Delving Deeper Into Amazon’s Ad-Supported Kindle » mobilegroove

We got an interesting read this week on Amazon’s Kindle ereader sales. This device is particularly significant to marketers since Amazon has brought to millions an ereader device bundled with “special offers” and screensaver advertisements.

As we can read in the Associated Press coverage of the 2Q2011 earnings, Amazon followed its usual tact and did not reveal the precise number of Kindles it sold in the quarter. Instead, it only noted that Kindle sales in Q2 showed an increase over Q1 sales. The figures are vague –as we have come to expect from Amazon. Meanwhile, AP reports that Q2 was also a good quarter for sales of eBooks for the Kindle device. Specifically, Amazon said it has sold more eBooks (that it offers for the Kindle) than hardcover and paperback books.

Even more noteworthy: Amazon CEO Jeff Bezos reported that the $139 Kindle 3G with Special Offers — a version of the Kindle Amazon released in Q2 that is subsidized with ads — is now its top-selling Kindle device. By way of background, Kindle with Special Offers carries a slightly lower price tag ($25 less or $114) because it is effectively ad-funded. Special offers and sponsored screensavers display on the Kindle screensaver and on the bottom of the home screen. However, they don’t interrupt reading.

What are these so-called offers? Over the last months the promotions and deals displayed have included:

• $10 for $20 Amazon.com Gift Card
• Save up to $500 off Amazon’s prices on select HDTVs
• $1 for a Kindle book, choose from thousands of books
• Spend $10 on Kindle books and get a free $10 Amazon.com Gift Card

As for screensavers, Amazon says its goal is to show sponsored screensavers that Kindle owners want to see. To this end, they have created a free Kindle app (available now) and website (coming soon) called Amazon AdMash. Anyone with a Kindle (Latest Generation device) can download AdMash, a clever app that harnesses the best of crowdsourcing to let people have a say in their future screensavers. How does this work? Basically, AdMash will show you two different screensavers, and then ask you to vote for the one you like best. The community will decide. Smart.

How I See It: Amazon’s Q2 numbers leave key questions unanswered about the ad-funded device. Is the price of this package bringing in new customers? If so, what are the demographics? Are they new too? (I know my mother-in-law – who is 82 – is a huge fan of Kindle, in part because it is a breeze to read.) And then there is the term ‘Special Offers.’ So far, we know the “offers” aren’t a consumer turnoff. This could be because Amazon shrewdly and purposely made the decision not to use the word “advertising” to describe them. So, who can refuse such an offer? As I’ve written in columns on MobileGroove and elsewhere, people will accept advertising in exchange for offers they appreciate. In fact this view is confirmed by a several industry reports, including a recent one from the Yankee Group. It shows that more than 70 percent of mobile subscribers surveyed in the U.S. want offers on their devices. As marketers, we can’t ignore the Kindle. We need to add this device into our marketing plan discussions. Amazon is most certainly providing advertisers more detailed user information to make sure they can make their media buy as targeted — and effective — as it can be. Meantime, let’s not forget that Amazon has another card to play later this year when it is expected to launch a tablet device. That’s when things will get even more interesting.

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In my column I occasionally name the analysts, authorities and industry voices we should be hearing — if we aren’t already. Seth Godin, Jeff Pulver and Chetan Sharma are some of my most recent mentions — and I’m adding Forrester’s Julie Ask to the list.

Back in January I was fortunate to attend a private company mobile briefing where Julie shared her insights. Personally, I consider Julie to be one of the savviest industry analysts, and I have recounted details from Forrester webinars in past posts here on MobileGroove.

This month, Julie and Forrester released a report discussing the importance of context in mobile marketing and advertising.

As Julie sees it, delivering highly contextual mobile services is not a nice-to-have. It’s a customer expectation. It follows. Mobile phones are personal devices, and consumers expect personal and relevant experiences on their phones.

For Forrester, context is much more than time and place. The research firm defines context as “the sum total of what your customer has told you and is experiencing at his moment of engagement.”

Put simply, context includes:

• Situation: the current location, altitude, and speed the customer is experiencing.
• Preferences: the history or personal decisions the customer has shared with you.
• Attitudes: the feelings or emotions implied by the customer’s actions or logistics.

Julie provides a few scenarios that simply leverage this new view of context, and challenges companies to tailor their services, offers and messages to the use cases and situations that make up our daily personal mobile routine.

• Banks. Should a user require the same depth of authentication at home, at work, or in a foreign country?
• Hotels. How much should you quote a prospective customer for a room tonight if she is 5 miles or 500 miles away?
• Airlines. What home page services should you show a passenger whose flight leaves in 2 hours? In 10 minutes?
• Retailers. How would you react if a customer was using your application for price comparisons and inventory checks from your competitor’s store?
• Insurance providers. How do you use mobile to mitigate risky behaviors? State Farm already has an application that stops incoming text messages while an owner is driving a vehicle.

How I See It: The full report is $499. Granted, it may not be the next place you need to spend this sum of money, but that doesn’t detract from the fact that this report is a great read. Julie has solid arguments and deep insights, and it behooves all of us to give a listen when we can.

About Jeff:

A career author and sought-after speaker, Jeff Hasen builds, strengthens and protects brands. Companies benefiting from his talents have landed on Wired’s list of most innovative entities on Earth and been named pioneers and the early leader in the burgeoning mobile marketing category. Jeff co-created the certification program for the Mobile Marketing Association (MMA). He is one of only two individuals certified by the MMA to train professionals and students on mobile marketing definitions, techniques and benefits. At Hipcricket, he conceived and led the execution of an accelerated rebranding effort in advance of the mobile marketing software and services company being named “the early leader in the mobile marketing space in the U.S.” by Frost and Sullivan. Hipcricket also won consecutive annual pioneer awards from CTIA — The Wireless Association. Follow Jeff on Twitter (@jeffhasen).

This entry was posted on Friday, July 29th, 2011 at 4:24 pm and is filed under Mobile Marketing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.