28 August 2023
How Much Money Can You Make with Amazon KDP
TweetLinkedInShareEmailPrint Have you ever dreamed of seeing your name in print or considered writing a book?...
You have spent your blood sweat and tears writing your shelf-published e-Book/paperback on Amazon. But once your book is live, it is silent and no one seems to be purchasing or even viewing your booking listing.
So how to advertise your book on Amazon?
There are a few ways that Amazon allows you to promote your new books, such as KDP Select, Kindle Countdown Deals, Free Book Promotions, and Kindle deals. All of the aforementioned require you to either discount or giveaway your book for free.
There is another way to promote without going through the promotion route, and that is using KDP Advertising, which is amazon book ads for authors.
Amazon kindle advertising is KDP specific, which sits on the Amazon Advertising Platform. It allows you to run paid advertising on your self-published book. The book you wish to advertise for will appear on either the Amazon search results, ebook detail pages, and on the lock screen on the Kindle devices. We will dive into the details of the different advertising types later.
The advertisements can easily be spotted on the Amazon website. If do any type of search for novels in the search result bar. The advertised book will have the tag “Sponsored” on the top right corner of the search result tiles.
In the above, the search term “Romance Novel” and resulted in 4 books with the tag “Sponsored” which means that these books are making a bid on the keyword “Romance Novel”.
The beauty of using KDP advertising is that you have control of the budget allocation to specific campaigns in real-time and can attribute the ROI on the most granular level, which allows you to really scale and optimize your campaigns. More on that later.
As of writing (March 24, 2021), KDP advertising support the following Amazon marketplaces.
Before going any further make sure to set up your Amazon advertising account for your KDP account. On your KDP dashboard click on “Marketing” under the “Amazon Advertising” section click on the marketplace dropdown, then click “Create Campaign”
Follow any additional steps required by Amazon such as entering valid credit card information. When the credit card details are properly set up it will then take you to the below screen for you to start your Kindle ad campaign.
The short answer is “Yes”, it is worth it. Other than sales, there is a positive feedback loop that occurs inside Amazon with your amazon book ads. Starting this feedback loop is crucial to your success as a self-publisher on KDP and can kick start your KDP marketing. This positive feedback loop is also called the “Fly Wheel” effect. Using KDP advertising is a very good way to start “spinning this flywheel”.
The flywheel effect as explained:
Another thing to mention is that any keywords you have converted in a sale will positively affect the relationship between your book and the keyword. Let’s say you are bidding on the keyword “Romance Novels,” It resulted in a sale, which means that the Amazon algorithm will know that this keyword is relevant to the book. Hence the ranking of your book on “Romance Novels” will improve.
The key takeaway is that KDP advertising will help you achieve tangible results (Sales) and intangible ones such as reviews and keyword ranking. These intangibles can affect tangible results. Knowing that KDP advertising can hit all the above objectives at one go really makes KDP advertising worthwhile, and a good investment as a result.
In this section, we will deep dive into the different metrics involved in KDP Advertising.
Calculated Metrics (calculated, using denominator and numerator from metrics above)
As explained previously ACOS is the % of advertising spent for a gross sale. Let’s say your book retails at $14.99, it takes you 4 clicks with the total spend of $2.35 to achieve an order, the ACOS in this scenario is 15.68%
With the book’s listed price at $14.99, do we actually get the full amount of that considering the extra cost, such as Amazon commission and printing cost? The answer is no. Therefore, if we run into a scenario where spending is higher than (Sales – Cost), we will be out of pocket in this advertising campaign.
Does spending more than your (Sales-Cost) always a bad thing? Not always. It really depends on your objective. This concept will be discussed further.
BUT! In order to control your cost, and ensure your campaigns are highly optimized (high ROI) you will need to understand how to calculate something called breakeven ACOS.
