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Amazon May Offer Ad-Supported Kindle Fire Tablets

Two ad agency executives claim that Amazon is looking to offer placements on the Kindle Fire's welcome screen. For $600,000, agencies will receive a two-month run-time and cover both the front page ad and inventory from Amazon's "Special Offers" product. Those willing to shell out a meaty $1 million will get even more inventory and be part of Amazon's public relations push.

As seen with other Kindle units, ad-supported models display full-screen ads -- aka sponsored screensavers -- when users power the device down into "sleep" mode. The ad is then reduced to a small banner stretched across the bottom of the screen once the user "wakes" the eReader. These devices are far cheaper than the ad-free versions, but run the risk of causing "spots" on the screen caused by fragments of an ad that couldn't be erased (at least on the baseline Kindle).

So far it's not clear if these advertisements will work the same way on the Kindle Fire. It's also unknown whether Amazon plans to roll out ad-supported version of its current Kindle Fire this summer, or wait until the 2nd-generation tablet arrives this fall. Both ad executives said they actually declined to participate in the program, and considering the steep price, Amazon may have a hard time getting the ad-supported Kindle Fire off the ground.

According to the execs, they turned down Amazon's proposal because the online retailer couldn't guarantee the number of tablets that the welcome-screen ads will reach -- Amazon still wasn't sure if it would begin the program with devices that have already been purchased, or new models. There was also concern about the overall consumer experience, especially if current Kindle Fire tablets begin sporting ads after showing a blank welcome screen since November 2011.

"You're already paying a premium for the product and then having that unexpected ad experience makes for a worse consumer experience," one of the execs said. "There needs to be a value exchange."

AdAge reports that Amazon's pricing is similar to Apple's iAd network which places ads within apps on iPhones and iPads. When the network first launched, Apple was asking for $1 million-minimum deals. But over time Apple reduced that requirement several times down to the current $100,000 asking price. Industry sources believe that Amazon is currently building a direct competitor to iAd.

"It's kind of an expensive buy to not get a guaranteed audience and measurement," one of the execs said, referring to the uncertainty of ad-supported screens. "It doesn't comply with a lot of our necessary planning rigor."

While an ad-supported Kindle Fire would be ideal for individuals seeking a tablet but still can't afford the $199 pricetag, it's troublesome to learn that ads could be injected onto the welcome screens of already-purchased devices. Amazon could easily say this was the plan all along, justifying the $199 pricepoint. But that might cause a nasty consumer backlash, so the chances of slipping ads onto the current already-sold welcome screens seems a little insane at this point.