Advertising Statistics and ROI for Authors: Part 1
In a past career and under current contracts, I’m responsible for the advertising analysis of clients and customers. As a small business owner and operator, making sure that my dollars spent pay back in sales is critical for me. In this series, I’m going to dissect and analyze my paid advertising efforts for my current webserial, From Winter’s Ashes.
I advertised the WebSerial through three major channels of online targeted advertising:
Reddit – 170 million users, offers targeted advertising by subreddit. In this case, /r/Fantasy with a user base of 83,750 readers, with a peak daily readership of ~1300.
Facebook – 1.5 billion users, 1.1 billion active users.
Twitter: 316 million active users.
My methodology on this analysis involved making minimum advertising commitments to each advertising channel. Each represents the minimum financial commitment through advertising on that channel:
Reddit: $10, for a month-long campaign on modestly populated subreddit.
Facebook: $35, at $5/day for a week.
Twitter: $35, at $5/day for a week.
Understanding your key metrics for advertising your writing and determining the cost effectiveness:
1. Impressions. How many times was your advertisement served? Chances are good that actual human eyeballs didn’t see them. (Thanks, AdBlocker). Depending on the website, 35%-85% of users block ads. Young markets with tech-savvy users block ads much more.
2. Clicks / “Engagements”. How many times was one of your advertisements actually interacted with?
3. Engagement rate: What percentile of your ads served resulted in an interaction? (For Search advertising, 3% is a good target. For display advertising, 0.3% is a solid average.) So per thousand impressions, expect an average of 30 clicks on Search advertising like Google, and 0.3% on display advertising like Reddit/Facebook/Twitter.
4. Cost Per Click (CPC). The core metric in any advertising campaign: Divide the cost of your campaign by the number of times the ad was interacted with. That’s what you paid per click.
5. Conversion rate: What percentage of visits to your website, overall, resulted in income?
6. Conversion income: What’s the average income that a conversion supplies you?
7. AIpV / Average Income Per Visitor: On average, how much money do you make per click on your website?
8. ROI-A: Return on investment on your advertising. Realistically, 10-20% is a good target. Most ads, if they’re profitable at all (most aren’t), will return only 10-20% more in additional sales than the advertising cost you. The best campaign I’ve ever run for a client returned a 310% ROI, but that was a finely tuned Google Search ad campaign for a regional, limited-supply professional service.
Be aware that some advertisers (Facebook) will obfuscate their metrics or want you to use their own interaction metrics, which can make it very difficult to determine to industry standards some of these metrics. If you plan to make a serious advertising campaign on one of these advertisers, spend extra time learning what metrics will matter, and look to professional advertiser forums for appropriate targets for your campaign there.
How to determine if your advertising campaign for your writing will be profitable (MATH TIME):
1. Look up your own website’s conversion rate. (If you don’t know, divide your number of transactions on your site in a month by the number of unique visitors in a month. Google Analytics can help you determine this.)
2. Determine your conversion income. (Divide your monthly income from your site by the number of paying customers on your site.)
3. Divide your conversion rate by your conversion income.
4. Look up the average CPC on the advertising channel.
5. Compare that against your AIpV.
Chances are distressingly good that your advertising campaign will not be profitable. Sorry. Just because it won’t be profitable doesn’t necessarily mean it won’t be useful, however. When building a name or a brand, having a lot of Impressions hitting eyeballs consistently can help build your brand awareness, and get your name to stick in people’s minds.
A sample advertising campaign, using plausible numbers:
Author writes a book titled “FooDog Generic Fantasy”, and sells it directly from their own website as well as through other distribution channels. It’s a nice book! It’s got great cover art, a solid synopsis with plenty of hooks, and the pricing is well within market norms for a genre book.
Author decides they want to advertise their book. The Author has a choice between two fundamentally different kinds of online advertising: Search Advertising, and Display Advertising. Search advertising displays when someone searches for a related search term that the Author specifies. Display advertising shows to (potentially) just anyone visiting a site/network.
Because the product is a book with a specific title, Author wisely decides that people aren’t likely to be searching for their book by name if they don’t know about it. The title of their fabulous book is “FooDogs Generic Fantasy”, and Author rightly determines that almost nobody will do a Google Search for the nonsense term “FooDogs” unless they already know about the book anyway, and the words “generic” and “fantasy” aren’t going to be useful search terms. (Google will agree with them, and degrade or decline their advertising.)
So Author wisely decides to advertise FooDog Generic Fantasy on display ads, instead. Author is hopefully either decent with art design, or else they’ll be paying someone else for nice artwork for their ads. If Author is going to do it themselves, Author needs to know the technical specifications of the display advertising on their channel, such as resolution of image, size limits, file formats, and form factors. Author will also have to invest the time (10-30 minutes per channel) setting up their user accounts to advertise.
It takes Author 1 hour to make their own art to their satisfaction, and Author spends 30 minutes setting up their first advertising campaign, researching, and implementing the ad, and another 30 minutes tuning it to their target: Readers who would plausibly enjoy and be interested in FooDog Generic Fantasy. Author knows not to waste their money advertising to people who would prefer to read Wartime Specific NonFiction, so they ensure their ads go where they’d be most effective.
Author makes a $35 investment in one weeks’ worth of advertising, and is down 2 hours of labour.
After week’s worth of waiting and tweaking, Author’s results come in:
Engagement Rate: 0.3%
Cost per Click: $0.33
Author’s results from this advertising campaign are firmly average for a Display ad campaign. So, the advertiser is delivering pretty average results on the internet. Not great, not terrible.
Next, Author goes to their own website, to track their statistics:
Visitors last week: 105
Visitors this week: 210
Conversion Rate: 3%. (Firmly average for retail sales online. Not great. Not terrible.)
Author sells FooDog Generic Fantasy eBook for a retail price of $6.00. Of that $6.00, $4.85 is the Author’s profit after taxes and fees.
Since this is all that the Author currently sells on their site, calculating the average income per conversion is easy: $4.85.
Author’s advertising campaign ostensibly brought in 4 additional customers, for a net benefit of $19.40.
The ROI-A on this advertising campaign, therefor, is -45%. Ouch!
While it cost the author money out of pocket to commit to this advertising, it teaches the Author a few valuable lessons about their own website’s offerings:
1. Author’s advertising campaign was average, it was middle of the road, it was unremarkable. It worked. It was not a failure. By every metric the professionals care about, the ad did what it was supposed to do.
2. Author’s website sucks at making them money.
3. Author paid only $15.60 (net) to double their site traffic for a week, and put their name and brand awareness into the minds of 105 additional customers. That’s about $0.15 per potential customer, and that isn’t counting the number of people who saw Author’s name and advertising and had it stick in their minds.
If Author had, say, a second and third book to offer on their website for sale, that average income per conversion might rise from $4.85 to $7.50 as readers found interesting looking titles to buy. In this case, Author would still be losing money, but they would be losing only $5.00 for the same advertising and brand marketing benefit.
The better your website is at making conversions of visitors, the more effective your advertisement will be. We’ll see in part 2 my personal experiences with advertising channels, and why controlling your CPC (and, more importantly, improving your conversion rate and income-per-conversion) matters for an author.