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The Rising Cost of AMS Ads

The Rising Cost of Amazon AMS Ads

If you’ve noticed a sharp decline in the effectiveness of your AMS ads recently, you’re not alone. An Amazon cash grab may be at the bottom of it.

The New York Times reports Amazon’s revenue from on-site advertising has surged by 130 percent in the first quarter of 2018, up to a staggering $2.2 billion. Take a moment to truly appreciate all those zeroes: $2,200,000,000.00.

It’s no surprise then that Amazon has refocused its gaze on this sector, intent on adding a few more zeroes to that figure.

New Pitfalls for the Unwary, New Tools for the Savvy

AMS has long been regarded as one of the most cost-effective forms of cost-per-click online advertising, and its was perhaps inevitable that the retail giant would seek to bring that equation in line with other ad platforms.

We’ve may be seeing the first stages of that rebalancing with the new prominence of the Bid+ option. Bid+ allows advertisers to automatically increase their bid by 50 percent when an ad is eligible for top placement. The feature entered beta testing in 2016, and has been available to vendor accounts for some time. Now it has been added to the Sponsored Product Ads, but as part of the ad creation interface, and available to all users.

The Bid+ option can spell disaster for an ad campaign that’s not performing well. Increasing the spend on a failing ad will not make that ad successful, even if it manages to sneak into the top results. It just allows users to waste more money on an ineffective ad, and many novices will do exactly that. In the hands of a savvy advertiser, however, Bid+ can give a successful campaign just enough of a boost to shoulder aside the competition.

AMS has also tripled its default CPC bid. A $0.25 bid was recommended to advertisers in the past, but that number has soared to $0.75.

That may seem like a trivial change; after all, experienced AMS users can tailor their bids to fit a wide range of strategies, including profitable campaigns as low as $0.10 per click. But there are a substantial number of novice users experimenting with AMS ads, and if they are placing ads at $0.75 or higher, that’s sure to inflate the cost of ads across the board. More experienced users are likely to increase their bids to compensate, making it more difficult to run a profitable campaign.

Is AMS Headed for Uselessness?

Combined with ever-increasing participation from big-budget corporate advertisers, the ROI for AMS ads may be on its way down. Does that spell the end of AMS as a useful platform as authors?

Absolutely not.

What it does mean is that the world of Amazon advertising has gotten a little bit more competitive. Authors who have been skating by with unoptimized ads and a handful of keywords are going to have to improve their game if they want to stay profitable — or in some cases, become profitable.

(Along those lines, I will now tip my hat in the direction of ALLi Partner Member Mark Dawson, whose outstanding Self Publishing Formula courses are an indispensable guide for indie author-marketers.)

Being an Indie Author Means Staying Nimble

Inflation of costs and weakening of the return on investment are part of the normal lifecycle of any advertising platform: we’ve seen it with Google Ads, with Facebook, with BookBub, and more. A successful ad platform attracts more users, and the owners of the platform — being sensible business operators — will capitalize on that demand.

That’s why indie authors need to diversify their advertising channels. No platform lasts forever, and as they wax and wane in effectiveness, indies need to have fallbacks. The time to learn the ins and outs of those alternative platforms is now, before it becomes a desperate scramble born of necessity. Exclusive dependence on any one service provider hobbles your ability to adapt to our rapidly changing industry.

And if that advice sounds familiar, it should: it’s one of the key arguments for why authors should go wide and build their brand on multiple platforms. That advice applies to every aspect of your business as an indie author, not just where you sell your books.

Over to You

What changes have you seen in AMS ads? Let us know in the comments below.

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4 Responses to The Rising Cost of AMS Ads

  1. Laurence OBryan September 19, 2018 at 12:39 pm #

    One of the interesting side-effects of the increase in cost of Amazon clicks is the requirement to raise our ebook prices to compensate. This alone may bring about the death of the 99c indie ebook, except for series starters and for short-term email promotions.

    We see a continuing focus on upskilling as a good thing at BooksGoSocial. You don’t have to be a marketing guru to understand things such as A/B testing, but you do have to be willing to learn. For more on what A/B testing means and why it’s critical to indies advertising on Amazon see this short post: https://services4authors.com/2018/09/10/shattering-the-1-book-promotion-myth/

  2. Seeley James September 18, 2018 at 4:44 pm #

    I’ve spoken at length to a friend who spends over millions per month on advertising (in consumer commodities: make up, shampoo, etc) and has several employees working on Amazon alone. In addition I’ve discussed AMS ads with an advertising consultant. After looking at my ads, where I’m competing and winning or losing, both said the same thing: Indie authors are killing themselves and each other by bidding on non-selling Keywords.

    They both, independently, said a keyword that does not result in a sale in fourteen days drags down the other keywords in that ad, and raises the cost for others trying to bid that KW.

    I took their advice, trimmed down most of my ads to the essential keywords and saw improvement. Because I’m alone in doing this, I’m still seeing red ink on many ads.

  3. Tim Heath September 14, 2018 at 5:08 pm #

    I’ve seen a drop in effectiveness with Amazon on my ads lately, but not for the reason you might think. I have six or seven ads performing well above the line for me (that line being, Sales – Ad Spend). It’s getting the ads to spend money that is annoying! I find the above article amazing, therefore. I have performing ads that aren’t now performing! I wish they were even spending the 2 or 3 dollars a day, as my best performing ad that has been running for months is making 4 or 5 times what it’s spent. For that kind of return, like Amazon it would seem, I would happily slip a few more zeros on as well.

  4. Richard Lowe September 13, 2018 at 1:43 pm #

    I have used Amazon ads for years with some success. I have seen the amount of money that I pay out increased dramatically in the last few months. I’ve also seen the results decrease at the same time. Based on a bit of brief research, it looks like there’s more ads per page being delivered now, which quite naturally reduces click through rates and things like that.

    It got so expensive, with such a low return on investment, temporarily at least, that I’ve turned off Amazon advertising. It’s just not making enough money to make it worthwhile anymore. In fact, lately it hasn’t even been breaking even.

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