Amazon Marketing Services: $1,016.65 Spent, $1,308.77 Sold

Marketing aims to raise awareness for a product, service, or brand. When people become aware of an item, only then can they consider purchasing it. Marketing is necessary for highly competitive environments like the book industry, where hundreds of thousands of authors compete globally for sales. To a lesser extent, publishers and authors must also compete against bad actors and schemers. For instance, Chance Carter scammed his way to hundreds of dollars daily on Amazon, which hurt the marketplace, self-publishing, and other authors.

Some authors don’t promote their books because they don’t believe marketing is useful, don’t understand marketing, or think that having a presence on Amazon is enough, which is a mistake. While a minority of authors do well without promotional activities, most success stories stem from robust marketing plans. For example, an author with an email list of 50,000 subscribers can email her fan base about her upcoming book. If 2 percent of her subscribers make a purchase, she will sell 1,000 copies, which will start a positive ripple effect regarding rankings, visibility, and sales. Furthermore, Amazon may take notice and promote the book through emails to customers. Yes, manual intervention and private deals do take place on Amazon and other marketplaces. Everything isn’t automated and algorithmic as we are to believe.

There are many free and paid ways to promote books. One paid method I’ve experimented with is Amazon Marketing Services (AMS). AMS differs slightly for authors and vendors so I’ll recount my experiences as an author.

AMS Overview

AMS offers targeted cost-per-click (CPC) and pay-per-click (PPC) advertising solutions to help Amazon authors reach new customers and drive sales. It’s like Google Ads, but advertisements appear on Amazon only.

What types of ads are available?

Authors can run sponsored product and product display ads. Sponsored product ads appear on desktop and mobile browsers as well as the Amazon smartphone app. Product display ads appear on desktop detail pages and may qualify for additional ad placement on Kindle E-readers.

AMS Ad Types

How much does it cost?

AMS uses a cost-per-click (CPC), auction-based pricing model. AMS recommends that you set the maximum cost-per-click you are willing to pay, for example, $0.10. Budget settings and requirements differ for ad types.

How are sales tracked?

Sales attribution depend on the ad type and can be attributed to the ASIN, title, and brand. Each ad type uses one or a combination of these parameters to report sales. A customer must click on your ad and purchase your book within 14 days for attribution.

How do you measure return on investment?

AMS records the amount you’ve spent, average CPC (aCPC), estimated total sales, and advertising cost of sales (ACoS). The data appears on your dashboard and is available to download in CSV file format. You would use total cost and total sales data to measure your return on investment.

Are results in real-time?

No. Campaign metrics can take up to 14 days to appear and do not include Kindle Unlimited (KU) or Kindle Owner Lending Library (KOLL) royalties generated by the ad.

Where can you learn more?

AMS has three resources to learn more about their platform.

How to Create an Ad

Ad types differ in setup but require similar steps. Steps to create an ad include:

  1. Click on New Campaign and choose Sponsored Products or Product Display Ads.
  2. Select the book you want to advertise.
  3. Choose a customer targeting method. (Learn more about targeting.)
  4. Enter your campaign name, ad period, minimum CPC, budget, and advertising copy, where applicable.
  5. Submit your ad for review.

Amazon will notify you via email about the status of your ad. If your ad is approved, it will start to run as soon as possible or on the date you specify. You can pause or terminate your ad at your discretion. You can update the price and metadata for an existing ad. For a cover update, you’ll need to create a new campaign to display the new cover in your ad. If your ad is rejected, Amazon will explain why. You cannot resubmit a rejected ad; you must create a new one and submit it for review.

My Experiment

I began using AMS in January 2015 to promote one of my books. In 2015/16, I used product display ads. In 2017/18, I switched to sponsored product ads because they are more visible and prominent on pages and in search results.

I thought more about Amazon’s search engine and SEO. I believe most people shop for books by their titles. Secondarily, shoppers search for authors and keywords. For sponsored product ads, you can choose automatic or manual targeting. With automatic targeting, Amazon targets all relevant customer searches based on your book’s metadata. With manual targeting, your ad appears based on the keywords you choose and approve.

Automatic targeting sounds imprecise, random, and gives Amazon control of where my ad appears. With manual targeting, I’m in control. I chose manual targeting because I trusted my keyword selection over Amazon’s “relevant customer searches” approach and didn’t want to leave things to chance. For example, automatic targeting could pair my investment book with keywords/phrases like “money,” “personal finance,” and “how to save for retirement.” While these keywords are relevant, they’re too broad a match for my book. I manually added keywords like “investing for dummies,” “stock market 101,” and “a random walk down wall street” to increase search relevance and accuracy.

My Results

In 2015, I spent less than one dollar and got a sale. In 2016, I paid $100 and achieved sales of $60.15 for an advertising cost of sales (ACoS) of 166 percent, which wasn’t impressive and a terrible return on investment. In 2017/18, I spent $1016.65 for sales of $1308.77, which produced an ACoS of 78 percent. A campaign for my WordPress book achieved an ACoS of 25 percent ($37.12 spent and sales of $151.50), which was my best outcome.

