How to Determine Your Amazon PPC Ads Budget as a Self-Published Author / Publisher

As a self-published author, it can be challenging to determine your Amazon PPC ad budget. This guide provides tips and strategies to help you make informed decisions.

If you’re a self-published author looking to promote your book on Amazon, you may be wondering how much to budget for PPC (pay-per-click) ads. While there’s no one-size-fits-all answer, there are some key factors to consider when determining your ad budget. In this guide, we’ll explore some tips and strategies to help you make informed decisions and get the most out of your advertising dollars.

Understand the basics of Amazon PPC advertising

Before determining your Amazon PPC ad budget, it’s important to understand the basics of how Amazon advertising works. With PPC advertising, you only pay when someone clicks on your ad. You can set a maximum bid for each click, and Amazon will show your ad to potential customers based on their search terms and other factors. It’s important to research and choose relevant keywords for your ads to ensure they are shown to the right audience. Additionally, you can set a daily budget for your ads to control your overall spending.

Determine your advertising goals and target audience

The first step in determining your Amazon PPC ad budget as a self-published author is to identify your advertising goals and target audience. The question you must ask yourself are

  1. How much Budget you can afford to spend per month?
  2. Aim of advertising a book is for increasing sales or to use a lead magnet for some other service such as selling a course, consultancy or being invited as Keynote speaker e.g if you are selling a 5000$ course and the book is a lead for that then you should look at overall cost of sales rather then ACOS (Ad Cost of Sales)
  3. You want to build your author brand, or promote a specific book launch?
  4. What are keywords which your targeted audience use to search same sort of books (you can use Amazon autocomplete for initial analysis but for keywords research use software’s like Helium 10, Jungle scout or Publisher Rocket.
  5. What is the Average Cost per Click for keywords within Ads ? (if CPC for Keywords is too high then budget spending will definitely increase). It must be realized that not all niches are same e.g Real Estate related keywords are generally very expensive.

 Answering these questions will help you create targeted ads that are more likely to convert into sales. It will also help you determine how much you should be willing to spend on each click and your overall daily budget.

Calculate your break-even point and profit margins

Before determining your Amazon PPC ad budget, it’s important to calculate your break-even point and profit margins. This will help you understand how much you can afford to spend on advertising while still making a profit.

To calculate your break-even point on Amazon KDP use Royalty as guideline e.g Production cost for the book is 8$ and selling price is 15$, royalty is 7$ per sale. In terms of Ads if you are spending 7$ to get a sale then you are breakeven otherwise operating on loss.

Device an Appropriate Strategy

Based on advertising goals, target audience and profit margin device a strategy. There could be many numerous strategies but we can broadly categorize as following

  • Defensive

               This strategy must be adopted when funds are very limited, say you don’t want to spend more then 150$ – 300$ a month. This approach relies on low bids and focus on long tail keywords which are lesst expensive. This approach can get sales at low cost but number of sales per month will also remain low say you spent 150$ to get 400$ sale at 37.5% ACOS. Problem with this approach is that if the competition becomes stiff then you might end up spending 50$ on ads in a month (since your bids are low) and 130$ sales . Volume of Sales will shrink invariably.

  • Offensive (Sales at any Cost Approach)

 In this strategy focus in on getting sales at any costs. This is adopted when you have no issue of funds or market is highly competitive and you want to get sales in first month of the book launch. Amazon always prefer new books therefore a book with no sales but newly launched might be ranked at 100K while older books with 1 x sale a day might find themselves at 500K. First month of Book Launch is known as Honeymoon period and one must take max advantage of this to get more sales and visibility.

Also this can be adopted when your book is a lead magnet to some other service and it is only to show your prowess on the services which you intend rendering, a book on Android development might sell at loss on Amazon but if it nets a client worth 10,000$ for an app development then its worth following.

Downside of this approach is that no one can predict profitability as there are many components and if things not go according to plan then funds and motivation for spending may exhaust in few months.

  • Balanced Strategy

A Balance strategy takes character from both strategies by being frugal in spending while still making very focused and targeted ads to get sales at low ad spending. It starts with targeting very broadly then honing on successful sales achieved.

In this strategy ad spending is kept on tight leash but bids can be increased depending on results e.g in an ad campaign there can 50 keywords, while 5 are generating all sales so ideally increasing bids for those wont harm overall spending. Amazon keywords suggested bids are often exaggerated so it is not recommended to use suggested bids.

Monitor Performance

Once you have calculated your break-even point and profit margins, it’s time to set your Amazon PPC ad budget. Start by setting a daily budget that you can afford to spend on advertising. This will help you control your costs and prevent overspending. As you monitor your ad performance, you can adjust your budget accordingly.

If your ads are performing well and generating sales, you may want to increase your budget to reach more potential readers. On the other hand, if your ads are not performing well, you may want to decrease your budget or adjust your targeting to improve your results. Keep a close eye on your ad performance and adjust your budget as needed to maximize your return on investment.

In analyzing Ads, must understand following scenarios

  1. Ads not getting impressions  – it means your targeting is either too broad or too irrelevant hence it is recommended more research must be carried out for targeting options. Analyzing competitors ads and keywords in ads can be used to ascertain relevance. Often neglected statistic CTR (Click Through Rate) can help in understanding the problem. Ideally it should be min above 0.2%.  (CTR = cliks on ads / impressions served )
  2. Ads getting Impressions but no Clicks – This means keywords bids are too low, try increasing them a little bit but don’t follow suggested ones.
  3. Ads getting impressions and clicks but no sales – It shows that ads are being served and getting clicks but buyer after reaching Book sales page has lost interest and did not buy it. In this case have a look at Subtitle, First three lines of description (since 90% people use mobile to access Amazon). If attention is grabbed by first 3 lines of description then it might convert into sale.
  4. Clicks per Sales – Best Clicks per Sale ratio is always <10. If it is more then 10 clicks per sale then have a holistic look at the book sales page, price (in relation to competitors),  description, keywords in ads and backend keywords used while publishing the book.
  5. Calculate Total ACOS  = (Total Sales / Ads Spent), as Amazon Ads start getting sales then organic sales (sales apart from ads) will also increase. Initially bulk of sales will come from ads and then organic sales will follow the suit. In Best case scenario 20% sales through adds and 80% through organic sales is ideal for obtaining suitable ROI.
Adjust your budget and bidding strategy as needed

It’s important to regularly monitor and adjust your Amazon PPC ad budget and bidding strategy to ensure you are getting the best results. If you find that your ads are not performing well, you may need to adjust your bidding strategy or target a different audience. On the other hand, if your ads are performing well and generating a high return on investment, you may want to increase your budget to reach even more potential readers. Remember to keep track of your ad performance and adjust your budget and bidding strategy as needed to maximize your advertising dollars.

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