Do Ads And eBooks Conflict?
One thing you have to say for Amazon â€“ theyâ€™re not afraid of potentially risky innovations. When the company introduced its Kindle e-book reader in 2007 at a price point of $399, there were those who scoffed at the device and the price. Now, reports Joseph Galante of Bloomberg, the Kindle will generate almost $5.5 billion in sales for Amazon this year.
Amazon has continued to innovate with Kindle, getting the price point down to as low as $139. The latest version, due out today, will sell for even less â€“ $114. But the price represents a very interesting market test, because the new Kindle will be the first e-reader or tablet with built-in ads and offers.
Amazonâ€™s nomenclature for the device, â€œKindle with Special Offers,â€ sets the tone for what the company is trying to accomplish. It has appropriated the idea of advertising sponsorship from the online world and transferred it to the Kindle, but in a way that seems to be as non-intrusive as possible. Amazon says ads will not interrupt a consumerâ€™s reading experience; instead, they will only appear when the Kindle is turned on and off (effectively a screen saver), as well as in a banner on the bottom of the home screen. Bloombergâ€™s Galante says Buick, Olay, and Visa are early advertisers who have signed on to the new Kindle-based ad program.
Even more interesting than ads may be the concept of â€œspecial offers.â€ Amazon says it will make special offers directly to readers on the Kindle, such as: $10 for a $20 Amazon.com gift card, $6 for 6 Audible books (regularly $68), and $10 for $30 of products in the Amazon Denim Shop or Amazon Swim Shop. Offers like these do seem to bear a sneaking resemblance to the Groupons of the world, donâ€™t they? One has to wonder if, as Dan Costa of PC magazine writes, â€œAmazon just turned the Kindle into its own personal deal site.â€
What Amazon has really done here is, once again, broken the mold. The company has created a version of its product that, admittedly, will turn off some purists who see no place for ads in an e-reader. But then again, at a time when consumers are price sensitive, they might just spring for a Kindle thatâ€™s approaching the magic $99 price point (which, Dan Costa predicts, will ultimately be the price of this Kindle by Thanksgiving).
Erik Sherman of BNET thinks the price should be lower than $114, but he admits this is an intriguing â€œnew direction.â€ Sherman writes that unlike cell phones, for example, â€œThe hardware would come directly from the vendor and not depend on some third party to actually buy and resell units. It if works for an e-reader, it could work for a tablet, a smartphone, a TV set-top box, or virtually anything else that has or connects to a display screen.â€
I give Amazon a lot of credit for coming up with the idea. It shows respect for their customers while giving advertisers a novel outlet. Amazon has figured out how to create a new advertising revenue stream, jump on the deals bandwagon, lower the price point of an already successful product, and minimize the annoyance factor of ads â€“ all while maintaining the integrity of the product.
Iâ€™m sure the company will take heat from some consumers and pundits for putting ads on the Kindle. Still, this is a company whose risky business moves seem to pay off. Amazon, you will recall, was the first company to really embrace affiliates in a big way. Then that became a standard industry practice. When Amazon first offered free shipping on orders over $25, many thought they were crazy. Now thatâ€™s becoming a standard practice in the online mail order business. Maybe the â€œKindle with Special Offersâ€ is the beginning of another new Amazon-inspired trend.