KDP Ad Scaling Methodology For Beginners
You're selling books, but you can sell more with ad scaling.
What is Ad Scaling?
Three years ago, I started the Detective Jamie Johansson series. It began with 3 novels set in London, then migrated to Sweden. The three earlier novels were segmented in a prequel trilogy, giving the ‘mainline’ series a bit of breathing room. Angel Maker has done well, and the sequels have been well received, and I just launched book 12 in the series, which again, people like … so then, after all this time, with book 13 in the pipeline, too, why does my cost and profit spreadsheet tell me I’m barely breaking even?
It’s because I’m scaling my ads to increase my reach.
The concept that you have to work with for sustainable KDP growth is called Ad Scaling. Others may have different names for it, but the basic premise has to work around Amazon’s ‘sixty-day cooling off’ period, wherein, all the book sales revenue (or royalties) you make during January, let’s day, doesn’t hit your account until March. Specifically, the end of March. So, you have a great day on January 1st, where you spend £200 on ads and you make £300 on book revenue — you don’t get paid that £300 until March 31st. But Amazon still charge you the £200 when you hit your billing limit (every few hundred quid) in early January.
What that means is that your £200 daily ad spend needs to be less than your monthly revenue divided by thirty from back in October. Because it’s your October royalty payment that determines your January ad spend.
Crazy, right? So, what is ad scaling then? This is the [really] simplified formula using these months as an example;
([October Revenue]/31)=January Daily Ad Spend Limit
([Average January Daily Book Sales Revenue]x31)=April Daily Ad Spend Limit
There are a lot more nuances to this, but using this basic calculation, we can account for Ad Scaling. Or at least the possibility of … stick with me here.
How Do You Actually Scale Safely Then?
If I’m barely breaking even, how do you scale ads? Surely, you need profit to do that, don’t you? You do. But that profit isn’t money in your pocket when it comes to scaling, it’s just investable capital. Whether you have a lot or a little, scaling is the right way to go to build your sales figures. So let’s look at an example of how this works.
For the sake of round numbers here;
(AS = Ad Spend / BR = Book Revenue)
August: AS £900 / BR £1,200
Profit: £300
September: AS £900 / BR £1,200
Profit: £600
October: AS £900 / BR £1,200
Profit: £900
For argument’s sake, let’s say this is how my figures look; and that they’re steady for three months — here’s what I’m thinking:
You need to take whatever ‘profit’ you have, in this case £900, and you divide that by 90 — why 90? Because 90 is the maximum time between your Jan 1st Ad Spend and your March 31st Royalties Payment. So this is our working figure.
So you take that £900, and you say, okay, chop this 90 ways. £10. Ideal.
Then you take your Ad Spend — which for the last three months has been a steady £900, and you chop it 30 ways — for the 30 days of the month.
Avg. Monthly Ad Spend: £900 = Avg. Daily Ad Spend: £30
Profit(900)/90 = £10
Combine these two figures, and you’ve got yourself your scaling cap. £30 + £10 = new daily Ad Spend limit.
You know, based on your average earnings and average spend, that you can increase your AS to £40 without going negative in the account (because you have your cushion) or having to nip the top off your ad growth and reduce it (which you definitely don’t want to do).
Now, you’ll likely not see a big immediate jump in the revenue, and you’ll actually probably come down to close to 100% ROI for a month or two, or maybe even drop below, and that’s because the organic RTR will take a while to build up and Amazon Ads is a fickle mistress.
I suspect you’re only advertising book one of your series (or should be to make the most of this method), so it’ll take a while for the extra people now buying book 1 (an extra 30% hopefully!) to get to book 2, 3, 4, etc. Your figures should jump a little, but you’ll likely be spending to the hilt for now. Then, in a month, two, three, you should see the revenues for the other books rise accordingly, and that £300pm profit you saw before should also rise.
Does this work?
Yes. Though it’s not the only plate spinning. You can keep scaling to the hilt and keep bringing books out to give yourself little profit bumps and scaling windows. Every pre-order period should generate money that gets ready to hit your account 2 months after the launch and should alleviate that scaling angst. If you don’t know which day to launch a book on, stay tuned — I’ll tell you in another post. I’ll also tell you how to gear Amazon Advertising to work for you, what kinds of campaigns work, and which are best, and how to ensure you’re maximising the usefulness of every tool at your disposal.
I stumbled at the start of my book series, and now I have my method locked in, the numbers speak for themselves. Scaling is tough, it’s scary, and it’s pretty unforgiving. But you can mitigate the risks by using a strategy and looking at the numbers.
Hope this was of some help! Drop a comment below if you want to ask any questions and I’ll be glad to give you some advice if I can.