Site icon Kairos – By Brian Niemeier

How Amazon Cut Your Royalties Under Your Nose

Since the dawn of KDP, indie authors have been questing for the newpub holy grail: that magic formula for earning a living on Amazon.

If we rendered KDP in visual terms, it would look like the Valley of the Kings or the Dakota Badlands, with hopeful authors digging away like ants.

All that’s really changed over the years is the preferred digging tool. Some scratch away with dental picks. Others use shovels. Lately, better-bankrolled operations have been bringing in backhoes.

In the old days, the first authors to strike it rich on Amazon used impulse buy pricing and social media networking to break out. When KDP Select debuted, the optimal strategy switched to limited-time giveaways in the hope that ranking hard on the free charts would bounce back to the paid list.

That ride ended when Amazon, in their infinite wisdom, nerfed the free-to-paid rank bounceback. Enter the era of rapid-release, mailing list trade-driven neo-pulp. Some prominent folks made a mint off this strategy and declared they’d cracked the code.

But trouble reared its ugly head in paradise again. This time, Amazon nerfed mailing lists, messed with also-boughts, and nixed authors’ ability to see if their books had been ghettoized.

Somewhere around this time, Amazon’s search feature became near-useless for finding books users wanted. Unscrupulous authors–looking at you, wordsmut peddlers–who deliberately miscategorized their books justly got much of the blame.

Yet all the while another, more serious, problem multiplied right under our noses.

With mailing list trades defanged and organic book discovery reduced to a lottery, groups like 20 Books to 50K came to the rescue. They, too, touted rapid release and a replicable sales strategy based on data science.

They also swore by paid ads–particularly Amazon Marketing Services.

AMS is rather complicated, and bugmen may inquire further of Amazon itself if so inclined. In layman’s terms, AMS lets authors place ads for their books which Amazon will show based on keywords chosen by the author. Each keyword is assigned a click bid, which is the price cap in the micro-auctions Amazon’s algorithm holds to decide which ad associated with a given keyword it will show the user.

In even shorter terms, AMS manipulates Amazon’s search engine, and it costs authors money.

How much money? That depends. Gone are the days of paying a per-word rate for a classified ad. AMS charges you whenever someone clicks on one of your ads. The amount they charge you depends on the click bid you set for that word.

Different AMS gurus preach different click bid sweet spots. The prevailing wisdom is 51 cents. Others insist on 35, or even 25 cents.

That’s all academic. The point is that, whatever click bid you set, you’ll be charged up to that amount anytime someone clicks your ad.

To keep you from losing your shirt, AMS does let you set a daily spending cap. Those click bids add up fast, though, especially if you heed the word passed down from the marketing whiz kids.

How many keywords to marketing oracles say you need to crush it on KDP?

Are you sitting down? Good.

Because the answer is 75,000 keywords distributed across 500 ads with 150 keywords each.

Per book.

Now, not all of your keywords will get clicks every day. In my experience, you’ll have one or two hot terms that dominate each add.

But say you’ve got one keyword getting one click per day at 25 cents per click.

That’s $125 in ad spend per day, folks.

And if shoveling money into AMS is the only reliable way to get your book noticed, that’s also Amazon going full pay-to-play.

Which would be fine if they didn’t already charge everybody 30% just to sell on their platform.

Publishing house apologists who’ve been predicting newpub’s doom for years have long warned that Amazon would take a bigger slice of the royalty pie. But the royalty squeeze never came.

Except it did, and I just showed you how Amazon cut your royalties under your nose.

Your AMS ad spend may as well be an additional cut Amazon takes out of your earnings.

To end on a bright note, my own experiment with AMS recently concluded. I followed the ad gurus’ advice as best I could–even going so far as to buy special software that helps pick keywords.

Long story short, none of my ads turned a profit. I shut them down.

The first day after I terminated my ads, my book sales rose by 30%, and they’ve stayed at the higher sales volume.

That tells me AMS isn’t the silver bullet the eggheads say it is; nor is it the only way to drive sales.

What’s driving my sales is you, the reader. Which is just how I like it. Thank you!

Keep supporting small businessmen who want to entertain and inform you, and someday soon, we’ll find a viable alternative to the megacorps. My new best seller lays out how.

Till then, do what you can where you are with what you have.

Exit mobile version