Some comments
>>So, the industry is at an all time low? Who cares? You'll make it.<<
That is an attitude you have to have to survive in thsi business. Though it has to be tempered with a realistic and knowledgable understanding of the market and a viable business plan for operating in it. But if you have a good product, never give up.
>>I imagined that out of 60,000 pairs of eyes passing over my ads, I might get 3% to 4% to fork out a few pennies. That's 1,800 to 2,400 sales. 1% would be 600 sales.<<
Well, the thing about advertising, especially in todays market, is its just one element of what needs to be a broader marketing campaign. And that includes a whole lot more than just advertising. However, a few years ago it was an assumption that in the advertising world you had to reach your average customer a minimum of "7 times" before you could hope to garner the desired response. And even after doing so you are more likely to get a 1% conversion ration on the audience you reach. The gaming market today, and D20 in particular, are very crowded, so it stands to reason that you should not expect even the standard return on that advertising. So maybe 1/2%. Half that again for each ad impression less than 7 that reaches the average consumer. So down to 1/4% for 6 ad runs. 1/8% for 5 ad runs. 1/16% for 4, etc. My guess, from the sounds of it, suggests you maybe ran 3 ads in Dragon? If that is so, a 1/32% would have been reasonable from that effort. Or, 60,000 reader = 187 unit sales.
However, for years, as a small company, I have had to turn away magazine sales reps trying to get us to advertising in their gaming publication. Because, as a small company, back in the day at the hieght of our distribution (with 13 distributors) we figured we had garnered maybe a 10-12% retail penetration. We figured an ad would thus only be 10-12% as effective as it should be since the majority of the persons reading it had no local access to the product. Adding in another 10% or so to account for those persons who would venture to our company website and buy direct. So, realistically, that 187 product sales needs to be multiplied by maybe .22 to get a true realistic projected return. So about 40 sales.
What did you do wrong?
Just guess from what I have read here, but you ventured into an advertising campaign without the capital needed to actually run a robust compaign with sustained presence; that which is needed for to get a decent return on those ad expenses.
>>first among which is DO NOT ADVERTISE. People don't buy from ads,<<
Yes, they do. But advertising alone is not effective. Advertising when coupled with a comprehensive marketing camapign, however, is a very effective tool.
My suggestions:
One, I am going on the assumption that you have a garage or basement full of unsold printed books at this time. That if you give up now, you'll never recoup the money you put into those books thus far, less turn a profit. To do that you have to stay the couse; but you also need to operate on a different scale of business. You have to think small; only in that can you achieve the success to grow and eventually become big.
1) get your website back up. ASAP. That is, effectively your number one sales outlet. Years ago our company used to sell mostly through distributors and retailers. Its a different market today with much less room for smaller publishers. As the market squeezed out the little guys or forced them into unprofitable relationships with sub distributors, we switched gears and built up our website, web presence, and direct to consumer marketing reach. Now we sell well more than 95% of our business direct through our website. Make sure you can accept credit cards through a shopping cart through that site. Paypal is a fairly viable low cost means to accomplish that, but there are others.
2) Make some good use of those boxes and boxes of books. Select some reviewers and get them into those peoples hands. When you get a review in, put it up on your website and promote it far and wide.
3) Get a 10 or even 15 page PDF sampler of your campaign setting up on your website for all to download. Advertise the dickens out of that. No, not in Dragon. Advertise it online. Get your website in several gaming related banner exchanges. Look to buy the 50,000 ad runs through the RPGhost banner exchange. Its only $5. When those run out, buy them again. Use those banners to promote your "brand". Keep that message consistent.
4) Think the genre and subject matter of your campaign setting would attract gamers other than the most die hard RPG supporters? You know, the casual role players that never actually frequent message boards like this one or RPG.net? Take the SRD, modify it however it fits best to your campaign setting, then use the OGL to make it into a presentable PDF. Make that PDF heavily branded with your brand. Make darn sure your campaign setting, for which you hope to sell is advertised in this thing and maybe even include a little discount coupon for your book that they can redeem at your website. Then dstribute that SRD widely, venturing out into the many computer RPG download sites and other "non traditional" outlets for our market. There are a great many persons interested in games that you simply can't reach through the traditional channels anymore. And many more who could get into them if only someone where to market to the effectively. If you are running into too much resistence in the core RPG market, then figure out how to bundle your product to sell outside that core market.
5) Look up all the game conventions within a reasonable drive of your location. Get ahold of the convention organizers and work with them to get your game scheduled as events there. Be prepared to give away your capaign setting to the players who play in those events. Give those same players some discount coupons for additional source material for your setting, that you would make available in PDF format (see #6). If you printed 2000 books and have sold maybe 100, be prepared to use another 400 to 500 books as promotional products at conventions, for reviewers, etc, to generate the interest you need to help sell the other 1,300 books.
6) research which retailers are most dedicated to having the largest gaming selections around. Contact those retailers directly and offer them a good discount to direct buy the product. If the bulk, offer them a slightly less discount to have them place and sell your book on consignment.
7) As ther suggested, make your campaign setting available as a PDF.
8) Start producing that follow up material you spoke of as PDF booklets. And perhaps consider making some of it available as printed "booklets" that you can produce at your local copy shop. Don't expect to "retail" these through distribution. These are add on products for those players who really come to like your core setting and you'll sell these direct of your website.
9) Get a discussion forum or e-mail discussion list established for your product line. Start getting all that are interested signed up to it.
10) Go buy yourself several books on marketing. At least one on marketing basics and another on guerilla marketing.
11) If you haven't already, go get signed up at RPGMall.com. Probably a good outlet for this type of product.
12) You spoke of writing some short fiction. Thats not a bad idea. Do a few pieces to help illustrate some of the good selling points of the campaign setting. Once you have a solid collection of free shorts on the website, then perhaps look to take re orders on additional ones that you would sell rather than give away.
13) Go talk to some retailers lik Titangames.com and see what he'll offer you to buy a few hundred books at liquidation prices.
There are probably another 20 to 30 things I could mention here. To do it right, however, I would need to know more about your product, your business situation, resources available, time available, your experience and your technical know how.
Gotta think out of the box. And in todays market, you have to market to wherever you can garner sales, not just to where the "established" companies traditionally market. We've made a pretty good run at tredding the less beaten path....
Ryan S. Johnson
Guild of Blades Publishing Group
http://www.guildofblades.com
I made the mistake of listening to gamers -- and a small segment of them at that, to judge by the foregoing statements about 70% at least of gamers not having anything to do with the Internet. Part of the problem was, of course, that I didn't know about this site ... I was basing everything on rpg.net and the WotC boards. It was actually one of my buddies on a Battletech site (of all things) who pointed me towards these boards. Unfortunately, by then, alea jacta est ... But of course, I probably would have thought that my product was good enough to generate at least modest sales 
