The SPF’s first Income Report! Mark Dawson and James Blatch present an account of Mark’s advertising spend and related revenue. James and Mark discuss the spend and income across both the USA and UK markets. In this first edition Mark looks back at February 2016, a month which saw solid ROIs in both territories. The boys also discuss the value of a mailing list sign up.
Speaker 1: You can win a scholarship to Mark Dawson’s acclaimed premium course, Facebook Ads For Authors by spreading the word about this podcast. Visit selfpublishingformula.com/contest to enter.
Speaker 2: The SBF Income Report. A unique look behind the scenes of best selling Indie author’s advertising spend and revenue. Revealing the figures, your host, James Blatch and Mark Dawson.
James: This is income report number one. This will be started initially in monthly. This will be a look at the advertising costs and the associated revenue for Mr. Mark Dawson. We’re familiar with your books, Mark, and we’re familiar with your methods. This is a really interesting extra part of that which is kind of putting your money where you mouth is, and quite brave of you, if you don’t mind me saying so, to come on once a month and tell us, to the dollar, what you’ve spent and what you’ve got back. That’s more or less what we’re going to do, yeah?
Mark: Yeah, we’ll do it to the cent. The reason I think this is interesting is, first of all, no one is really doing it. I think it’s useful to demonstrate to other readers what’s costful with advertising. I include failures as well as things that aren’t working so that people can think of me as the crash test dummy, if you like.
I’ll be doing tests and things like that and we’ll tell people if they’re effective, if they’re not effective, whether they make money or they lose their money.
The genesis of this was that I did weekly income reports the last time we opened the Facebook course and it went really, really well.
I’d record 20 minutes of video and we’d sent that out, just talking about what had worked and what hadn’t worked over the course of the last week.
I’ll do that again when we get close to opening the course again, but I think it would be really helpful to have a monthly roundup. One of the questions that I got when we were doing that on a weekly basis was, “Is this all of your income?” The answer to that is no. As you mentioned, James, it is just expenditure and revenue generated by that expenditure just from my advertising.
It doesn’t take into account organic sales, read through, all that kind of natural business that’s done as readers read through my various series. It’s just trackable income that’s generated by my ad sales.
James: Okay, and it doesn’t include your male modeling contracts or anything like that?
Mark: No, I thought I’d better leave that out because we’d start to get really daunting figures if I did.
James: Yes, stratospheric figures. I think for a future podcast it would be interesting to look at how much a new reader is worth to you over the lifetime. It’s still early days, really, for you as an author. Five years into the whole project perhaps, but a couple years into really making a financial success of it. It would be interesting in a few years’ time for you to try and work it out.
Have you tried to work it out yet how much a reader, a new reader is worth in the long term?
Mark: I have worked it out.
James: Oh, okay.
Mark: I don’t know the answer off the top of my head. The reason for that is I have a separate spreadsheet on that which takes into account read through rates, promotions, all kinds of different variables. It’ll probably take me half an hour to explain.
James: It’s another podcast, isn’t it?
Mark: Probably. It’s definitely a use for an exercise.
James: Well, let’s have a look then at, say, month one. This is going to be February 2016?
Mark: Yes, the first of February to the 29th of February, 2016.
James: You’re cheating, because you got an extra day already.
Mark Dawson: I know, it looks good, isn’t it? I’m going to break it down into four parts really. We’ll look at the US and the UK for Amazon, and Kobo for Canada mostly. The reason for that is because those are the territories and the stores that I was targeting with Facebook ads during February. Then, just to close out, we’ll also look at growth to have an ongoing acquisition campaign that’s adding readers to my list all the time. We’ll just touch on that quickly.
If we start with Amazon US, so let’s just jump straight into the numbers right away. Before I do that, I don’t want people who, at the start of that crazy appetizing announcement be daunted by the numbers because they are quite big. Just bear in mind that it didn’t always start this way for me.
I think probably the first ad I ran was for 5 or 10 bucks for a day so. It gradually scaled up, and scaled up, and scaled up to the level that I’m at now. Don’t be daunted by the numbers, the principles apply regardless of the actual spend.
Amazon US for February, I spent $16,452.46, so that was the spend on those Facebook ads during the month. Then, using affiliate tracking, I can work out exactly how much revenue was generated by those ads, and for those ads stores. I’m advertising one item at the moment for Amazon US and UK, and that’s the box set of the first three John Milton’s books, plus full stories retails took my hit $6.99 in the US.
Those ads generated 3,056 sales, so that’s how many of Facebook sets that was sold by way of the ads. That brought in a revenue of $21,395.32. Once Amazon had taken its 30% off, so there’s 70% royalty to me was $14,976.72.
On top of that, sometimes people would go in on one of my affiliate links and then would buy other books by me and typically they’d buy the second book set. That happens recently regularly. That brought in an additional revenue of $1,537.29, so the 70% of that is $1,076.10.
Then, on top of that, Amazon would give you a commission if you’re using their affiliate program. It’s usually round about 7% to 8% of the price of the book, and brought in amounts of $2,828.91.
That brings in a combined revenue of $18,981.74 and that’s a return on investment of 15%. I recouped my ads spend and then added 15% on top.
James: What’s interesting to me about that, you talk of the affiliate links being an important part of it, but here it’s not going to be like this every month. Some months sales will give you a fantastic return. However, being this month that affiliate jumping through to other box set, jumping through to other products has been the difference between profit and loss.
