Can Amazon challenge Google's dominance in online advertising?
Amazon intends to find out, according to a Wall Street Journal report. The online retailer is building a new ad platform similar to Google's, which could open a huge new business. Amazon Sponsored Links, as it's being called, would effectively be similar to Google's AdWords product, which shows ads based on search queries. Someone who types in the search term "bicycle," for instance, sees a text ad from a bicycle retailer.
A major ad push like Amazon's could be a significant blow to Google's bottom line, as Amazon is one of Google's largest ad buyers. Online ads account for the lion's share of Google's revenues.
Still, Amazon would face formidable competition. AdWords has a 14-year head start and remains largely unrivaled in online ads. In an effort to win market share, Amazon is also reportedly working on a tool that would allow advertising agencies to buy ads in bulk on behalf of thousands of clients.
But the upside for Amazon is undeniable. While digital marketing firm eMarketer predicts Amazon's existing ad business will rake in $1 billion this year, up from $700 million in 2013, that's still a paltry figure compared with Google. And Amazon's treasure trove of customer data could be used to make ads more "click-worthy" to users — even more than Google's efforts — which certainly would be attractive to cash-focused advertisers.
Amazon did not immediately respond to a request for comment. Google declined to comment.