Amazon has been selling subsidized, ad supported Kindle eReaders for several months, the ads had just never made their way to the fast selling Kindle Fire. Until now, that is.
Ad Age has a story about the plan that Amazon is developing to bring their ad banners and sponsored screensavers to the Kindle Fire, and the surprising rates that they want to charge for them.
If you're not familiar with the ad supported Kindle eReaders, Amazon will sell you an ad supported version of the Kindle Touch 6" reader for $99. The ad free version is still available, but the convenience of not having your battery drained by the sponsored screensavers will set you back another $40.
When Amazon started this ad supported Kindle option, previous buyers were offered the option to see these special promotions and sponsored screensavers on an opt-in basis. Amazon hasn't released the number of previous buyers who opted in to to seeing ads after having paid full freight for their devices, but I can't image that the number is statistically irrelevant.
I'm not so certain that these banner ads and sponsored screensavers will be optional for Kindle Fire owners.
Amazon sells every Kindle Fire at a loss that some speculate could be as much as $50 per device. The idea is now and has always been to make that loss up in sales of Amazon digital content and amazon.com merchandise. Maybe that just isn't enough anymore.
At $600,000 per campaign, Amazon will be charging absolute top dollar for these Kindle ads. That's not the kind of money that you charge for an ad spend on a limited number of sales, say on new Kindle Fire sales after the start date of ad sales. Likewise, only offering ad placement on a new model of the Kindle Fire won't work because that's just not enough impressions either. Nope, you have to open every one of the devices that you've sold to date for ad placement to justify these ad rates.
Otherwise, these Kindle Fire ads are worthless.
Kindle Fire sales have already slowed and these new adware devices aren't going to help reverse that trend. What's more, if Amazon actually does issue an "update" for Fire tablets that have already been sold, they are going to piss off every single buyer that bought an ad free device.
Would you pay $199 for an ad supported device, or would you rather pay $249 for an ad free tablet with better specs? I know which way I'd go.
Source: Ad Age