Before that though, you need to calculate your Royalty. Therefore, we should know the cost that is incurred by the author per eBook/Paperback sale:
eBook Cost ➡ Amazon Commission and Delivery Cost
Paperback Cost ➡ Amazon Commission and Printing Cost
Your royalty is net of cost, so the royalty for your book is calculated as follows:
List Price of Book minus eBook/Paperback cost
An easy way to get the Royalty amount on your book is by going to your KDP dashboard ➡ Bookshelf ➡ Rollover on the ‘…” beside the book ➡ edit ebook/print book pricing
Under the section “Royalty and Pricing” you can see what your Royalty is (your net amount) on each of the marketplaces
Armed with the Royalty and the Listed Price, we have the information to calculate the breakeven ACoS, which is:
So if we use the example in figure 2, List Price is $14.99, and the Royalty is $6.84, then our breakeven ACoS is:
Breakeven ACoS % = $6.84/$14.99 ➡ 45.6%
That means if the ACoS on campaigns or at the keywords/target level is higher than our breakeven AcoS of 45.6% than we are losing money and on the other hand, if ACoS lower than the breakeven ACoS than the campaign/keyword/target is making money. The following demonstrates the different scenarios:
By knowing your breakeven ACoS% you can use that as your key benchmark in the ongoing KDP advertising management and optimization. From the 3 scenarios above it may seem obvious that you want to avoid scenario 2, but it really depends on your advertising objectives, which will be discussed in the next section.
Let’s talk about campaign objectives, the key here is to identify what is the end goal here for your KDP advertising campaign, so you can establish your Amazon kindle advertising strategy. The following are the potential objectives for your KDP Advertising campaigns:
I may not have included all potential objectives, but I think you get the picture.
The key point is that if you have a certain objective in mind then you will have to be realistic with your ACoS targets. For example, you want to really rank for a keyword to ensure you are number #1 on the search results, then realistically your ACoS for that keyword will be higher than your breakeven ACoS.
Also, any top of the funnel activities such brand-building advertising objectives will normally results in a relatively higher ACoS.
In KDP Advertising, there are 3 main campaign/advertising type options when you first create a campaign.
Each campaign type appears in different areas on the Amazon website and also on the Kindle device. I will discuss in detail of each and what is the best way to used them.
The ads from this ad type shows up in two places 1) In the search results and 2) In the book detail pages.
In the above, from the search “Economic Books” the results with the tag “Sponsored” are from the Sponsored Product ad type. These publishers had set up a Sponsored Products campaign that is bidding on the keyword “Economic Books”.
The other type of Sponsored Products ad is product target, where the advertiser will choose a specific category, books, or book series to target. These ads will show up as shown below.
The ads from Sponsored Brands will be shown as a banner type ad, they are both shown on the top Amazon search results and also on the book detail page.
The Sponsored Brands banner is the top most banner on the Amazon search results and allows the advertiser to list 3 books on the banner. For example, you have 3 books that is written on the topic of “taxation”, using Sponsored Brands is a good way to bring awareness to all 3 of your books on the topic of “taxation”.
For Sponsored Brands ads on the book detail page, they will show up as the below.
Also to note, Sponsored Brands is good for helping customers discover and engage with your brand to generate awareness with the ability to customize your tagline with ads that link directly to a landing page with your selection of books.
Lockscreen ads allow book publishers to advertise their books with interested targeted ads on Kindle E-readers and fire tablets.
The ads will show up on either the wake screen or the Kindle E-reader and Fire tablets’ home page. When the readers engage with the ad, the reader will be directed to the eBook/paperback detail page.
Within the aforementioned advertising types in KDP advertising, there are also different targeting types that you can select.
In this option, you as the advertiser gets to pick the specific target keywords and products/books with the corresponding bid to the book in your ad. This is the most granualar targeting type, allows for the most control as it allows for the one-to-one relationship between the keyword/product and bid.
The automatic option allows Amazon to target keywords or products/books that are similar to your product/book in your ad. There is much less control in this option. It is basically going on autopilot, and it doesn’t have a one-to-one relationship between the keyword/product and bid.
