Amazon (AMZN) Developing Its Own Ad Sales System to Challenge Google (GOOGL) and Microsoft (MSFT)

Amazon.com (AMZN) is planning to develop a program for placing ads online both on its own properties and other sites, The Wall Street Journal reported, citing people with knowledge of the matter.

While the new in-house ad placement system,¬†currently dubbed Amazon Sponsored Links, is initially planned to replace ads supplied by Google (GOOGL) on Amazon’s own website, the software, given Amazon’s scale and access to shopping information, could challenge both Google and Microsoft (MSFT)’s ad business in the future and potentially create a new stream of revenue for the Seattle-based e-commerce giant, the publication cited the people as saying.

It goes without saying that Amazon will face significant challenges scaling its own system to compete against Google’s $50 billion-a-year advertising business, but the platform, should it launch, could be a big success for Amazon given all the data the retailer has on people’s online shopping habits.

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

Amazon’s ad system, which may begin testing later this year, would resemble Google’s AdWords and is planned to make it easier for marketers to reach the company’s 250 million active users, the report said.

Shares of Amazon closed at $331.59 on Friday.

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