Jeanne: How Are Those Amazon Ads Working Out for You? Part 1

Amazon LogoToday I’m going to provide a brief survey of Amazon ads and how they work for authors.

Disclaimer: I did my research on the Internet. Although I tried to cross-verify all the information provided below, it’s entirely possible I fell prey to some of the misinformation floating around the Web. (!) Eight Ladies Jilly and Kay have both taken classes on Amazon advertising, so I’m counting on them to correct any egregious errors.

There are three types of Amazon Ads:

  1. Headline Search Ads (primarily for brand awareness)
    • Allows you to display multiple products at once
  2. Product Display Ads
    • Allows for interest targeting
    • Allows addition of custom copy and images
    • Allows selection of pages on which to appear on (i.e. similar products or competitive products)
    • Clicking link sends customer to vendor’s website
  3. Sponsored Product Ads
    • Keyword-driven
    • Auction-based
    • Allows for custom copy but not custom images
    • Clicking link sends customer to book’s Amazon product page

Sponsored Product ads are the ones best suited for selling books, so we will focus on them.

Sponsored Product Ads can show up in three different places on Amazon:

  1. On the page of search results for a keyword
  2. On a product page, below the product description and the line of “also boughts.”
  3. On a product page, next to the “also boughts” and under the 1-click box. (I haven’t seen any of these recently. I heard some rumblings in the community a while back that this excellent tool for generating sales had been removed, and I think that’s true. Alternative theories welcome.)

There are three terms you need to know to understand how Amazon ads work:

  1. Impressions
  2. Clicks
  3. Sales

Impressions are the number of times your ad is selected to be displayed on Amazon search results or product pages. An impression is an opportunity to get your book in front of a customer. Since impressions are free, one approach is to simply aim for the highest possible number of impressions., especially if you’re a newbie author with no platform.

It is not clear to me if Amazon counts an impression only when a customer actually sees it, or if they count every ad that’s selected to appear. So if they get ten pages worth of search results, and your ad appears on page 10, does that count as an impression, or does it only count when the customer pages all the way through to page 10?)

Clicks are exactly what you think: the number of times a customer clicks on your ad, thereby linking to the product page for your specific book. Clicks are not free. You bid on clicks, and every time a customer clicks on your ad, you pay Amazon the amount you bid. So, if you bid fifty cents per click and your ad gets one hundred clicks, you will owe Amazon fifty dollars–whether or not you sell a single book. (Note: you set a per-day budget when you set up your campaign, which prevents you from spending more than you planned in the event your ad proves to be a click-magnet.)

Sales are the number of times the customer who clicked goes on to purchase your book.

The best possible scenario is to set up an ad campaign that generates tons of impressions, but causes only those customers who will buy to click on the ad.

This, as you can imagine, is really tricky to achieve.

An ad is selected for an impression by the Arcane Amazon Algorithm (AAA) based on multiple criteria. Although how this works is a bigger secret than the recipe for Coca- Cola®, some of these criteria can be inferred from the information the Zon collects when you set up your ad campaign. These include:

  1. Keywords
  2. Negative keywords (words/phrases to exclude)
  3. Match Type
    • Broad (all the keywords, in any order, plus plurals, variations and related keywords)
    • Phrase (exact phrase or sequence of keywords, plus plurals and variations)
    • Exact (exactly matches the keyword or sequence of keywords)
  4. Default bid per click
  5. You can also choose to allow Amazon to exceed your bid by up to 50% when an ad is eligible to show up in the top of search results.

Other bits of the AAA are forever unknowable and appear to be subject to intermittent tweaking by the Amazon techies. It is reasonable to assume that these tweaks are designed with one of two goals in mind:

  1. To increase Amazon’s ad revenue (e.g. to maximize the number of clicks per impression)
  2. To provide a better customer experience (thereby increasing Amazon’s product revenue)

Given the info the Zon collects at setup and the above rules (and using my 30+ years work experience as a programmer), I infer the following about the algorithm:

  1. It selects on matches for keywords, based on both the keyword and match type, typically returning with far more candidates that it can display on a page (or even multiple pages).
  2. It then filters for the matches with the highest bids per click. (See Rule #1 above)
  3. It then filters for the high-bid matches with the best sales rank (see Rule #2 above)
  4. It then applies eye of frog and toe of newt.

Note: This is not, I’m sure, a complete representation of how this works. It’s also not necessarily in the right order.

In addition to filtering based on these criteria, the AAA also sorts based on them, so that the best-fitting, highest-paying, most-selling items show up on the first page of results.