Ad spend/costSalesACoS
2015 $          0.29 $          8.973.23%
2016 $     100.00 $        60.15166.25%
2017 $     572.63 $     546.15104.85%
2018 $     444.02 $     762.6258.22%
Total $  1,116.94 $  1,377.8981.06%
Observations

At first glance, my 2017/18 results appear to be money well spent, but this is incorrect. I must account for my royalty/revenue share with Amazon to get a better understanding. Between ebooks (a 70 percent share) and paperbacks (a 60 percent share), my average royalty is 65 percent. (Ebooks priced at $0.99 attract a lower royalty of 35 percent.)

A 65 percent royalty on sales of $1308.77 yields a pretax profit of $850.70 (the difference, $458.07, goes to Amazon). After spending $1016.65 and sharing revenue with Amazon, I lost $165.95. I achieved an ACoS of 78 percent but would need an ACoS of 65 percent, my revenue share, to break-even. Breaking-even wouldn’t be terrible because sales would improve my seller rankings and visibility. However, to make the expense worthwhile, I would like to achieve an ACoS of 50 percent or less.

2017/2018ACoSAd spendSalesAMZN’s shareMy shareProfit/loss
Actual78%$1,016.65$1,308.77$458.07$850.70($165.95)
Break-even65%$1,016.65$1,564.08$547.43$1,016.65$0.00
Goal50%$1,016.65$2,050.00$717.50$1,332.50$315.85
Criticisms

I’ve always been a critical thinker, which helps me to see underlying truths. It’s a vital skill to develop in a world full of illusions, theatrics, and deceptions. Let’s review AMS critically.

The Cost-Per-Click Model

The purpose of CPC and PPC advertising platforms is for users to pay for clicks to get traffic, leads, customers, and sales. Some advertisers will succeed, and some will fail regarding their goals, customer acquisition costs, and so on.

AMS defaults keyword bids to $0.25 for sponsored product ads. All things being equal, 100 clicks will cost $25. A standard conversion rate of 2 percent will yield sales of $19.98 for a paperback selling at $9.99 and $5.98 for an ebook selling at $2.99. Before we get into revenue sharing and taxes, the results produce losses.

You could lower your bids, but you’ll get fewer impressions and reduce your potential for sales. If you increase your bids, you’ll get more impressions and potentially pay more for clicks with no guarantees.

The AMS Value Proposition

CoinsThe problem with CPC isn’t the model; it’s Amazon. I’ve used Google Ads to my satisfaction, and Facebook Ads have worked wonders for thousands of advertisers. How many authors have reported success on AMS? Hardly any.

AMS isn’t equivalent to Google Ads or Facebook Ads. The latter offer sophisticated advertising platforms. Users get tools, recommendations, insights, strategies, case studies, advice, and support to optimize their campaigns. For example, Google’s keyword planner tool provides search volumes, competition, and bid scenarios. Facebook enables you to target ads by gender, age, location, and more. AMS doesn’t offer tools and uses basic targeting methods.

Google and Facebook depend on advertising revenue, which drives them to improve their platforms daily. By contrast, AMS is a low priority, nothing burger in Amazon’s vast ecosystem. Jeff Bezos has more important things to focus on and battles to fight, for example, the Whole Foods acquisition and competition from Walmart and FANG. AMS is on the back-burner, which is why the platform doesn’t see many improvements and upgrades. AMS’s shortcomings include:

  • Amazon’s customer base and reach are much smaller than Google’s and Facebook’s.
  • Sales figures are unreliable, and it’s near impossible to reconcile your ad spend. Total sales are an estimate and campaign metrics may take up to 14 days to appear. As AMS states, “Estimated total sales shows you the total price of orders customers placed after clicking your ad. This may include the removal of purchases that were canceled within 72 hours of the initial purchase or any declined purchases. Your KDP sales reports will show you the final sales numbers, which may be different from the number you see here.” “May” is used too many times to trust the numbers. (Advertising spend and billing, however, are incredibly accurate and timely.)
  • Users cannot filter data on the dashboard.
  • Users cannot split test ads efficiently.
  • Users don’t get recommendations or insights to optimize their ads.
  • No advertising tools are available.
  • Users cannot use demographics or behaviors to target customers, only keywords, product information, and genre, which are less specific.
  • Keyword research, volumes, competition, and projected bid costs are not available.
  • Users cannot add negative keywords.
  • Users cannot do bulk edits, which would be helpful to change bids.
  • Bid input fields are flimsy. (I thought I changed and saved a bid, but I didn’t, which resulted in a click that cost me $20.52. My dispute was to no avail, and AMS didn’t/couldn’t provide any supporting documentation.)
  • Analytics and reporting are nonexistent. Users must track information manually and create reports with a CSV file.
Final Word

Success in publishing is less about how excellent a book is and more about the reach, relationships, and connections an author has. Additionally, marketing is necessary to build awareness and spread the word. That’s not to say an author without reach and a sizable marketing budget can’t hit a home run, but the chances are low.

Given my prescription for success, I won’t be using AMS again. It’s not a viable advertising platform for authors, and many more authors likely lose than gain. AMS is dated, inefficient, one-dimensional, and needs upgrades. It can be useful for niche books like my WordPress book; however, unreliable sales data is too problematic. AMS might work better for vendors, but I don’t know. I wouldn’t recommend Google Ads or Facebook Ads for authors either, although I would favor Facebook over Google for marketing books.

Instead of wasting my money on Amazon ads, I’ll stick with free marketing activities to promote my books. To achieve my goals, I’m better off investing in marketing tools to grow my email list, brand, online presence and reach.

 

About this Post

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