Sunday, June 19, 2011

Amazon AdMash: Will It Catch On?

While I was looking for the next batch of books to read on Amazon, I started looking at Kindle 3G. It was right on the landing site selling one for $114 (Wi-Fi version). That sounded really cheap. It wasn't too long ago Kindle was selling for $150 or so, I thought.

It turns out I was about right. The third generation Wi-Fi Kindle was selling for $139 until early April. Amazon is marketing that Kindle is now on sale for $114 to make the e-reader even more affordable.

What's interesting is how Amazon is moving from premium to ad-based discounted model. Yes, Amazon is lowering the price of Kindle by displaying ads when Kindle is turned off or showing its home page. Usually we see many freemium to premium movement especially from small start ups looking to grow user base quickly. But it's interesting to see that Amazon is now lowering the price by introducing sponsored advertisements.

Amazon will let users vote on which one they'll like to see.
Of course, there is the third option - none at all at $25 more.

In some sense this can be a brilliant move for Amazon. Because of the unique E Ink Pearl technology which doesn't use any power to display an image, it can use it's powered off idle time to display sponsored ad.

Not only that, Amazon is showing the signs of learning from all social networking trends, such as crowd sourcing and gamification. Amazon is releasing Kindle app called AdMash that will help sponsors do A/B testing to filter out less engaging ad content and presentation, and also lay out the foundation to provide rewards to those users who actively participate.

But there are also scenarios how ad sponsored Kindle can flop as well. It's not clear $25 discount with various thank-you gifts, such as future $10 gift card credit, $1 e-book coupon and others, would be enough to entice people to tolerate advertisements. Amazon has not laid out clear incentive structures for people to participate in AdMash program.

With increasing pressure from Apple iPad's dominance, Amazon's move seems somewhat late timed -- about 2+ million Kindles have been estimated to be sold while about 25 million iPads have been sold. It will be interesting to watch how Amazon learns from all freemium-to-premium scaling experience of many startups.

What do you think about Amazon's latest price drop on Kindle? Would you buy ad sponsored Kindle for $25 discount and other freebies or would you rather stick to regular Kindle? Or iPad does all of that for you already?


  1. I'll wait until they give it away with Prime membership :)

  2. Yes, it may happen sooner than one might think. At least price might drop faster than you might think. For reading text and portability, I am really tempted to get one...