How to Run Amazon Kindle Advertising Campaigns

Ebook publishers who want to generate sales on Amazon may have no choice but to run Kindle advertising campaigns to promote their books.

The reason is simple. Amazon has millions of ebooks. In many cases, there are multiple books and sometimes even dozens of them on the same subject.

The competition is intense. A book that ranks fifth or tenth in search results simply won’t get as many sales or attention as a book that ranks in first place.

Even if a book ranks in first place in organic search, it may appear below the entire opening display on a desktop monitor. Amazon dedicates far more display space to advertisers than Google, Bing and other major websites that show ads.

But advertising cuts into the royalties an ebook publisher receives. So the publisher must manage the campaign carefully to ensure at least some respectable profits.

Cost Effective Kindle Ad Campaigns

Publishers can launch a Kindle advertising campaign at the Amazon advertising console. Anyone who has run online ad campaigns elsewhere will find the console both simpler and easier to use than others. Campaign setup is intuitive.

The console does have one unique difference. It emphasizes Average Cost of Sales or ACOS. ACOS is the total ad spend divided by total sales as a percentage.

For example, a publisher spends $40 in advertising and sells $100 worth of ebooks on Amazon. The ACOS is 40 percent or $40 / $100.

Without advertising, if the ebook is priced at $2.99 or higher, the publisher normally receives 70 percent of the total sales or $2.10 per book.

If Amazon keeps 30 percent of any sales, and it keeps another 40 percent for advertising, the publisher is left with only 30 percent of the total sales or 90 cents per book. But 30 percent of something is better than 0 percent of nothing for a book that is buried in organic search results.

So publishers must decide what ACOS they want to target in order to sell the most books for the most total profit. Obviously, it makes no sense to spend more money than the potential profit.

Placement ACOS

Cost effective Kindle ad campaigns become possible when publishers drill down into the ACOS at the placement and keyword level.

If they click into the campaign and then on Placements, they will see the performance of ads in three locations. They are the top of search results, within targeted “product pages” and elsewhere on “rest of search”.

The odds are good they will see the highest clickthrough rates for ads that appear at the top of search results and lower rates on product pages and rest of search. Rest of search works best with books that have descriptions with plenty of relevant keywords.

Even if the maximum bid for each keyword is the same, the ACOS for each placement may not be the same. So publishers should raise or lower keyword bid prices until they find similar ACOS results in placements.

Keyword ACOS

A click on Targeting will show similar insights for individual keywords such as ACOS, orders, sales, cost per click and click rates.

Date range is especially important. The average cost of sale for a single day is not useful information. The longer the date range, the more insightful the ACOS.

Overtime, certain keywords will tend to perform better than others. Publishers can raise or lower bids in response to the long-term ACOS and clickthrough rates to maximize results.

Prices Versus Profits

There is a potential problem with running Kindle advertising campaigns versus competitors. If a competitor book is priced higher, it can afford more expensive campaigns because it has a higher profit margin.

Campaigns with expensive keywords will force books with lower prices to accept fewer clicks, lower margins or, in some cases, no clicks at all because the ads are too expensive.

So should a publisher increase the price of a book for the sake of advertising? Maybe, but only carefully. Low prices attract high volume from budget-minded shoppers. Higher prices may start to limit the number of sales.