Let’s walk through this with a real-life example. For simplicity, we will look at the first page of results on the product page only.

I set up my ebook, The Demon Always Wins, with a number of keywords, including “enemies to lovers.” I bid 50 cents per click. At the time the campaign ran, my book was ranked around 20,000 in the Kindle store.

Let’s assume, for purposes of this illustration, that the keyword the shopper typed in the search bar was an exact match: “enemies to lovers.” Since that’s one of my keywords, my ad goes into the hopper for an ad to be displayed, along with the ads of every other advertiser (book or not) who has that keyword.

Let’s further assume that 100 authors have “enemies to lovers” in their keyword list.  Since only seven books appear on a product page beneath the “also boughts,” the Zon got more results than they have real estate to accommodate on that first page. People may click on the arrow and view additional pages, but I suspect they usually don’t.

Five of the other authors bid $.75 or $1.00 per click. They grabbed the first five slots.

That leaves two.

Ninety of the other authors only bid $.25 per click. I beat them.

Now it’s down to me and the four remaining advertisers to slug it out for those remaining two prime slots on the product page. Among those candidates, my sales rank is the second best. I grab the last spot.


Next week: What actually happened in my two actual Amazon Ad campaigns.



9 thoughts on “Jeanne: How Are Those Amazon Ads Working Out for You? Part 1

  1. One of the things I notice these days about Amazon ads is just how many of them there are. Jeff Bezos claims that the Zon’s secret sauce is all about being obsessed with your customer, giving the customer exactly what they want at the best possible price. Right now, as a customer, it drives me nuts that if I search for a specific author’s books I can barely find them among all the ads. There’s a sponsored header full of books. There’s a sponsored line below the also-boughts. And about half the list of titles on any search page are by authors other than the one I searched for. That’s not a good experience for me as a book buyer.

    As an about-to-be-published author I’m glad of this opportunity to improve my visibility and want to learn how to make the most of it (thank you for sharing your experience). As a reader, I think the Zon has gone too far with its ads. If it is still truly a customer-obsessed organization, I’d expect to see them being streamlined in the future. Though as a recovering CPA who has worked in a public company, I’d say it’s very difficult to take out a revenue stream once you’ve incorporated it into your results 😉

    Look forward to hearing what actually happened with your campaigns!

    • And I’ve read on some loops that that kind of overexposure has led to a serious decline in results for authors buying ads, so you’re not the only disgruntled one, Jilly. I’m not sure if complaints are for all genres and authors (say, best-sellers compared to debut), however. It will be interesting to see your results, Jeanne!

      • Another thing that kind of muddied my results is that we ran ads on Amazon, Facebook and Smart Bitches, Trashy Books all at the same time, in a kind of “make an initial splash” sort of way. So I have a hypothesis about what worked best (with “best” being a relative term), but I’m going to have to see if it’s reproducible to any degree.

  2. CLIFFHANGER! (-: LOL, can’t wait until next week. I haven’t been on Facebook for about five years, so I’m not sure how ads work over there at all. Now that I’ve read this, I’m going to feel guilty about clicking on ads that look kind of interesting, but not something I want to buy. Costing an author 50 cents to a dollar seems like a lot of money . . . . If it’s a bookseller getting 50 books, that’s a great deal, but that’s not the way things work now, is it?

      • I’ve read/heard that potential new readers will often see a book or author several times (three or more) before they decide to buy. I’ve certainly done that. Those non-buying clickthroughs may be part of the getting-to-know-you, awareness building process.

        If you’re intrigued enough to click, I say click, even if you don’t buy. If I were the author, I’d be pleased that I’d managed to persuade you to move from impression to click, and I’d be hoping that next time, or the time after, you’d take the next step. If you’re engaged but you don’t click, I’d be (wrongly) wondering whether my ad was intriguing enough.

        • The problem becomes, if you only earn $2 per book, and it takes 3 or 4 clicks at $.50 per click to make a sale….

          Like any other small business, an indie author needs a substantial financial cushion (or a whole lot of luck) to be successful.

        • Yep. As I understand it (and we’ll see how it goes when it’s my turn), that’s why indies need a series, and it needs to be compelling enough that a goodly proportion of those who buy Book 1 will go ahead and buy at least one more.

          You’re right about needing a financial cushion, though. And/or luck. Not forgetting patience and sheer bloody-minded persistence. Eh. I don’t think anybody goes into this expecting to get rich!

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