Friday, January 29, 2016

The Effectiveness of BookBub Ads

BookBub is the most popular mailing list / advertisement venue for ebooks right now. BookBub sends out a daily email to well over three million subscribers showcasing ebooks that are being offered for a discount. There are many other promotional sites out there that are useful, but they don't have nearly the number of subscribers that BookBub does.

For an independent author, the downsides to BookBub are twofold:  the chances of getting accepted, and the high price of entry.

There are innumerable posts out there already that give advice on how to better your odds of acceptance, including one by BookBub itself, so this post will not address that.

Instead, this post will address the high price of entry, or more specifically, the potential return on investment (ROI) of running a book ad. Depending on the popularity of the genre and the type of promotion involved, a Bookbub ad can cost anywhere from $55 to $2,350. (as of January 2016) As an author I am most interested in submitting to the Fantasy or Action and Adventure genres, where prices range from $260 to $1,450.

A thousand dollars is nothing to a publisher, and therefore BookBub can be an extremely cost-effective marketing service for them.  But for an indie author on a tight budget like me, it can be a make-it-or-break-it gamble. If somehow I managed to get one of my books accepted, would it be worth it?

To find out, for 30 days I tracked the Amazon rankings of 50 titles from BookBub ads from the following categories: Fantasy, Science Fiction, Historical Fiction, Action and Adventure, and Bestsellers, because those titles are of the most interest to me as both a reader and a writer. Since you get less than 50 titles in a single ad, I collected the titles over a period of a little more than a week until I got up to 50.

Right from the beginning, I noticed something interesting--only 3 of the 50 titles were independently published. Out of the rest, some of them may have been independently published under the name of a small publisher, but the majority were large publishers. Lest that sound too depressing, all three indie titles did very well in terms of rankings. In fact, the ranking of those titles at the end of the experiment (30 days after the ad went live) were 2, 3, and 19 out of the 50 titles studied. Having a large publisher might give an author a better chance of getting an ad accepted, but according to my study, doesn't give the author a boost in terms of ROI.

Once I had tracked the rankings of each title, I grouped them by promo price point and averaged the rankings. I then plotted the results for the 30 day period for each average: $0.99, $1.99, and $2.99-$3.99, and Overall Average.

Amazon Ranking vs. Time (Days after ad runs), averaged by price point
The first thing you notice is that for the first week, the different price points have nearly identical curves. More than that, as time goes on, all the way up to 30 days, there is little divergence.  One would think that books priced $0.99 would do far better across the board than those priced $2.99. Not so--they ALL do well.  But is it well enough to justify the far higher price of a $2.99 ad compared to a $0.99 ad? To determine that, we'll have to put a dollar amount on those rankings.

In tracking the numbers I flagged when a title reverted to its original price. I did this specifically to see if there would be a sudden drop in sales due to the new price. One thing I noticed is that some of the titles actually kept their discounted price for the entire 30 days. As for a drop in sales, to my surprise, I didn't see any such drop. I conclude from this (unscientific) study that while sales drops probably occur, they are not nearly as significant as I had thought.  For the purposes of calculating ROI, I assume that the discounted price is maintained for the duration of the 30 days after the ad runs.

Also, for titles in the $2.99 - $3.99 range, I assumed that for royalty calculation purposes, all of the titles were in fact $2.99 with a 70% royalty.

In order to translate the rankings to a number of sales per day, I used this online tool, plotted the results, and produced the following equation:

Royalty = 29371 * [number of sales] ^(-0.8) * [price point] * [royalty percentage]

Where royalty percentage = 0.35 for a price point of less than $2.99, and 0.70 otherwise.

For the initial investment, the four primary genres I chose, Fantasy, Science Fiction, Action and Adventure, and Historical Fiction, the spread in prices fortunately isn't all that much:

under $1
$1 - $2
Historical Fiction
Action and Adventure
Science Fiction

Which averages out to $565, $975, and $1,413 for each price point respectively.

With those investments, here are the returns:

Looks like a sound investment. The Break Even point is reached on Day 3. Total Royalties over 30 days is $888.40, resulting in an ROI of $323.40. Not bad.

The $1.99 price point gives even better results. The Break Even point is Day 3 again, and Total Sales is $1,655.50, yielding an ROI of $680.50.

...Wow. For the $2.99 price point, the Break Even is reached on the first day, with total royalties equaling $5,804.43. This leads to an ROI of $4,391.43.

What is going on here? Well, a few things, so far as I can figure. First, as I noted earlier, all three price points get very similar (that is, excellent) rankings, especially for the first week, where most of the sales occur. This, coupled with the $2.99 price point having a far better royalty ($2.99 * 0.70 = $2.09 per sale) than the other price points ($1.99 * 0.35 = $0.70 per sale) ($0.99 * 0.35 = $0.35 per sale), yields massive returns right off the bat. There may also be a psychological factor at play: Discounting a $2.99 title to $0.99 is a good deal, certainly, but still, $2.99 isn't all that much to spend. However, discounting a $9.99 title to $2.99 "feels" like a better deal, because of the $7.00 difference in cost. Especially if you're getting a bundle of several books at once...

Still, you might be thinking that these results just represent the average.  It's still a lot of money to pony up for an ad, so what if your book underperforms?

To answer this question, I plotted up the ROI graphs again, this time only using the worst performer in each price point. What happened to those titles?

Uh-oh, now things don't seem so hot. In this case, a book discounted from $3.99 to $0.99 did not get an ROI after 30 days. Or did it?

Remember, I conservatively assumed during my averaging that the price points stayed at the discounted price for the full 30 days. What if we take into account when it went back to regular price?
Now things don't look quite so bad.  Reverting back to the original price causes a large bump in royalties, which is enough to produce a respectable ROI.

For the $1.99 price point Worst Case:

Already there is enough to cover the investment costs and produce an ROI, which isn't even much worse than the average of $680. The original price of this book was $6.99, so what happens when we take that into account?
Here, the ROI is significantly improved--more than doubled, in fact.

What about for the $2.99 Worst Case?
Here, there is a good ROI again.  And when we include the book reverting to its non-discounted price when it did, we get:
Here, the visible "bump" in royalties caused by the end of the discount isn't as dramatic, but there still is a benefit. The ROI over 30 days still goes up by 56%.

So that's the bottom line. No matter what you price your book at, even if it underperforms, it's likely that you'll make your money back with room to spare. What's more, these numbers don't account for any "spillover" sales you might get for your other titles. (as an aside, make sure you have other titles available to benefit from this)

My advice?  Create a bundle of 3+ books, price the bundle at $9.99, then submit an ad to Bookbub for a promo at $2.99. According to the posts giving tips, bundles are more likely to be accepted.

And if you are fortunate enough to get accepted by BookBub, find the money to pay for the ad.  It's worth it.

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