The Ripple Effect: How Amazon Ads Drive Organic Sales
A Case Study From 3 Years of Amazon Ad Campaign Data
We recently completed a thorough analysis of three years of data in order to quantify the impact Amazon Ads have on organic sales of books (yes, we received permission from the publisher to share this with you).
The results were fascinating, and, although I’m tempted to dive right into the numbers with you, it is vital to first lay out the details of this unique case study, because your results will not likely be the same as what you see below.
“Amazon Ads produce more growth than just what is attributed in the ad dashboard.”
Even though results vary widely between book publishers, the data we’re about to review validates an overarching principle that applies to all books, authors, and publishers - one that we’ve seen with every one of the book marketing projects of which we’ve been a part - Amazon Ads produce more growth than just what is attributed in the ad dashboard.
Spoiler: In this case study, the growth that came from the ads was 4x what was attributed in the ad platform!
Amplify’s Experience
Over the last 5+ years, our marketing agency has worked with 28 book publishers and many individual authors to promote over 25,000 books. The millions of ad dollars that we’ve invested in Amazon always bring growth, but the amount of growth varies based on a number of variables, including the:
Author’s platform (and the platform of the publisher)
Trending nature of the content
Competition
Ad budget
Book’s price point
Time of year
Number of reviews and their average star rating
and more
Details of the Case Study
With that in mind, here are the specific details for this case study:
Publishing Model: KDP
Number of Books Advertised: 58
Type of Books Advertised: Children’s Books and Journals (two highly competitive spaces)
Book Formats: Hardcover, Paperback, Kindle
Timeline: 2022-2024
Total Ad Spend: $33,626
Price Point of Books Advertised: $9.99-$14.99
There are three additional details that demonstrate the unique nature of this case study:
1) Gaps in Ad Investments: First, during the 3 year window, there were two gaps of time when the ads were intentionally paused so that we could measure the impact the ads were bringing and the residual benefits after they were stopped.
2) Authors Without a Platform: Secondly, it’s also important to understand that the authors of these books were first-time authors with virtually no digital platform.
3) Goal: Thirdly, the predetermined objective was to build awareness via ads that would at least pay for themselves with sales (by the way, we accomplished that goal).
Case Study Results
Now, let’s dive in! The table below (taken from the analysis conducted by our team with the assistance of ChatGPT) demonstrates the impact that Amazon Ads have during the same month in which they are running and it also quantifies the residual impact that ads have up to 60 days after they are stopped.
Here are some fascinating highlights from the data:
Although the Amazon Ad dashboard attributes 500 orders to the campaigns, the total impact on sales was 4x greater (2,495 orders)!
Although the ads continue to bring growth after they are paused, the residual impact becomes negligible beyond 60 days.
Although the data above only demonstrates the residual impact of ads after they are paused, the rest of the data (not included in this article) demonstrates that ads become more efficient over time (meaning ROAS increases when they are allowed to continue without interruption), and organic growth also scales up over time (due to reasons outlined in the next section).
The data in this case study confirms that the attributed orders reflected on the Amazon Ads dashboard reveal only part of the story. ACOS and ROAS are important metrics to measure, monitor, and optimize by, but the revenue impact is much greater than it appears.
Since more is going on beyond the dashboard’s purview, a nuanced approach to measuring ROI will help you make informed and discerning decisions about your Amazon Ad investments.
How Do Amazon Ads Increase Organic Sales?
So, we’ve established that Amazon Ads bring growth to organic sales, but why is that so? How do they bring about sales that aren’t directly connected to a click on an ad? There are at least 4 examples of ways in which ads influence organic sales.
1) Delayed purchases
The first way in which ads produce sales that aren’t attributed to the campaigns is quite simple. Some people will see the ad, thereby becoming aware of the book (or product), but they get distracted or they decide to hold off for the time being. If more than 2 weeks pass before they complete the purchase, the sale won’t be attributed to the ad.
A delayed purchase is one way that organic sales can happen without attribution, but it is the least important of these 4 examples. Few people wait more than two weeks to buy something. Amazon’s 14-day attribution policy covers the majority of delayed purchases.
