How Are Those Amazon Ads Working Out for You? (Part 1)

Today 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.

Yay!

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