Mark Dawson: That is true. I’m kind of a black and white level, but there are other benefits to advertising that go beyond just making money. I would run this if I made a small loss because all of those 3,000 owed sales, those are 3,000 new readers. I know that my read through rate is good, my retention of readers are very good. They’re using it as if that’s the only icing they’ve got to the pie. They can then move on to the second book set. There’d be a third book set later this year.
Beyond that, there’s the benefit of just exposure in the market. People will become used to my brand and my name, and so I’d quote something I’m ready to sell. It reduces the ads spend and it’s the safety of to achieve the same effects in the future. Right in practical terms that was the difference between making a loss and making a profit, but there are other benefits that are more difficult to quantify.
James: Let’s move on.
Mark Dawson: Amazon UK, the spend was $11,728.72, that brought in sales on the box set of 1,720 units. That is once the 30% comes off that generates the royalties dollars of $11,579.13. Other sales brought in royalties of $709.21, and then commission was $1,094.64.
That brings returns of $13,382.98, so that’s returns on the investment for UK of 14%.
What I started to do last month, and this is a really good tip that we’ll get into in a bit more detail in one of the longer podcasts, because it’s the only something there that has two legs.
The other platforms, Kobo and Apple in particular. They don’t have a $9.99 upper limit whereby they’ll only give you the 70% to that point, and beyond that, you’ll get 35%. That’s what happens on Amazon. The other platforms have that 70% royalty available however high you go.
One of the things I’ve started doing is handling all of my mails and books. That’s bundling all of my Milton books, putting them in to a box and selling for $25 on those platforms, and then advertising into those platforms, specifically Kobo. That’s where I’ve had a lot of success with.
In February, I started to run a campaign driving traffic to that box set, that mega box set on page. I spent $877.16 on that campaign during February. I sold 146 units of that mega box set, bringing in royalties of $2,622.40. That’s a return investment of 199%, so almost more than doubling my money in that case. That’s been extremely effective, and that’s something that is continuing to be effective as we move into March.
James: That’s really promising, isn’t it? The way that you set up and the way that you approach this is very important for people to understand as well. Advertising, obviously costs money and then you look at the return. Forgetting for a second the long term is very beneficial as well. You have created in your system a money machine, effectively, where you put in the dollar, and you get $1.15 to $1.90 depending on what kind of return you’re getting out of it.
We had a curious email, didn’t we, last year? You might remember from somebody from the odds of corporate world, who said, “Do you know what, your returns aren’t enough. I’ve worked in x, y and z companies. You need to be getting 500% on advertising, because otherwise you won’t sustain your company.” Our response to him, really, was, “You tell me where you can invest $1,000 and take $1400 back every month.” You tell me where that happens.
Mark Dawson: I was very polite with him, although I was tempted not to be. It’s one of those situations where you only know by doing things. Anyway, where you can invest one and get two back? I can’t think of any other way you can make that reliably. Stock market isn’t going to do that. My property is not going to do that in the short space of time that we’ve got. That was a very weird series of emails.
James: The only thing I could think is that he’s taking into accounts the big building on 5th Avenue, which is staffed with staff and everyone from cleaners and people in accounting through to the receptionist and the accountant, all of whom aren’t revenue generating. They’re just in there being paid the money of the company, and a few people are doing the revenue generating.
In fact, in the corporate environment which still dominates a large parts of the market, you probably do need 500% to 1,000% return in the advertising revenue, but you know what? We sit at home in our front rooms, and we have no overheads.
Mark Dawson: Exactly, I don’t have an office. At the moment money in money out. People know my view on this. The first time I got this to work, I had to call the accounts to make sure the math is right. We’ve a difference of opinion between me on that one, but anyway, that’s how I’ll keep doing it because it’s still working.
Just before we wrap up, I will also just note the mail in this campaign that I run. This is a video ad that I filmed on my iPhone about 18 months ago, and just basically talking to camera, telling people that if they’re looking for a great new read, then they can get my starter library is 2 novels. They can get that for free just by signing up, by clicking and going over and joining the list. You can get video views ridiculously cheap, about a cent of 2 cents a view.
Some of those will convert, others will watch and not convert. Every time someone’s watching, you are becoming known, they will remember the next time they see the ad, all these benefits I mentioned 5 minutes ago. I just ran this in the background between $5 and $10 a day. I spent $174 on that campaign in February, and generated 276 new subscribers and that’s the cost per subscriber is 63 cents.
You mentioned earlier what is the subscriber was to me. The reason I work that out is because I want to make sure that my cost per subscriber is below what the subscriber will bring in over the long term, and 63 cents is well underneath what interest that subscriber is worth to me. That’s the reason I keep that going. Just sticking new reads into the fannel all the time, so I can market them the books that they’re going to read after the free books. Some of them won’t read them, of course, but that’s fine. Enough of them do, so that’s pretty worth product sales to me.
James: Great. Okay. Mark, lots of detailed good stuff. Thank you very much. Remember, our main podcast selfpublishfomula.com. Income reports will be monthly. We’d love to hear from you. You can email us email@example.com, and we would love you to leave a review on iTunes if you like the podcast. Send us your questions and ideas, and we will be back with you shortly.
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