Amazon is projected to sell 5 million of its new Kindle Fire tablets by Jan. 1, a remarkable launch story. Or is it? Amazon has used its own site for an estimated $90 million in free advertising annually for its Kindles, pushing them at massive scale in consumers’ faces. Here’s the math:
– Amazon.com is the No. 8 website in the U.S., attracting 75 million unique visitors a month.
– Assume the average user visits the site 4x a month — that’s 300 million impressions on the home page.
– Amazon is running the equivalent of a marquee site ad buy. Let’s be conservative and say the value of such a dominant ad placement is $25 CPM (cost per thousand impressions).
– $25 CPM * 300,000 (thousands) * 12 months = $90 million in free advertising value annually.
This is not to complain: Bully for Amazon for leveraging its own assets. Amazon is brilliant at milking every sales angle; it gives the Fire away below cost to lock consumers into the Amazon ecosystem, and has made superb price framing plays such as “free” shipping that costs $79 a year, etc. Yet when we read about the Kindles taking off, let’s remember Amazon is putting nearly $100 million in advertising behind them on its own site, not counting other paid media campaigns. Amazon is much more than a bookstore and all-mart — it is one of the smartest marketers of our generation.