In response to a recent blog post about Amazon Advertising, someone asked a question about manual and automatic ads. I started answering, then realized I had gone into so much detail that my response would probably work better as a blog post itself. And so, here we are…
Anyway, I should probably start off by saying that the world of Amazon ads is a very competitive environment. If you go to the product page for just about any book, you can scroll down to a section entitled “Sponsored products related to this item,” which basically contains ads for other books. You’ll see that there are often dozens of pages in that section (each of which has 7 or 8 books on it), giving you an idea of just how many ads are running solely in relation to that single book. (By way of example, the sponsored products area for my novel Sensation is currently comprised of 36 pages.)
Basically, it’s an auction system: you create an ad campaign and determine how much you’d be willing to pay for someone to click on your ad, and also set a max amount you’d like to spend per day. To see how it works, let’s say you want to advertise a superhero novel, with a max budget of $5 per day. You think a lot of people who like superheroes might look for things related to The Avengers, so you set “Avengers” as a keyword. Now, let’s assume that the average cost per click for “Avengers” is 80 cents. However, you want to make sure you rank on the first page of sponsored products for that term, so you decide to set a max bid of $1 per click. That doesn’t mean that you will actually spend $1 every time someone clicks on your ad; it’s just what you’re willing to spend per click. Remember: it’s an auction system, so even though you’re willing to pay up to $1 per click, if the next-highest bid is only 49 cents then you only pay 49 cents. (Amazon ads employ a second-price auction model, meaning the winning bidder only pays the amount offered by the second-highest bidder. In this instance, the second-highest bid was 49 cents so that’s the price you pay.)
So for an effective ad campaign, you might have hundreds of keywords, with a different bid amount for each. You might also have a campaign that focuses on categories, specifics books, etc., with hundreds of terms in each campaign. (Amazon actually limits you to 1000 per ad campaign.) What you’re willing to budget and spend in this area has an effect on your visibility, but may depend on how competitive the environment is for the terms you select. Taking the example above, “Avengers” might have an average cost of 80 cents per click, but maybe “Hulk” is only averaging 50 cents per click, in which case that term will probably cost you less.
Now, of course, these bids aren’t static; they change every day, which is only to be expected. For instance, if you target a book that is #1 in a category today, a month from now it may rank #100. At that juncture, you may want to tweak your ad in terms of products to focus on, the amount of your bid, and so on. Likewise with our hypo involving the “Avengers” keyword. If a bunch of people start bidding on it and the cost goes up, you may decide it’s too rich for your blood. After all, at $1 per click and a $5 daily budget, you may only get five clicks per day out of that ad. That’s doesn’t necessarily mean it’s bad (especially if all five of those who click buy your book), but you may decide to lower your bid, stop bidding on that keyword, or do something else to modify the ad. Long story short, if you want to make your ads as effective as possible, you’ll probably need to tweak them regularly and often.
Of course, the scenario described above is for manual ads. For automatic ads, Amazon is hopefully – based on my budget and bidding criteria – regularly performing all the necessary adjustments to make sure my ads are placed in relevant spots. In other words, Amazon is doing all the heavy lifting that I used to do myself. That said, it doesn’t necessarily mean that my ads are hands-off from now on. I still need to be aware of how the advertising dollars are being spent and make changes if necessary.
For instance, there’s a book currently ranked in the Top 20 in the teen superhero category. At present, my novel Sensation appears on the 7th page of sponsored products for that book. For another book that’s ranked a little lower, Sensation is on the 4th page of sponsored products. Ultimately, if you go down far enough on the list, you’ll reach titles where my book is on the first sponsored products page. There are a couple of conclusions to draw about this, first and foremost being that it costs more to be on the first page of higher-ranked books (presumably because being on those pages is better). Costing more, however, also means that you’ll burn through your budget quicker. For someone in my position, I have to decide if it’s worth it to have my ad rank higher (for lack of a better term) for the books in question. After all, almost no one is going to go more than a few pages deep into the sponsored product pages. (In that sense, it’s a lot like ranking on the first page of Google for a search term: most people will look for what they need on the first page, and not many will go beyond the second or third.)
All in all, as I said in a previous post, advertising is simply one of those necessary evils that you have to live with these days. The Amazon ad system isn’t perfect, but I’m hoping that automatic ads will give give me something close to the same return as manual ads, but with much less effort on my part.