Amazon Plans Direct Competition With Google AdWords

Amazon has developed its own software for placing ads online, potentially putting it in direct competition with Google’s current dominance of the online advertising market. The new platform will be driven by the shopping data that Amazon has collected as the world’s largest online retailer, and reports indicate that testing of the “Amazon Sponsored Links” program could begin later this year.

Initial reports indicate Amazon’s plans to replace ads on its pages that Google chiefly supplies with its new in-house ad placement platform, creating the potential for the company to challenge Google’s staggering $50 billion per year advertising revenue.

“Amazon could use the data it has about buying behavior to help make these ads much more effective,” said Karsten Weide, an analyst at researcher IDC. “Marketers would love to have another viable option beyond Google and Facebook for their advertising.”

Amazon has been involved in this realm to some degree already, with ads that link to product pages on its own site, ads that link out to merchant sites and ads on a network of third-party sites. However, with this new offering, it’s clear that the company is stepping directly into Google’s territory, and marketers will be watching closely as this unfolds. Having access to Amazon’s products browsed and purchased targeting will be extremely enticing to a broad range of marketers.

“Amazon knows a lot about how people are searching on the site and consumer preferences and histories. It can use that to tailor advertising in ways that probably nobody else can,” said Reid Spice, vice president of media at digital agency iCrossing.

Sources reveal that Amazon’s offering will resemble Google’s AdWords, the engine that Google uses to place keyword-targeted ads alongside Google search results and on more than two million other websites. The effect that Amazon’s new initiative could have on Google’s massive online ad business is yet to be seen, but with Amazon currently being one of Google’s biggest buyers of text link ads, some big changes in online advertising may be on the way.

Many marketers will be interested in gaining access to Amazon’s unique shopping and product data as a way to gain more reach and flexibility than Google’s AdWords currently provides. Even though Google has been amassing its own bank of data on products and product search, the company has very little insight into what consumers actually buy. Amazon has a massive amount of this information already on hand, and there’s no question that marketers will be analyzing the possibilities once its new ad program comes to fruition. Will “Amazon Sponsored Links” become a major competitor for Google’s AdWords? At this point it’s difficult to speculate, but advertisers will be watching carefully as the situation develops.