The figures are in for the March Income Report! Mark and James get their teeth into the author’s spreadsheets to find out what’s worked, what hasn’t and elaborate on some of the weirder things that can happen when people buy your books. Other topics covered include the power of video, (even when it’s not a pro production), the value of reinvestment, advertising books on different platforms and the Amazon affiliate program.
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The SPF Income Report, a unique look behind the scenes of a best-selling indie author’s advertising spends and revenue. Revealing the figures, your hosts, James Blatch and Mark Dawson.
You can click here to read / download a transcript of the income report. Or, read on!
James: This is the one where we pull the curtain back and have a look under the metaphorical skirt of Mark Dawson and get our teeth into … Actually, I’m not going to go any further with that metaphor. I’m going to leave that metaphor there and say:
Hello, Mark. How are your figures? How’s your figure?
Mark: I’m completely befuddled now. Skirts and teeth and figures. My figure is fine. Thank you very much for asking.
James: It is.
Mark: Had a good month, so looking forward to running through some numbers with you, you pervert.
James: Yes, indeed. Well, this is the March figures. Woo! We’re going to look at three areas.
Let’s start with, I suppose, your biggest spend area which is Facebook ads, mainly for sales but also for mailing list building. I know you divide these up geographically, don’t you?
Mark: I do, yes. The two sales campaigns that I’ve run and have been running now for two years pretty much, I split it sending traffic from the U.S. and the UK. Those are the two markets I tend to focus on.
James: You’re doing separate campaigns.
Mark: I do, yes. The first one is a U.S. campaign, second is UK campaign. The reason for that is Facebook’s algorithm gets a little bit confused if you try to run an ad set that contains geographical areas that aren’t close to each other. You can run U.S. and Canada or UK and Ireland, but it’s not a good idea to run the U.S. and the UK or France and Australia or areas that have a big difference in terms of time and location and that kind of thing.
James: All right. Should we kick off, then, with your U.S. spend on sales ads?
Mark: Yeah. This is March 1 to March 31, so U.S. I spent $10,800 during that month, which is down a bit on the $16,500 I spend in February. The results from that were pretty good. Remember, these ads are all selling copies of a book set, four books in the John Milton series, the first four books. Just over 2,000 copies in March 2007. That generated revenue of $14,119.80. That’s a 70% royalty to me of $9,803.86. After that, other purchases that came in from people who clicked on that link.
James: These are sometimes weird and wonderful, aren’t they?
Mark: Well, that’s in commission, so that comes next. The way I categorize the second line here is it’s other books that I’m selling that people have bought after going through on the link. It could be book set two, it could be the first book in the series. People often buy that rather than the book set, etc., etc., that kind of thing. Generated revenue of $836.07. That’s 70% royalty of $585 and around 25 cents, and then commission. That’s the weird and wonderful collection that you refer to. If people then buy other things on Amazon after clicking through on my link I get a commission of around about 7, 8% on those items. They can include all kinds of weird stuff, some of which we shan’t mention because this is a family podcast.
James: You occasionally send me a screengrab of something somebody bought just after buying one of your books and yeah, it’s weird sometimes.
Mark: Yeah. Slightly worrying occasionally. The commissions, that’s on my books, so on the box set and also on other stuff as well. Total commissions were $1,812.05. That is a total revenue generated of $12,281 and around about 16 cents. Return on investment, so basically the profit that I made compared to the cost that was spent is a 14% profit. Down a percent on February, which was 15%, but I’m still pretty happy with that 14% profit.
James: 14% is a very good margin, and with the sort of figures that you’re investing in.
That’s a decision that you make, I suppose, week-to-week, day-to-day, is how much to put in.
Mark: Day-to-day, yeah. I calibrate my ads. It takes me about 10 minutes every day. If a particular ad set is performing well, I’ll very carefully increase the spend on that, and conversely, if one isn’t performing so well I’ll start to decrease it or kill it and then generate another one and start from scratch with that.
You don’t have to spend that much daily. One thing I did do last month, I was in New York for my wife’s birthday for four days. I didn’t open my laptop once because I probably would’ve been divorced. I didn’t monitor them for four days, and when you’re talking about a daily spend of nearly a grand sometimes you’re crossing your fingers a bit. When I got back, it’s very simple just to add those days up and work out the numbers. They actually performed, weirdly enough, slightly better over those four days than they would’ve done probably if I had been tweaking them, so there you go. It just goes to show.
James: It is important to scale up when things are working, as in the same way it is obviously to kill a baby when it’s not performing for you. We do have an interview on the main podcast coming up with Adam Croft in the next few weeks. Adam suddenly had success with one book, and he talked about it in the interview. He scrabbled around all his credit cards. He maxed, he borrowed money from family, and he stuck it in there because he could see the return.
