Amazon’s Gift Card Promotion Nets $5 Million and Lots of New Subscribers

In just 17 hours yesterday, AmazonLocal sold one million Amazon gift cards for $5 million, making it the company’s most successful promotion in the daily deals space to date.

That’s not a big surprise, given it was essentially giving away cash — each $10 gift card cost five bucks!

But it’s a big deal for AmazonLocal, the company’s nine-month-old daily deals business that’s playing catch-up against others, like Groupon, LivingSocial, Travelzoo and Google.

According to Savvr, which tracks deal information from 260 publishers, Amazon’s promotion may have been one of the fastest-selling deals since the industry took off in 2008.

Previously, it took LivingSocial only 14 hours to sell one million gift cards for Whole Foods. (Amazon entered the daily deals business through a strategic investment in LivingSocial.)

For Amazon, yesterday’s deal by far and away was its most successful in terms of deals sold as well as revenue generated. Previously, Savvr said Amazon’s highest revenue-generating deal was for Omaha Steaks, which put $806,800 in top-line revenue. Meanwhile, the most vouchers it had ever sold was 27,135.

These high-profile deals in the space are used to introduce the service to new users and sign up more subscribers, even though they tend to lose money.

In a blog post, Savvr’s co-founder Tim Elliot explains that Amazon’s decision to sell discounted gift cards was a smart move because it roughly costs about $5 to acquire each new subscriber through traditional channels, anyway.

“Amazon not only paid that amount, but they also acquired substantially more valuable subscribers: Customers who are known to make purchases online, and now these customers can place 1-click orders as well,” he wrote.

Not to mention, all of those who bought the gift card will turn around and spend it on

In a statement, an Amazon spokesperson confirmed the deal sold out after one million vouchers.

“The $10 Gift Card deal offered by AmazonLocal on Tuesday sold out in just over 17 hours at 5:11 p.m. PDT. The deal went live at midnight PDT and was available to customers across the U.S. The popularity of this AmazonLocal deal shows that customers want unique and relevant deals that provide them with an excellent buying experience.”

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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik