Buying Your Readers. Think About It.

Once, while attending the Phocus Wright Travel Conference, I heard the CEO of the largest online-travel agency declare that it didn’t matter that a slew of new travel web sites with innovative products would pose a challenge to his site’s dominance. “We will simply outspend them,” he replied. “They won’t be able to compete.”

What he meant was that his company would be able to maintain its industry-leading position by “buying” users–in other words, spending enough on advertising to draw users to his site. The big three travel sites (Expedia, Travelocity, Orbitz) average approximately a 5% conversion rate. It simply becomes a math formula at that point. If the web site gets a million users, 50,000 of them are going to buy something.

As I prepare my manuscript for publication I have been thinking about what he had to say and did some “napkin” math.

Let’s start with a couple of assumptions.

**You are prepared to spend some money on advertising your book. Let’s say it’s a $1,000.

** Assume you have written a book that falls into the “chick lit genre” and that you want to advertise  on a variety of sites (travel sites, blogs, fashion, entertainment).

**Assume that your average CPM rate is $8 per 1,000 ad impressions (which simply means that you get 1,000 text or graphic ads appearing on a variety of web sites for that $8). In short, you will be buying 125,000 ad impressions for your $1,000.

** Assume that 1% of those clicking on your ad will buy your book.  That means you will have 1,250 purchases.

If you’re selling your book for $0.99 (a disturbing trend which I will write about later), then you’re probably going to break even–at first blush. But remember, reading is a lot like leisure travel: what you read (or where you vacation) is heavily influenced by others.  So, let’s assume you wrote a good book, one that 60% of the readers like, and that 10% of them recommended it to their friends, who eventually bought it–and who then recommended it to their friends. As you can see, a positive referral cycle begins and you end up making a profit and getting the word out.

Now if you sold your book at $2.99, which means you keep $2.10, then you have immediately made a nice profit, plus you got the word out.

Of course all of this is merely hypothesis. You may not get a 1% conversion rate on your ads. Your readers may not recommend your book. You may not advertise on the right sites.

In any case, food for thought. Please do leave a comment. Oh, and by the way, I do not work for or own any piece of an advertising company. Just a guy typing away…

Advertisements

3 Comments

Filed under EBooks and Advertising

3 responses to “Buying Your Readers. Think About It.

  1. The disturbing trend of $0.99 a book is working on the basis that people are always on the lookout for a bargain. How many people buy things they don’t need because it’s cheap!! I have found that by selling things at a low price in a street sale, I sell more and end up with more in my pocket than if I had held out for higher prices. I must add here that my cheapest ebooks are short stories (10 000 – 15 000 words) for $1.99. My novellas sell for $1 more at $2.99. In fact, they’re the bargain at 70 000+ words! I am trying to build up a following with one 72 000 word novel that is free on several different sites. More than 5000 people have downloaded. Money isn’t really my aim and I may end up giving every one of them away as I survive on the praise. What have you tried so far?

    • Hi Suzy,
      Thanks for your comment! I, too, am stymied by the $0.99 price tag.
      I think it’s really bad for the business and makes it seem like
      self-published writers are in fact not producing quality material.
      I know Locke and others have popularized this concept — and perhaps
      it works if you have written ten books, but this seems a bit self-defeating. Kudos to you for experimenting with higher prices as well
      as for a free model. I’ll be blogging on the $0.99 model next. Take care! Mark

  2. Retail is all about the numbers. Selling eBooks at $0.99 is all well and good when you have a captured readership who will buy en masse. When you’re selling in excess of 100,000 copies in one sitting, charging $0.99 is a luxury that lines the bank vaults very nicely thank you. But when you’re first starting out, retailing your labour of love at less than a dollar is demoralising. When I put my sci-fi novel ‘Uth’ on Amazon I intitially priced it at $2.99. It made sense to me to get 70% over 30%. After a month or so of trickling sales, someone suggested dropping the price to increase sales (because everybody wants a bargain). A little reluctantly, I dropped the cost to the dreaded $0.99 and decided to monitor the sales. Over the following 4 weeks I sold many more copies than in the first month. But isn’t that always the case with a new product? I expected to sell more. To test this out, I increased the price back to $2.99 and watch what happened. Sales increased. Not because of the price, but because my book was being recommended and readers will pay many more dollars for a recommendation. For the last 2 months ‘Uth’ has remained at $2.99, with steady sales (90 in the last 2 weeks). So the lesson here is, believe in the quality of your work, because readers will pay good money for good writing.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s