Amazon's Kindle Fire Tablet: Ablaze With Ad Potential?

Amazon’s content play just got even bigger with the announcement of the Kindle Fire, a full-color mobile device optimized for movies, TV shows, music, books, magazines, apps, games and web browsing. The device will sell for just $199, half the price of Apple’s cheapest iPad, and will ship in November in time for the holiday season.

Adding to the volume of content available on Amazon devices, on Monday the company announced a licensing agreement with FOX that will allow Amazon Prime members to instantly stream a selection of movies and TV shows from the FOX library, bringing the total number of Prime instant videos to more than 11,000 movies and TV shows.

And all of these media – except, for the most part, books – are already optimized for advertising. Of course, Amazon’s recommendations are already a form of behaviorally targeted advertising. But the Kindle Fire could open up additional opportunities for marketers.

Amazon’s new browser, Silk, has a dual architecture that divides the page request labor between the mobile hardware and Amazon’s Elastic Compute Cloud, so that web pages load much faster. Silk will also use Amazon’s collaborative filtering and machine learning algorithms to learn more about the individual sites it renders and where users go next.

This capacity could also be used for behavioral targeting of ads, although Amazon has said nothing about this. The company already offers the ad-supported Kindle with Special Offers and Kindle 3G with Special Offers. Amazon.com did not respond to a question about whether Special Offers will be incorporated into the Kindle Fire.

Whether or not they are, the Kindle Fire opens up new revenue opportunities for publishers.

Says James Lamberti, VP of global marketing and research for mobile ad network inMobi, “My guess is they will play this very similarly to the way Apple does. I think they will help existing publishers – and, therefore, eventually advertisers – improve the ad experience on these devices through their data knowledge.”

Lamberti thinks that, at first, it will be publishers with presence on the Kindle Fire that sell, target and deliver ads into the device. He adds, “Depending on how successful these devices are, what inevitably happens in mobile is that there is so much inventory created that even huge publishers ultimately can’t sell their entire inventory. You then need to think about how to fully monetize. The logical next step is to work with someone like inMobi.”

On the other hand, Amazon itself could become a competitor to mobile ad networks.

Krishna Subramanian, co-founder of the Velti Mobclix Exchange, says, “Amazon.com does a great job of predictive targeting of content on the website, and that insight definitely could be passed to their own advertisers to run within display units, as well as being almost a competing platform. Amazon.com has insight into all of the usage [of] Kindle Fire devices, and ad networks will only have insight into specific applications.”

Lamberti agrees. “I anticipate they will sell services through the platform and potentially offer targeting but not necessarily extend it to ad networks like ours.”

For example, he says, Amazon could allow magazine publishers to serve different ads to different people, based on anything from time of day to demographics to behavior.

“All of that seems logical and in the ad experience that the Kindle Fire technically can support. I suspect we’ll see all of those elements coming into play in next several months or years,” Lamberti says.

Subramanian says that, because Amazon has not revealed many details, it’s difficult to say how much of a technical challenge it would be for mobile ad networks to make use of its user insight.

“We don’t even know what kind of data is available,” he says. “But, at the end of the day, the supply-side companies all make use of third-party data — and I’m sure people would find ways to make it work.”