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Subject: RE: UKNM: Fast Summit
From: Ben Thompson
Date: Mon, 21 Sep 1998 18:02:30 +0100

Ross said,

... They show that Amazon spent 38m in
Advertising in 1997 and they currently have a circa $70 per user acquisition
cost (Jupiter figure). They have a Net Sales total for 97 which is
$147,758,000 and a cost of sales of 118,945,000. I think that the SEC
details may provide you with the breakdown you need Ray. Did ICE have access
(or use) the SEC figures?

Actually this is the other half of my argument. In Q2 Amazon spent
$26,452,000 on advertising and got 881,000 new customers (i.e. $30 per user

Unfortunately, as the vast majority of this advertising expense is tied up
to long term Partnership deals (Excite, Yahoo, Quicken, Netscape) with large
initial outlays, it is impossible to tell what the actual user acquisition
cost is.

It is at this point that we start hitting problems. As large parts of this
advertising cost is for long term deals that will carry on (without large
additional costs) for 2+ years we don't know what the cost of each user
acquisition is. We can guess but it is only that. But I doubt that the
figure is going to be anything like $70.

Beyond this I'm not going to say anything as I assume that this detail is
going to be of interest to merely myself, Ross and Ray.


  RE: UKNM: Fast Summit, Ross Sleight

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