Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Amazon.com, Inc. (AMZN) -- Ignore unavailable to you. Want to Upgrade?

To: Rob S. who wrote (67226)	7/12/1999 12:10:00 PM
From: Randy Ellingson	Read Replies (2) \| Respond to of 164684

There will be "winners" for sure but the idea that anything named .com that gives money away for page hits is a formula for success is seriously flawed. The recent reports of declining effectiveness of web ads and the inability for give-aways to create a longer term pay-back is telling. Why does anyone think that a strategy of giving away $5 or $10 free certificates or free merchandise or stuff at or bellow cost is sustainable? Just when these companies think that they have carved out enough market share that they can scale back the customer buy-ins, another group of competitors will take up the strategy to entice their customers away with a new round of freebies and ad campaigns. The "money for hits" is working very well. No, it has not produced profits today; the intent is profits tomorrow. It remains to be seen how well retailers can keep their customers, but everybody and their uncle.com wants customers today, and trying to take them away will be game most easily lost by the newcomer (who will have to pay more to take them away than the established companies will have to spend the keep them). I think the established companies will have the upper hand; they'll presumably have the cash flow to be better able to withstand a price war. As for declining effectiveness of ads, you're seeing the tip of the iceberg regarding ad spending on the Internet. There has never been a more effective way to advertise that targeting the desired audience. Click-throughs were bound to drop, but that doesn't spell the end. Everybody "sees" the ad; they just don't click on them (novely wears away, people get busier). You think advertisers won't pay up big for the premium advertising spots? They already are. Ad spending's not going to drop. $10 off promotions are not sustainable. That's in part why they are typically offered on the first purchase only. But $10 may be a cheap price to get customers who could end up buying thousands of dollars of product from the company over the next twenty years. Randy