This option can be very useful in the beginning so you can validate the keywords and books you can target before going manual.
In genres such as sci-fiction and romance, the revenue coming from Kindle Unlimited can be significant. This is reflected in the KENP Royalties via the KENP Reads. Since KENP Royalties can be an amount that can change your bid adjustments
As you run your KDP Ads your royalties from these campaigns will trickle in, that is when you need to adjust your breakeven ACoS to include KENP Royalties. Hence your calculus will need to change
So your new KENP Adjusted ACoS will be:
KENP Revised ACoS % = Spend/(Sales + KENP Royalties)
Unfortunately, this KENP Revised ACoS % figure is not inside the Amazon ad console, but it is inside SellerMetrics so the KDP authors that uses our system can optimize their bids using the KENP Revised ACoS % instead of plain ACoS % (more on the that later).
As you can see above your optimal bid calculus changes with the KENP Revised ACoS %
2. Select Campaign Ad Type
3. Under the Settings section, edit the Campaign Name, Start/End Date, Daily Budget, and Targeting. For best practices on campaign, names can check out our article here, and for best practices on finding your optimal campaign budget here
4. Select your Campaign Bidding Strategy. I think the screenshot below gives an excellent explanation of what each strategy does. The rule of thumb is that if you want maximum control, the “Fix bids” option is the way to go. If you want to go a bit auto-pilot, it would be the “Dynamic bid-down only” option.
5. Choose Ad Format, I normally use the option “Standard ad”
6. Add Products/Books. You will add the book titles you want to advertise. You can add multiple titles if you like, but you have to make sure that these titles are keywords related to each other. Only add multiple titles/products if it is a variation of the main product; otherwise, it is recommended to add one title in this section
7. Targeting options for manual targeting campaigns only. You will have the options to choose either keyword or product targeting.
8. Add Targets. In this option you will add the specific keywords/product and their corresponding bids
This option is selected when you click on the keyword targeting option in step 7. If you add your book titles in step 6, then there will be a list of suggested keywords once you get to this section.
If you only started your first campaign for this title and didn’t have any previous data, the suggested keyword and bid can be a good starting point. Make sure to go through all the suggested keywords manually and screen for the ones you deem not too relevant for your title.
If you know exactly what keywords you want to bid for, you can select the “enter list” option as well.
This option is selected when you click on the product targeting option in step 7. If you add your book titles in step 6, there will be a list of the suggested product once you get to this section.
You select a default bid. If you have previous sales on this title, you can use the CPC in the campaigns. Go through the suggested list, pick and remove the target title by relevancy. If there are competitors’ book titles that you want to target, you can enter their ASIN under the “Enter List” tab.
9. Add Negative Targets
Similar concepts for both negative keywords and products. If there are targets that you don’t want to bid for at all or phrase you know are not a good fit for your title you can add them to the negative list
10. Final step is to confirm all your entries and click “Launch Campaign”
Ok, now that you have created your first campaign and started to drive clicks and orders, you cannot just sit back and relax. To improve your ROI or make sure you are fulfilling your objectives, you will need to optimize your KDP advertising campaigns, in other words, optimization. Here are 5 steps you can take to optimize your campaign. Of course, they’re probably much more complicated and comprehensive ways out there. I condensed the optimization process to 5 quick and easy steps, which only needed to be done once a week.
Step 1 – Stopping Bleeders
Action ➡Change Bid to $0.02 (Amazon min bid)
Step 2 – Decrease bids with really high ACoS
Action ➡ Decrease bid to 50%
Step 3 – Decrease bid higher than your breakeven ACoS (in our example our breakeven ACoS is 45.6%)
Action ➡ Decrease bid to 25%
Step 4 – Increase bid on really low ACoS
Action ➡ Increase bid 20% above CPC (If you are not using SellerMetrics, this require a lot of manual calculations)
Step 5 – Add new keyword and negative keywords
This step will require you to run Amazon advertising reports. On the Amazon advertising dashboard click on “Report” ➡Click “Create Report” ➡ Select Campaign Type ➡ Report Type “Search Term” ➡ Report Period last 30 Days ➡ Click “Run Report”
Once the report has been processed, download and open the report.
