Amazon is reportedly planning to enter the lucrative internet advertisement business using the data it gathers from its customers.
Amazon, the largest e-commerce operator in the world, is going to take a huge swing at Google's profitable internet advertising business if the latest claims are to be believed. According to a report by the Wall Street Journal citing anonymous sources, the online retailer is reportedly developing its own program for targeted internet advertisements using the information it gathers about its customers' preferences.
The latest move will challenge Google's rule in the advertisement sector. The web giant accounted for more than 31 percent of the global ad market share this year, according to eMarketer research and makes around $50 billion a year. Amazon is aiming at merely a fraction of Google's earnings, estimated to be around $1 billion this year, which is still a lot when Google's comparison is ruled out, the Journal added.
Amazon already shows various types of ads on its pages. The e-commerce giant made more than $700 million in advertising revenue last year, according to eMarketer. A separate research from S&P Capital IQ found Google's advertisement profits in the first six months of this year is greater than Amazon's total earnings since the company was established 20 years ago.
The ads displayed on Amazon's sites are not just limited to its own products and services but also show text-based keyword ads by Google and other companies. With a proper system in place, Amazon will increase its business in placing ads on third-part websites.
Advertising revenue will help Amazon build a stronger income source as it marks thin profit margins in acting as a broker between suppliers and consumers. The retailer frequently posts losses, the Journal said, but a concrete ad system will change that.
Over time, Amazon has grown vastly with its reach in selling books, streamed video, online music and smartphone and tablet devices. Adding another business source for Amazon will help it flourish even further.