The next three examples are in ascending order of importance.
2) Social Proof
One of the factors that directly impacts conversion rates of product detail pages is the number of reviews a product has and the average star-rating.
Shoppers will hesitate to purchase a book (or product) that has less than 20 reviews. And it only gets worse if the average star rating is below 4.5 (4.6 and above is the sweet spot to aim for).
More sales (from ads) means more reviews and more reviews means more social proof, making the purchasing decision easier for shoppers. If other people bought it and liked it enough to post a review with 4.6 stars or higher, it must be good.
3) Lower Prices
Social proof makes a difference in conversion rates and lower prices can have the same effect, especially when the discount drops the consumer price below a particular threshold.
Depending on the product category, an item can feel more like an impulse buy when it is below certain numbers like $10, $25, $50, or $100. It is exciting to see how even a dollar or two reduction in price can increase conversion rates (i.e., $11.99 to $9.99 or $26.99 to $24.99).
How do Amazon Ads impact Amazon’s discount? It isn’t always the case, but often, when demand for a book (or product) increases, Amazon responds by testing various degrees of discounts to find the sweet spot for conversion.
The more traffic and sales that Amazon Ads bring to a product detail page, the greater the odds that Amazon will increase the discount. Since conversion rates are higher when prices are lower, an effective Amazon Ad campaign can increase organic sales.
4) Earning Amazon’s Trust
Sure, some people wait more than 2 weeks to buy something they discovered from an ad. A higher percentage of people who see your product detail page will buy it if there are enough reviews with a strong star-rating. And even more people will purchase it when the price is lower.
“Amazon Ads are all about establishing and building trust.”
But the 4th example of how Amazon Ads increase organic sales is the one that makes the greatest impact.
Amazon Ads are all about establishing and building trust with Amazon.
Let me explain what I mean. Amazon wants to sell products more than they want to sell ad space. In order for the online retail giant to remain dominant, they need to put relevant products in front of shoppers who are likely to purchase them.
If nothing interests you at the top of your search result pages, you’ll be inclined to check other retailers. Amazon knows this, so they are very careful to put products they trust in front of people who are likely to buy them.
The products Amazon trusts get more real estate at or near the top of search results pages. The books that have proven to sell more consistently than others (i.e., higher conversion rates) will be given preferential treatment and placement. They’ll be shown more often and more prominently.
That’s why, at Amplify, we’re always talking to our publishing partners and authors about the need to establish and build trust with Amazon via Amazon Ads.
Amazon Ads kickstart trust and then they help maintain and even scale that trust up higher.
Here’s an example:
According to my favorite software tool, Helium10, there were 13,900 searches in December of 2023 for “Books for 7 Year Old Girls.”
If you’re advertising a book that was written specifically for 7-year-old girls, you want it to show up every time someone enters that query. Pay to have your book appear in those search results and if you can prove that your book sells more consistently than the others currently appearing at the top of the page, you’ll earn Amazon’s trust and they will be motivated to show your book to a higher percentage of those 13,900 shoppers in December.
Let’s go even broader than this. Sure, 13,900 searches is a substantial market to focus on, but it would be wise to use Amazon Ads to kickstart trust for searches with even higher volume.
The line graph below shows that, in December 2023, there were over 75,000 searches for “7 year old girl gifts.” That’s more than 5 times the volume of searches for “books for 7 year old girls.” Yes, you’ll face more advertising competition for this ad target, but if you can establish trust with Amazon by proving that your book sells more consistently than the competition, you will earn the chance to have your book appear in front of more of those 75,000 shoppers.
Conclusion
Amazon Ads can bring strong ROI, even within the limited framework of what is attributed in the ad dashboard, but their true impact is far greater that it appears because they establish and build trust with Amazon, they can lower the consumer’s discounted price below key thresholds, they can bring in more reviews which establish social proof, and some people will buy your product more than 2 weeks after they saw the ad.
What metrics are you using to measure success with your Amazon Ads? What are you analyzing when setting next year’s ad budget? If it is merely ACOS or ROAS as shown within the ad dashboard, you are missing out on the big picture.
