Analysts say ads could become a common part of the e-reader experience following Amazon's announcement of a cheaper, ad-supported Kindle device.
Amazon announced on Monday (April 11) that it will be dropping the price of its Kindle e-reader in exchange for the addition of on-screen advertisements on new devices. The new Kindle — priced at $114, which is $25 less than what it goes for now — will have ads at the bottom of the device's homepage and also in the form of screensavers.
Although some may be put off by ad-supported e-reader devices, the advertisements itself shouldn't bother too many Kindle users, according to Neil Strother, an analyst at ABI Research.
Amazon has lowered the price on the e-reader for years, but it's the first time the company is bringing ads — which will include Olay cosmetics, Buick and the Amazon.com Reward Visa Card — to the device.
Strother said that the ad-supported Kindle is likely to attract new users, but not enough to completely change the device's adoption rates.
"People will be interested in taking advantage of the cheaper price, but it's not like the price is that much cheaper," Strother said. "A $25 price drop may not be enough to drive a whole lot of new buyers."
Some experts believe that the addition of ads may be a sign of things to come. For example, Erik Qualman — author of the best-selling book, "Socialnomics: How Social Media Transforms the Way We Live and Do Business" (Wiley Publishing, 2009), which breaks down the power of the medium with the help of real-world examples — predicts that social media will take its next big leap into the e-book industry with the growing adoption of iPads and e-readers.
"I wouldn't be surprised if companies start a big advertising push into the e-book space," said Qualman, adding that instead of having the word "soda" featured in a novel, "Coca-Cola" could be used instead. "Tracking data could gauge how many people were reading that e-book page as though it was an ad impression."
Qualman also believes a natural step for e-books will be to embrace interactivity. If an e-book page mentions a museum or restaurant, a reader could click for pop-up images of an art exhibit or be directed to the diner's menu, he added.
Keeping a distance
Strother of ABI Research agrees that e-readers may introduce this type of advertising in the future, but companies are shy to jump in since they don’t want to be too intrusive into people's reading experience.
"Companies are trying to stay relevant, but they want to avoid intrusion and taking it too far," Strother said. "They don't want to turn off its e-reader use base."
However, it wouldn't be a big leap to expect that Amazon will get to know your reading habits via the new ad-supported Kindle, Strother said.
"Amazon probably won't be tracking if you've read the whole book, but they will be keeping track of what books are downloaded," he added. "From there, they might start to cater ads and recommendations based on personal preferences. However, we don't expect any of this will be intrusive."
The new Kindle — which will be the same as the current model — will ship on May 3. It will also be sold at select retail stores, including Target and Best Buy.