RE: UKNM: Fast Summit

[Ben Thompson]

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

acquisition

cost).


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.


Ben