Amazon Ads Analysis

Last month I posted a summary of my 2017 eBook sale promotions and this month I'm sharing the results of my 2017 Amazon Marketing Services (AMS) advertising campaigns. I've been advertising my three epic fantasy novels and a compilation eBook on AMS since June 2017.

After some trial-and-error experimenting, I'm currently earning more in combined eBook sales and Kindle Unlimited (KU) revenue than I spend on AMS advertising; however, the Amazon market is dynamic and ever-changing, and your promotional tactics need to be flexible as well. What works today may not work tomorrow, and results will certainly vary by user. I'm quite conservative in my AMS spending, as if you're not careful, it is easy to spend a lot of money while getting no sales.

AMS provides you two choices when setting up your ads: 1) Sponsored Products (or keywords ads) and 2) Product Display Ads (aka focused ads). I've found that the Sponsored Products (aka keywords ads) perform better overall than the Product Display Ads. However, I have made a profit on several Product Display Ads, and since they can reach different readers than the Sponsored Products ads, I use them both. Each type of ad are discussed below:

For the Sponsored Products (keywords ads), Amazon automatically selects keywords for you, which I recommend culling, as some of these are very unlikely to ever be searched for (e.g. 'books books books'). After selecting the best choices from the auto-generated keywords, make sure to add your own. I have over 100 keywords in each of my Sponsored Products (keywords ads).

I'm currently running four of these Sponsored Product/keywords ads (one for each novel, plus the trilogy compilation). Below are the statistics from my longest-running Sponsored Product/keywords ad, which I started at the end of June 2017.

As you can see above, my spend is higher than my sales, although (as noted in the top line) sales do not include KU revenue (which, for me, often earns more per month than direct sales revenue). What I mean by this is, while my eBook sales from the ad were $55.02, I likely earned that much on KU, so in reality, the ad is profitable. Unfortunately, Amazon doesn't offer a way to track KU earnings by ad (maybe some day they will).

Regarding the Amazon acronyms in the screen capture above, impressions is the number of times Amazon displayed your ad. Clicks count the number of times a potential customer clicks on your ad, regardless of whether they buy an eBook.

CPC (Cost Per Click) is your 'maximum bid' amount in which you compete with other sellers for Amazon ad space. You only get charged whatever it takes to beat out the next highest ad bid, so your average click cost will be lower than the CPC you set. ACPC means Average Cost Per Click, which is the running average of what Amazon charged you when a customer clicked on your ad.

ACoS means Average Cost of Sales (i.e., the money spent on an ad divided by the sales generated from the ad). An ACoS aver 100% means you are spending more for the ad than your book sales are earning (but again, it does not include KU revenue, so the effective ACoS is likely lower if you are earning on KU). I typically stop running an ad (or lower the CPC) if the ACoS is approaching 200%. My other three Sponsored Product/keywords ads currently have ACoS percentages below 100 (which is the goal).

For Product Display Ads (aka focused ads), based on trial-and-error, I target "By Interest" instead of "By Product."

Targeting "By Interest" allows you to pick from a list of Amazon categories to place your ads. For example, one category I chose was Science Fiction & Fantasy - Adventure (see below).

Setting an effective CPC for the Product Display/focused ads is a moving target. For these ads, I've had luck with CPCs under 20 cents, and had no luck with CPCs over 30 cents, and vice- versa. I've won bids as low as a nickle and as high as 35 cents, but I haven't found a CPC that works consistently. 

Based on my book prices, CPCs any higher than 35 cents will typically lose money for me, while ads below 20 cents are more likely to stagnate. My current CPC comfort zone for Product Display ads is between 20 and 30 cents. I've also noticed the effective CPC rose in November (likely due to an increase in ads for the holiday season). My advice here is to experiment to find what works for you, and track it and adjust as needed.

I've also experimented with running ads for one month and two months, but haven't noticed any performance differences or patterns between the two. So far, I typically select "Spread campaign evenly over its duration," although I've had a few ads where I accidentally left this clicked to run as fast as possible. I may experiment more with the second setting in the future.

I'm currently running seven of these Product Display/focused ads in different interest (or genre) categories (e.g., Teen & Young Adult-Science Fiction & Fantasy, Science Fiction & Fantasy-Adventure, etc.). Below are the statistics from a Product Display/focused ad (which differs slightly from the data provided for the Sponsored Product/keywords ads).

The CTR percentage stands for click-through rate, which is your number of clicks divided by the number of impressions. I've read that the 'magic number' for CTR is around 0.10%. If your CTR drops too far below this, Amazon will stop serving your ad, no matter how high the bid, because readers are not responding to it.  

The graph below shows my Amazon Author Ranking since I published my first novel in September 2012. The highlighted portion of the graph is the time period since I started advertising on AMS. As you can see, the ranking has remained higher and more stable than prior to advertising with AMS.

Over the last six months, I spent $308 on AMS ads, and have directly earned $171 in sales from these ads. However, this data does not factor in revenue from KU pages read. I noticed a significant uptick in KU pages read after I started running AMS ads, so I suspect the ads are responsible for generating a portion of that revenue as well. Since June 2017, 53% of my revenue has come from KU, which means in addition to the $171 from direct sales of eBooks, the ads may have also earned that amount in KU pages read revenue, which means, overall, the ads are profitable.

If you're interested in reading my previous posts about advertising with Amazon, you can find them below:
As always, I'm interested in reading about your experiences with Amazon ads as well, and learning any tips or advice you may have. Please feel free to share or ask questions, and thanks for stopping by.