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Amazon Kindle DX
Amazon’s new microtargeting initiative

This is how microtargeting works and why the best continue to earn great profits. Amazon (AMZN) is that e-commerce company that continually launched and refined until it assumed a position in worldwide retail, not just e-commerce.

Pundits scoffed at the free shipping for $25 offer until data showed that incremental purchases and lifetime value paid for the shipping.  Skeptics scoffed again when the company said it would deliver millions of Harry Potter books on each book’s drop date, but the company made it happen and secured millions of pre-orders.  And even more skeptics derided the notion of Amazon Prime, the $75 fee that provides free two day shipping and low cost 1 day shipping for a $75 annual membership fee.

I’m in my third or fourth year of Amazon Prime membership so I can’t scoff too much at that one. Now here’s the gamble that underscores how a company doing its research can create amazing sales lift. TechCrunch is reporting that Amazon has a 30 day money back guarantee on its Kindle e-book reader with shoppers allowed to keep the Kindle even if they get their money back. Before you go running off to burn Amazon for a free Kindle, the offer is only available to certain customers.  I didn’t get one, and I’ve spent thousands at Amazon over the years.   Smart money says that Amazon is screening demographics, buying characteristics and web analytics for prolific buyers with the goal of getting more Kindles into circulation. Some people will get a free Kindle.  More will buy the Kindle, like it, goose sales of e-books and influence others, maybe even become evangelists.

The lesson is that being rigid about your analytics and metrics allows you to be an aggressive marketplace.  About seven years ago, I created Carfax’s BuyBack Guarantee program.  That was an aggressive program too that essentially promised that the data company would buy any vehicle if a Carfax report had been purchased and a problem title was later found on the vehicle. The marketing team loved it.  The CEO loved it.  The money people, the insurance people, even some of the data people were a wee bit skeptical.  But I had enough data to overcome Board objections, to convince the insurance people and to roll to market.   Our agency even recut our ads to tag the new program at the end of each spot. I just checked their site and the program is still active, just like Amazon’s $25 free shipping program is interwoven into that company’s brand promise. The whole thing starts with data.  If you don’t understand all of your data, you can’t be aggressive and profitable.

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Regardless of the upsets (Jets win for the first time since before West Side Story?), who plays in this year’s Super Bowl is irrelevant for advertisers, even with a big market team like New York in the hunt. That’s because the cost to air a commercial this year decreased, not a healthy trend for any event, much less the pseudo holiday of the Super Bowl.

Pepsi, home to Justin Timberlake, Britney Spears, Michael Jackson and countless other stars in the past is bailing on the entire event.  Instead, Twitter is all a titter about Pepsi Refresh, a grant program with a social media hooks.   Giving money to the community at large for various good works is certainly a longer lasting way to spend millions, but there is a message here for all businesses, large and small.

The biggest events — the Academy Awards, the Super Bowl, US presidential elections — still draw huge crowds and dominate the national news cycle for a long period, but at least one savvy marketing outfit in Pepsi has decided that an Internet spend tied to social media is a smarter bet.  They may not have the right answer.  They might not even have asked the right questions, and your business may be totally different, but after watching this Britney video from two games ago, decide whether the buzz Pepsi got from Ms. Spears is really bigger than what they’ll get throughout 2010.

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phone booth
Not a smartphone.

This is a long time coming, and boy, is it big.  Yes, this is Google news related to telephones, but we won’t talk about Nexus One (still).

Google is launching pay-per-call advertising.  Now.

There have always been variants of pay-per-call available, but this shows how serious Google is about invading the local search advertising space.  The program, announced today via email before Google’s other announcement, is arguably more important and profitable in the long run.  Here’s how it works:

  • A business will get a 5th line in a Google advertisement that shows a local phone number on smartphones (or as Google calls them, “high end mobile devices”)
  • Google says they’ll check the phone’s location and show the phone number for a nearby business.
  • The searcher simply has to scroll to your number and click.
  • Advertisers get the full range of analytics and metrics associated with keywords, this time with a telephone call as the conversion.

The best part for advertisers is the cost.  Pay-Per-Call has traditionally cost a much higher rate than a click to a website.  For now, anyway, Google is keeping the rate the same.  That’s quite a bargain for advertisers.

Meanwhile, the infighting with Microsoft continues.  Google described the covered phones as “iPhone, Android, Palm WebOS”, but didn’t mention Windows Mobile.  I asked Brandon Miniman, the CEO of leading smartphone site pocketnow.com, about the omission and the future of Windows Mobile in an Android and iPhone world.

“Windows Mobile is becoming less relevant because version 6.5 offers no big innovations and is mostly unchanged from a decade ago. That said, Microsoft has been working on Windows Mobile 7 for many years. When released in 2010, it could finally bring Microsoft back into the smartphone arena,” said Miniman.