Of course, he had to borrow the money because Amazon’s payout system is that lags significantly behind. You pay for the ads in the first place. This was a guy with his head screwed on, could see the figures, and was classically making hay while the sun shines. I’m not sure if that’s an expression in the States, but it was important to do it.
Mark: Adam did amazingly well. It is true, in Facebook you’re slightly quicker to take payment than Amazon is to make payment even though Amazon is very, very fast compared to the traditional industry. The lag is not that significant. In his case, he was doing so well he had to find … He was basically putting in one and getting out two or something stupid like that. He did max out his credit cards and borrow money, but he’s done very, very well. I think he said when you spoke to him, James, that he’s on course for revenue of over a million this year, generated mainly through his ads which is just unbelievable.
James: That’s a gross cover price, but nonetheless, it’s significant. It’s a turnover, so he’s a one man band. He’s created a million-pound turnover business in the space of a few months. Anyway, that’s the powerful side of things. Let’s just carry on with this for a moment before we move on. I know something in some people’s minds is: What happens when you don’t work on big budgets? We are coming to that, so be patient with us, for smaller budgets.
Let’s move on to the UK and get those figures done.
Mark: Same period, March, I spent $6,707.75. That’s an increase on the $2,600-ish I spent in February. That generated box set sales of 942 units, which was a revenue of $5,096.09. That created a dollar revenue. I calculate all my figures in dollars because that’s how I’m paying Facebook. The dollar revenue was $7,285.88. The others, those are the other books that I am selling that people have bought through those ads, created a dollar revenue of $593.68. Then the commission came in at $504.46. That’s a total dollar revenue of $8,384.02. That’s a return on investment compared to the revenue with the spend of 25%. That’s up 11% month on month, so very pleased with that.
James: UK outperforming the U.S. in March for you by 10% odd.
Mark: It did, yes. Not always the case, but the way that the ads responded last month, UK was doing better than U.S.
James: These are ads for book sales. Hence, your revenue side of things.
In terms of building your mailing list of key parts of your business methodology, how did that go?
Mark: That was great. Mailing list, as I mentioned last month, is something that I keep going at, almost in the background. I do very, very little tweaking with this because it just works really well without me doing anything. I spent $190 last month. These are on video ads, so it’s basically me just talking into an iPhone saying, “Do you want some free books? If you do, go to this website and sign up.”
That generated 314 subscribers at a cost of 60 cents per subscriber. That’s down from 72 cents in February. That’s really good. It’s well within the tolerances for adding subscribers to my list, I think. They’re worth much more to me than that, so obviously I’ll keep doing it.
James: That’s really good, isn’t it?
The video ad you’ve found have been working well?
Mark: Yeah. They’re great. Facebook is majoring on video right now so you can get views of your ads that are around about 1 or 2 cents per view, which is very, very cheap. I’m only spending between $5 and $10 a day on those ads. Mailing list subscribers are the lifeblood of an indie author business, so it’s something that I very strongly recommend people get involved with. It is something that we go into in a lot of detail in the free course, the three videos that we make available at selfpublishingformula.com if people are interested to see another way of doing that.
James: I think creating the video is something that frightens quite a few people. It’s a slightly unknown area. Some people struggle for the first time when they put a layout together and they put their ad together, let alone doing a video.
You’ve done it in a really straightforward way without, I might add, the help of a video professional, from myself. You just did this yourself, didn’t you?
Mark: I did, yeah. I held the iPhone on a tripod and recorded myself speaking into the mic. Really straightforward. Anyone could do it. It doesn’t have to be flashy. In some ways, it pays not to be flashy. You get a bit of authenticity that way that you might not get if you spend too much money on something that’s slick. It’s working really well.
James: Can we put a version of this video, or one of them, onto the show notes for the income report so people can see it?
Mark: Yeah, should be able to do that. If I remember at the end of recording I’ll dig that out and we can add it on.
James: I’ll make a note. I just think people would be interested to see it and it’ll be helpful for them in terms of doing it themselves. I mentioned that for some people these are eye-watering amounts of money that you’re putting in, and indeed, getting back. Many people are on smaller budgets.
Does this methodology only work when it’s scaled up to the level you’re working on now, or can this work at a lower level? I think you have an answer and some examples of that from March.
Mark: I get a few questions on this, people who basically say, “There’s no point in me doing this,” because they can’t afford to spend $10,000 a month on ads. That’s fair enough. I wasn’t able to spend that much money when I started doing these ads, not anywhere near it. I tend to start all of my ads, even now, I’ll start running them and testing them at $5 or $10 a day. You can get really good results at that level. I’ve got, I think, about 10 or 15 different variations that I’m running at the moment, just going to the U.S. and the UK. I’ve just taken one out.
