The Uncertain Future of Amazon (and Indie) Advertising

So this one’s been on my list to write about ever since Jungle launched. Things have been … pretty busy, which is why it’s taken this long to get to it. But no matter where I’ve been, or what I’ve been doing, this topic has weighed on the back of my mind (even when sick, lol).

Why? Well, because I think it may have a lot of impact on the publishing future going ahead.

Look, let’s all be on the same page here: Indie publishing is the juggernaut change that the book industry is dealing with right now. Traditional publishers are fast falling out of favor, doubling down on archaic models and methods that haven’t made financial sense in two decades, while authors jump ship to newer, smaller indie pubs or just go completely independent on their own. And right at the middle of this swirling maelstrom is … Amazon. The world’s largest bookstore. Who basically looked at publishing and said “Oh, how cute and quaint. Well, you keep doing that, but we’re offering the future.”

Okay, what they really did was throw their doors wide open, say “Hey, anyone can sell a book here, and here’s your 70% royalty,” and let logic do the rest. Because few authors were going to stick with a traditional publisher model where they owned nothing and worked for a royalty so small they’d need to sell a hundred books just to make $10 when they could instead keep all the rights and sell two books to make $10.

Anyway, that’s ancient history by now, and the market is well on its way through the reactionary shift to this change, with traditional publishers struggling to stay relevant through all sorts of questionable actions like cutting author royalties even further or attacking libraries.

But this isn’t about that. Well, sort of. That’s all background to bring us up to speed so I can get to the real meat of today’s topic: Amazon’s Advertising system.

See, when you’re an independent author, you have to handle all of your own marketing and advertising. Which is why posts like this one will often have a reminder in them that Sci-Fi Epics such as Colony are these amazing, fantastic books and you should go buy them, complete with link to do so.

Basically, by eschewing a traditional publisher, you’re also eschewing a lot of the services they traditionally provided such as advertising and marketing, and taking them upon yourself.

But not to worry, because many places, seeing the writing on the wall, have made this as easy as possible. Amazon and Facebook being two of the largest key players, with Twitter lagging behind (mostly because Twitter is a cesspool). But all of them, and others, offer similar deals whereby for a bit of money, they’ll promote your work.

All good, right? Well … Here’s the thing: I have my doubts.

Take Amazon’s system for example. The one that prompted this post. The system they promote is a classic (for the internet) “bid per click” system. In other words, it works like this:

The one running the ad campaign picks keywords that their product identifies with. So for example, a keyword for Colony would be “Science Fiction” because it’s a Sci-Fi book. With me so far?

Once the keywords are chosen, the ad creator goes through and puts forth their “bid” for their product to be advertised for that keyword. So when someone on Amazon types in “Science Fiction Book” the system looks to see who has the current highest bid and shows their ads in the “suggested content” bar.

Note that this doesn’t immediately max out your bid. If someone bids 75 cents for an ad, but the next highest bid was 63 cents, then the winning bid isn’t 75 cents, but 64 cents. So you’re effectively setting an “up to” number.

But you haven’t paid yet. Part of how this sort of advertising works is that you only pay that bid, even if your ad is displayed, if someone clicks it. So if someone sees an ad that won the bid for 64 cents and doesn’t click it, then nothing is done. If they click it, however, and look at the product? The ad-holder pays Amazon 64 cents.

From there, all that needs to happen is for one making the ad to set how much they wish to spend each day on their ad.

With me so far? So there’s the maximum bid for each ad and the total amount you wish to spend each day. This is a pretty old but established system for ads.

However … that doesn’t make it perfect, and as I was setting up my advertising for Jungle a few months ago, I noticed some troubling signs that all might not be well with it.

See, the service also “helpfully” informs you what the “average” bid is for each keyword. You know, so that you can “beat” it if you want your book to get attention.

Anyone seeing the potential for issues to arise here? Well, if not, let me fill you in. When I started setting up my advertising campaign for Jungle, I noticed that a lot of keywords had taken a sharp climb since Colony had come out. A very sharp climb. To levels that, quite frankly, didn’t make financial sense.

