In today’s crowded publishing landscape, authors and publishers need to actively market their books to connect with readers — and most marketing isn’t free. While it’s often true that you need to spend money to make money, it’s important to spend wisely. Many successful book marketers sell more books by making the most of their budgets — they scale up the marketing campaigns that yield ROI-positive results, and nix the ones that don’t.
If driving a positive ROI is a high priority to you, it’s important to measure your results. Crunching numbers might not be as fun as publishing your next masterpiece, but wasting money on campaigns that don’t meet your goals isn’t fun either.
Knowing how many copies you sold isn’t enough.
Let’s say you’re an indie author who ran two marketing campaigns for your ebook on two different websites, each of them garnering 500 book sales.
Woohoo! You sold 1,000 books in total. Let’s say your retailer royalty rate is 70%. At $2.99 per book, after your retailer takes its 30% cut, you’re left with $2,093. Not too shabby! Each campaign generated $1,046.50 in profit, since they each sold 500 books.
At first glance, it looks like those campaigns performed equally well. However, one of those campaigns cost you $600, and the other cost you $2,000.
If one of your goals was to break even or make a profit, the $2,000 campaign didn’t do so well, did it? Even though the campaign generated $1,046, you lost $954 after factoring in what the campaign cost. On the other hand, the $600 campaign netted you $446.50 in profit. Unless you’re willing to take a loss in order to boost the book’s visibility, you’d be better off running two of those $600 campaigns next time.
If that’s still confusing, don’t worry. We’re going to break it down even further.
Determining how much profit you made.
Our Book Marketing ROI Calculator makes it easy to determine whether or not you made money from each of your marketing campaigns.
Here is the data you’ll need to input for each marketing campaign:
- Campaign Cost: How much did your marketing campaign cost?
- Books Sold: How many books did you sell as a result of running this campaign?
- Book Price: How much did the book cost when you ran this campaign?
- Royalty Rate: What was your royalty rate? For indie authors, this could be anywhere from 35% to 70% or even higher. For publishers, subtract the total royalty rate, including the cut paid to retailers and authors (if applicable).
That’s it! Once you provide this information, the spreadsheet will tell you:
- Total Revenue: How much money your marketing campaign generated in total.
- Your Revenue: How much you made after subtracting others’ royalty (retailers, authors, or publishers).
- Your Profit: How much you made after subtracting the cost of the marketing campaign.
- ROI: Your return on investment. This lets you easily compare the effectiveness of all of your marketing campaigns.
Using ROI as an indicator of success.
Aside from the “Your Profit” column (which is very exciting), the ROI column is the best indicator of your marketing campaign’s success. ROI is expressed as a percentage – the higher your ROI, the better your marketing campaign performed in terms of generating revenue.
- A positive ROI means you made money on your campaign.
- An ROI of 0% means you broke even.
- A negative ROI means you lost money on your campaign.
This is how it’s calculated:
In the future, you’ll know that marketing campaigns with a positive ROI are worth running again or supplementing with an even bigger budget. Some advertisers will be comfortable taking a short-term revenue loss in order to boost visibility for a book, drive a book up retailer rankings or bestseller lists, or drive downloads of series gateway books. But for those of you looking to break even or make a profit, campaigns with a negative ROI may not be worth your money and time. Either way, now you’re well-equipped to make smarter marketing decisions!
If you have any questions, please let us know in the comments below!
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