Amazon is looking to take on Google's leadership in the market for online advertising with sponsored links on its own website.
Google dominates the market with its AdWords service, which allows advertisers to create ads with their own chosen keywords. When the keywords are entered by a user that uses Google's search engine, the created ad may appear adjacent to the returned search results.
Google's AdWords is effective because with the right keywords, ads are shown to users that are already interested in the advertiser's business.
According to research company eMarketer, Google has a share of 31.45 percent in the online advertising market, allowing the company to earn about $50 billion annually.
Google's top percentage of online advertising market share, along with the revenue that comes with it, is what Amazon is trying to chase. To compare, Amazon expects to only earn about $1 billion this year from its advertising business.
Amazon is looking to replace the ads on its website with a new ad placement system that utilizes the information that Amazon gathers regarding the preferences of the company's customers.
Amazon could begin testing the new ad placement platform within the year.
The implementation of such an ad placement system for Amazon will affect Google's earnings directly, as Amazon is actually one of Google's biggest ad buyers.
In addition to the ad placement platform, Amazon is also currently creating a tool that will allow advertising agencies to buy ads in bulk in behalf of thousands of advertisers.
Amazon has humble beginning as an online bookstore, but has since grown into a major online retail company. Among Amazon's other businesses, on top of its burgeoning bookstore business, include sales of digital content such as eBooks, online music and streaming video, and hardware such as tablet computers and smartphones.
The huge customer base of Amazon has also been taken advantage of by third-party vendors, who can choose to sell their products on Amazon.
Amazon will need all the advertising revenue it can get, and a new ad placement system will allow the company to focus on something else aside from its ongoing spat with publishing house Hachette.
Amazon is claiming that its only goal is to make the prices of eBooks cheaper, criticizing Hachette's refusal to agree to a new contract that could decrease the prices of most eBooks to $9.99 or less.
Amazon has launched the Readers United movement, which encourages readers to send an email to Hachette CEO Michael Pietsch to discuss the ongoing dispute.