How bad was it? There were ad keywords where the average was now $2.83 per click. In other words, the average someone was paying for that ad to be seen for the keyword was $2.83. Just for someone to click it. Not even to purchase it. That means someone out there, a lot of someones for this to be the average, are paying $2.83 every time someone looks at one of their books. Not even buys it. Just looks.

“Okay,” I can hear some of you saying. “So what?” Well, the “So what?” is that it doesn’t add up. For starters, clicks on an ad don’t equal sales one-to-one. Far from it, in fact. You’re looking at a number of clicks to get someone to buy a book, varying from book to book, but it’s not one-to-one. So that “average” is really more like two or three clicks to see a purchase.

But then … the average price of books on Kindle, where this advertising is primarily taking place, is around $2.99-$4.99.

Now are you seeing the issue? That means if it takes two clicks for someone to buy your book, at the average price-per-click, even if your book is $5 that’s a loss of 66 cents.

Oh wait, let’s not forget the royalty. A book that sells for $4.99 only pays a royalty of $3.49. So two clicks to one sale (and that’s a really good rate, by the way) would mean you’d only be losing $2.17 on every sale.

See why I’m perplexed? These numbers don’t add up. And that makes me cautious. Alarmed, even.

Now, there are ways this could make sense. People trying for loss-leading, for example. Or worse, people backed by someone with a lot of funds who don’t mind pissing it down a drain as long as they push everyone else out of the market. In looking at this system, for example, it wouldn’t be hard for a traditional publisher to simply earmark more of the money they’re already losing just to try and price a bunch of indie writers out of being able to advertise.

I don’t know. This is all theory, because the only thing I’ve got on my end is the reported “average bid per click” and how incongruous that is with the rest of what I can see from the market. But there’s one other thing that raises more than a little alarm at the whole thing: Amazon wins no matter what.

Now, I know that’s nothing new. Stores taking money to advertise certain products they already sell is nothing new. What bugs me about Amazon’s approach is that they’re so silent about it, you really don’t have any idea what’s going on. All you see is what little piece of info is put in front of you, and honestly, that’s most advantageous for Amazon, not the creator. And if Amazon’s position is to make money, well … That puts them in a position where having that knowledge can be exploited to make more money … at the cost of those using the service.

Again, so much of this is speculation because, well, there really isn’t much info to go off of. All I have is “Here’s how much the average bid is” and that’s it. But I know that the average bid doesn’t make financial sense, not unless you can promise that every click is a buy. So what’s driving it so high? Loss leading? Folks hoping to claim all the ad costs on their taxes and that it balances out their losses (it probably won’t).

Or are a lot of authors just really bad at math and diving headfirst into a system they don’t understand?

Similar could be said of Facebook ads. I’ve never quite trusted Facebook, and their ads seem to be similarly “blind.” The most common ad I get from them begging me to sign up for their services, for example, is a variant of “Your posts could reach up to X amount of people for just Y dollars!”

Except that number is never consistent. The “X amount?” It’s different every time I see the ad. And it’s not a guarantee. It’s “could” and “up to.”

And again, Facebook is in it to make money, not to help you sell a product. Which might be why my last few months of seeing those ads, the “just $X amount” they advertise has doubled. It used to be ‘reach around a thousand people for just $5.’ Now it’s $10. Or $11. Supply and demand growth? Or just savvy bean counters at Facebook?

There’s no way to know. And I suppose that’s the real thrust of this post. When it comes to the cost of advertising, I feel like there’s a lot of numbers that don’t really add up or make a lot of sense given the sparse information that I have or am given, and worse, often it feels like when they do make sense, it’s not in my favor, but in someone else’s. Where I, the content creator, have become a “product” alongside the things I create.

Part and parcel of being an author during one of the most tumultuous times in the history of books and publishing. So it’s not unexpected.

It is, however, a bit daunting.

But … that doesn’t mean all the news out there is bad news (or even just neutral). Because again, the best form of advertising for books is word of mouth. Maybe one day that’ll change, but for now? Word of mouth, readers and fans talking about your work, is the best way to get one’s work out there among the masses.

Of course, that brings up a sort of chicken and the egg problem, but …

Anyway, just some thoughts on the matter. Now, if you’ll excuse me, I’m going to try and go beat this con crud out of me once and for all and then get that next episode of Fireteam Freelance done.

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