Amazon ‘Building Its Own Ad Platform’

Amazon.com is planning to expand its existing ad-selling business to more directly challenge Google, the Wall Street Journal has reported, citing unnamed sources.

The online retailer is developing a new ad-placement platform, called Amazon Sponsored Links, and has told potential ad buyers it may begin testing it later this year, according to the report.

Competition

Initially the platform is intended to replace that of Google on Amazon’s own website, but in the future that focus could be expanded, the Journal reported.

The offering will reportedly resemble AdWords, Google’s main ad-placement engine, and the foundation of its roughly $50 billion-per-year (£30bn) ad business.

Industry analysts have said Amazon could use the data it has about buying behaviour to make the ads it sells more effective. Growth in ad sales could help Amazon widen its notoriously thin profit margins.

Google currently counts Amazon as one of its biggest buyers of text-link advertisements through AdWords, but Amazon has to date eschewed buying Google’s enhanced product adverts, partly because this would require it to share product and inventory data with Google, according to industry experts cited in the report.

Bulk buying

Amazon has also been separately reported to be building a tool to help ad agencies buy in bulk. That tool could help Amazon in future efforts to sell ads on third-party websites. The retailer’s existing ad business will bring in an estimated $1bn in revenues this year, according to EMarketer.

Amazon currently displays ads from Google and others on its own sites. The two companies compete in areas such as smartphones, online retailing and cloud infrastructure.

Do you know all about the Internet of Things? Take our quiz.