American Amazon is apparently preparing a Google Adwords competitor. Amazon would like to get a cut of the 50 billion dollars (38 billion euro) Google currently brings in on a yearly basis.
"Make ads more effective"
Amazon plans to replace Google-administered ads on its own page with its own platform of advertisements as its first move, whie it is looking at options to expand the platform. The first testing phase for Amazon Sponsored Links, as the program is called, should start later this year.
"Amazon could use the data it has about buying behavior to help make these ads much more effective", Karsten Weide, an IDC analyst told The Wall Street Journal. "Marketers would love to have another viable option beyond Google and Facebook for their advertising."
The American online retailer will get nearly 1 billion dollars (750 million euro) in advertising revenue this year, which could grow thanks to the new system. Amazon's profit margins could get boosted a lot thanks to this. In the first half of this year, Google's operational profit, derived purely from its ads, was higher than what Amazon managed from its foundation 20 years ago up until now.
Apparently, both companies will lock horns more often from now on. Google is investing in Amazon's expertise areas while Amazon is doing similarly. Just like Google, Amazon now has a smartphone, while Google is focused on the expansion of its delivery service geared towards its online orders.