four years and where I only have two titles out under that name and the last novel was published two years ago.)

In the 30 days after I pulled the novel it’s had 28 sales at $6.99.

The only problem is that the ad doesn’t result in borrows/buys as often as when it was in KU at a lower price, so I’m not sure the ad will continue to run. AMS likes success and if you fail to hit that level that it deems successful, you get shut down.

I do think, though, that this highlights an important issue to think about with respect to AMS. There are a number of moving parts to running an AMS ad. One is how much per click you have to bid to have your ad shown, another is how much you have to pay for clicks on your ad, another is how many clicks to a purchase or borrow, and another is how much you make on a purchase or borrow of your book.

All four of those factors come into play in determining whether you can successfully run AMS ads long-term. It’s easy to bid really high and get visibility on a title. You might even get sales. But if you’re paying $1 per click and it takes 5 clicks to a sale and you only earn $2 on that sale, you’re very nicely losing yourself $3 per sale of your book. If you instead make $5 on that sale, you’re at least breaking even.

It seems counter-intuitive, but sometimes raising prices makes your ads more profitable. At each price point there is very likely a differing number of clicks that will lead to a sale and if you can find that sweet spot where the number of clicks needed is smaller relative to the income from a sale, you can increase profitability even if sales or the number of readers go down slightly.

Of course, you have to back that up with a good product, too, or long-term a poor customer experience will take you down. But that’s a whole other discussion…

I should also add here that when I looked at prices for fantasy novels that the price point I was seeing a lot of was $9.99, but I just couldn’t bring myself to try it, so even I have my psychological stopping points when it comes to pricing ebooks. (I put those books to $7.99 again because they actually do alright there and that is yet another pen name I am not actively adding to at the moment. Sigh.)

Big AMS Changes Ahead

In case you hadn’t logged into your AMS account yet today, it’s changed. Finally authors who access AMS through their KDP dashboard have the same metrics and display options as those who access AMS through an Advantage account.

This means you can see ad spend and sales for a period of time and not just the lifetime of an ad. (As someone who runs ads for years at a time I have to say this is a very very nice feature to have. Who knew I was up to almost 40 million impressions across all my ads? Not me.)

Also, if you ignored all my advice and focused on Product Display ads, those can no longer be created as of today and existing ones will disappear as of February 5th. (They’re being replaced with Locksreen ads which are one of the places that PD ads used to display. So looks like no more of that box right under the buy option on a book’s product page, at least not using that ad type.)

You can also now use product targeting with your Sponsored Product ads.

There’s a nice summary of the changes available here. (The link should also be available in your AMS account when you go in. Don’t be shocked when you see the new display. It may take some getting used to if you haven’t seen it yet.)

Anyway. Another day, another change.

I will say this makes the AMS video course and book less relevant. I’ll leave them up, but a lot of the mechanics section of both have now become largely outdated. I have no plans to update either one at this point.

Why Price Competition is Dangerous

The initial title for this post was going to be “Why Being an Asshole is a Poor Long-Term Strategy”, but I figured people might take offense at that for something they probably just consider good business.

Plus, my father wasn’t an asshole and I’m going to use him as an example here.

So…

Back in the 80’s my dad got into the sign business. (He’d previously been an accountant but when you need a job, you need a job. And he was one of those types of people who can pretty much do anything they put their mind to, so in a couple years he’d bought the place and then proceeded to be in the sign business until he died ten years later.)

Anyway. At the time he got into the business there were these lawn signs that most of the realty companies used. You may have seen them. They have a metal frame that sticks into the ground and are double-sided. Great for carrying around and putting in the yard of a house that’s for sale. Easy to install, easy to remove, easy to transport.

They were very cheap to make. Very.

But the sign companies at the time charged far more for them than they cost.

Which equaled opportunity when my dad entered the market, right? Hey, those can be made for something like 50 cents a pop and everyone is charging $10. If I charge $5, I’ll take all their business and still make $4.50.

(All numbers here are made up. I don’t remember them.)

Winning, right?

Until those people who’d just lost their very lucrative business undercut his $5 price. And then he undercut their $4 price. And then they undercut his $3 price. And then it got to the point where the last man at the bottom didn’t even want the business because there was no margin left in it.

Within a couple of years that entire market had collapsed and everyone was back to where they’d started but without that revenue stream.

See, this is why being the asshole is a short-term strategy. Because if your business is based on undercutting someone else’s price (or in the case that inspired this post, significantly overbidding your ad spend in a niche market), it only works as long as you’re the only one doing it.

If all other books are $7.99 and you price yours at 99 cents, you can suck up a lot of sales. Enough to make it worth it. But when everyone prices at 99 cents, then we all find ourselves in need of another job because the volume that made up for the low price goes away and all you’re left with is the low price and consumers trained to think that’s a fair price.

Same thing happens with ad bids on CPC ads. When you bid really high for ads but no one else does you have this perfect world where your ad is always at the top but what you pay isn’t near that mark. (Since Amazon at least only charges you a penny over the next highest bid.)

Problem is, that only lasts as long as you’re the only one doing it. Get three assholes doing the same thing and it’s mutually-assured destruction. Suddenly you’re actually paying that $10 per click. And when all you have is one poorly-written knock-off book to pay for that ad spend, well… Like I said. Short-term strategy.

Only question is how many people it takes out before it fails. And that can unfortunately be a lot of people.