I’m just looking at it now. Let’s count the number of days. 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11 days. Over the course of those 11 days I’ve spent $215 and generated $307 in revenue. That’s a return on investment of 43%. Most people can probably afford, say, $5 a day, maybe $10 a day. Of course, the beauty of this when you get an ad that starts to generate that kind of return you can reinvest the proceeds and then up the spend. That’s what I did. That’s how I’ve got up to the big levels of spending that I’m making now. It’s by continually reinvesting the profits back into the business again and advertising.
James: That’s really encouraging to hear. $5 and $10 ads, and as long as you’re fairly disciplined about keeping the money circulating within it that’s how you can scale up. It is possible on a smaller budget.
Mark: Yep, definitely. I’ve got lots of examples at varying levels of return, but 40% is pretty good. You’re not going to get a 43% daily return on many investments, so I’m quite pleased with that one. Then I gradually scale that up, so it’s at $15 a day at the moment and I’ll probably put it up to $20 in the next couple of days.
James: Something else I want to ask you about, because it’s some comments we’ve had in social media about the way that you describe your income and the way that you measure the success and the sales. I detect from some people just some skepticism about how you track sales.
In fact, some people think it’s not possible to do it to the level that you’re doing it with the certainty that you’re doing it. Can you just answer that?
Mark: That’s a fair question and it’s easily answered. One of the main benefits of advertising digitally like this is the data that you’re provided. If you think about taking however many thousands of dollars it would cost you to put a billboard ad up at a subway station, you’re not going to be able to track that effectiveness with any degree of accuracy much more accurately than licking your finger and holding it up and having a really rough guess. The benefit of these ads is that Facebook provides really good data and so does Amazon.
Amazon has an associates’ program, an affiliate program, and that enables you to track traffic or clicks coming in to your sales page on Amazon pretty accurately and then to work out how many people have actually clicked and bought and the commissions that you’ve made, the revenue that’s been generated. That’s how I track revenue. Facebook tells me exactly how much I’ve spent, and then it’s just a question of entering those two pieces of data onto a spreadsheet and then running a series of pre-made formula that calculate the rest of the information that I need to know, things like cost per click, average sales, conversion of percentage, and at the end of the day return on investment.
James: You’ve been doing this long enough now to have a pretty big data sample to validate your method.
Mark: Enormous, yeah. Absolutely enormous. That’s what I’m doing when we do these income reports. I just go to Amazon and I go to Facebook. I select the month that we’re looking at and I just pull those numbers out and then just run a series of really simple calculations on them. I’m confident enough that I’m accurate to within a few cents. Provided that you set the parameters correctly when you’re putting the data down, it’s really, really easy.
James: Great. Finally, in terms of the figures to talk about for March, is Kobo.
Mark: Kobo is great. I’m a big fan of Kobo. I’ve been working with them quite a lot to boost my performance on their platform this year and it’s going really well.
One of the ways I’ve done that is to, and I mentioned this briefly in the last income report for February, is I have a big 10-book box set on Kobo which costs 25 bucks. The reason I do it on Kobo, not on Amazon, is because Kobo will give me 70% royalty on that whereas Amazon will only give me 35% because I’m above the $10 limit for the 70% royalty. I’m driving a lot of traffic through Facebook ads to Kobo and basically just sending those ads to Canada, Canadians.
The returns have been great. I’ve got a full month’s worth of data now on that campaign and I’ve spent $2,194.32 over the course of March. That generated profits, or revenue, to me of $2,604.45. That’s a return on investment of just under 20%. This does work on other platforms. It doesn’t have to be something that’s exclusive to Amazon. I’ve also run ads successfully to Apple and Barnes and Noble as well. Depending on which slice of the market you’d like to boost your performance on, Facebook has worked really well. I’m still seeing between 20 and 40% daily return on those Kobo ads. Again, I’ll keep spending.
James: Why Canada?
Mark: Kobo is a Canadian company, James. Kobo is actually bigger than Amazon in Canada.
James: It’s available in the UK, isn’t it? I’ve seen it in WHSmith. Don’t they have Kobo?
Mark: Yeah, Kobo is worldwide companies. It came out of Canada originally, and it’s very broad now. It’s got a very big reach, more stores in more countries than Amazon does. Obviously, Amazon is bigger in most of the big markets, but Canada is a pretty big market and Kobo is a big player there. I’ll give you a bonus if you can tell me why it’s called Kobo.
James: Canadians Ordinary Books …
Mark: Rubbish. It’s an anagram of “book”.
James: Oh, okay.
Mark: There you go.
James: I was rubbish at anagrams.
Mark: Useless fact of the day.
James: There you go. You can take that away with you, and you can also take away quite a lot of data. Thank you very much indeed, Mark. It’s been a pretty standard month for you, but when you look at the bottom line of the amount of dollars that come in to you as profit that is a healthy living that you have crafted for yourself, cut out for yourself there.
Mark: January and February have been the biggest months in terms of total revenue by a long, long way. Had a couple of big payments from Amazon that came into the account, which were kind of like gulp moments this month. It’s been really fantastic.
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