WSJ: Amazon Developing Online Advertising Software To Challenge Google

(RTTNews) - Online retailer Amazon.com Inc. (AMZN) is developing its own software for placing advertisements online that will help it to directly take on Google Inc. (GOOG, GOOGL) in the online advertising market, the Wall Street Journal reported Sunday, citing people familiar with the matter.

According to the WSJ report, Amazon had told potential ad partners that it might start to test its new placement platform, called "Amazon Sponsored Links", later in 2014. The plan is to make it easier for marketers to reach the company's about 250 million active users.

Amazon initially plans to replace ads on its page, that are currently supplied by Google, through a new in-house ad placement platform. But the company's system could challenge Google's $50 billion-a-year advertising business in the future.

Amazon already has a limited business that places ads on other sites. The company's offering would reportedly resemble Google's AdWords, the engine that Google uses to place keyword-targeted ads alongside its search results and on more than two million other websites.

According to the WSJ report, in order to displace the Google ads on its site, Amazon is developing a tool to help advertising agencies buy in bulk for potentially thousands of advertisers.

While Google has benefited in terms of ad volume from mobile and video advertising, concerns remain over its weak ad pricing. For the recent second quarter, Google said that payments from advertisers for the quarter slid 6 percent from last year, although aggregate paid clicks jumped 25 percent.

AMZN closed Friday's trading at $331.59, down $1.32 or 0.40 percent on a volume of 2.21 million shares.