Add new convert keywords
You will filter the report for any “Customer Search Term” that converted as an order, and filter match type to exclude “Exact”.
Lastly, compare if the “Customer Search Term” is NOT equal to “Targeting” values. You can do this with a simple spreadsheet IF formula. The idea is that you want to pick up unique “Customer Search Term” values that resulted in an order that is NOT currently in your campaign
Add the filtered search terms into the corresponding KDP advertising campaign. As to what the starting bid should be, I would use the CPC value on the campaign level
Add negative keywords
Going back to the search term report, you will filter for clicks => 8 and order (14 Day Total Orders) = 0
Add the resulting values on the “Customer Search Term” field and add the negative keywords by going into the corresponding campaign ➡click “negative targeting” ➡click “Add negative keywords”. It is also highly recommended that you use the “Negative Exact” match type
As a writer, I understand that you want to spend all your time writing your best work. That is why I condense the optimization process to only 5 steps, once a week. Doing all the above should not take more than 2 hours out of your week. Depending on the number of campaigns you are currently running, of course.
If the 5 steps are followed week in and week out, you should see your campaign optimized. This means sales increase and at the same time your ACoS decrease. That is the goal all Amazon advertiser is striving towards.
Also to note, the above optimization process doesn’t take into account the KENP royalties. Optimizing with KENP royalties can only be done using SellerMetrics, which we will document below.
There are many choices for Amazon Ads software that sits on top of the Amazon Advertising Platform. Unfortunately, not all Amazon PPC software is KDP friendly. We at SellerMetrics designed our KDP PPC software to support KDP publishers as well as Amazon product sellers.
SellerMetrics supports the following feature:
Action ➡Change Bid to $0.02 (Amazon min bid)
Action ➡ Decrease 50% from CPC
Action ➡ Decrease 25% from CPC
Action ➡ Increase bid 20% above CPC (If you are not using SellerMetrics, this require a lot of manual calculations)
Using SellerMetrics to “Harvesting” your search terms and add them as keyword is super simple. This can be done for both positive and negative, by either orders or KENP reads as your trigger threshold.
Beauty of SellerMetrics is that you can tell the system to harvest for # of Order and # of KENP Reads
Once the rules are set up, the trigger search terms from the above rule will appear on the “Converted Search Terms”, where you can push the search terms into the selected destination ad groups
In the above negative rule, it is telling the system that any search terms that realized >=5 clicks and 0 orders will appear on the “Negative Keywords” screen, where you can push these poor performing search term as negative keywords into the selected destination ad groups in the above rule.
If you take the above steps with SellerMetrics, I guarantee that you will see ACoS improvement within 3 weeks.
Also, the beauty of SellerMetrics is all the above steps be completely automated with our Automation Settings setup below.
There is no a risk (no credit card required) free 14 days trial for you to see for yourself, sign up for a free trial with SellerMetrics.
Yeah, so ok I have reviewed my own software, might be a bit biased. But I stand by it. If you have read this review, I’ll be happy to give the reader a lifetime discount, just reach out to me on the widget on the button right and mention this article 😉
I hope the above will help my fellow KDP authors with the knowledge to tame KDP advertising. As with anything new, it may seem intimidating at first, but if you follow the above steps you should see some positive outcomes with your KDP advertising. KDP has become more competitive over the years, you cannot just publish a book and just wait for royalties to come in, being strong in KDP advertising will definitely give you a clear advantage.
If you have questions or insights to share, please feel free to post them via the comments section. Please also consider joining our Facebook Group where we discuss any questions you may have about running an Amazon business.
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