Amazon to take on Google in the ad business with AdSense-like offering of its own

Amazon is seemingly not happy to be just one of the main, if not the most important, online retailer, and the company is ready to challenge existing top companies in various niches with more products of its own.
After taking on everyone in the mobile business with very affordable Android-based tablets last year, the company is reportedly preparing to assault the smartphone business as well at some point next year. Meanwhile, the company is still selling its Kindle Fire versions – updated 2012 models – in the U.S., but also in various other international markets.

Amazon established itself as a popular tablet provider by taking Google’s Android OS, stripping it from everything that resembled to a regular Android experience and making its own. The company removed Google’s own built-in Android apps – which is how Google makes money off of Android since it doesn’t charge OEMs licenses for it – and replaced them with similar products of its own.
And Amazon seems ready to go to the next level when it comes to fighting Google. AdWeek reports that Amazon has developed its own bidding-based advertising platform, which could grow in the following years as a worthy Google AdSense rival.
Sure, Google has a lot of experience in search and providing targeted ads to advertisers, and it’s making a lot of cash from its ad business. But companies like Facebook, and now Amazon, seem to be more interested in offering a competing advertising alternative to interested customers.
While Amazon is not sitting on a huge pile of search data like Google, and it doesn’t have over one billion social profiles to mine data from like Facebook, it certainly knows how and what people are shopping. The company can provide even more targeted ads to shoppers, since they already know what products they’re looking for.

According to the report, Amazon has developed its own bidding technology that would be used in such an AdSense competitor, and we could see in action as soon as the first quarter of next year:

Over the past year, Amazon has built a proprietary real-time bidding platform that plugs into exchanges and supply-side platforms, including Google’s AdX and PubMatic. This platform lets the company retarget its users across the Web based on their browsing and purchase habits on Amazon’s owned-and-operated properties. That could be a game changer. Given Amazon’s recommendation engine and general deal-closing prowess, the company’s data should have advertisers drooling.

And according to the same publication, some ad execs seem to be very interested in an Amazon-run ad business exactly because of the data Amazon can analyze when targeting ads:

“What’s so powerful is having revenue data and action data on purchases,” said Scott Symonds, managing director of AKQA Media. “Google has [some ability to track conversions] through Google Analytics, but everyone is desperate to see [a closed-loop system].”
Said IgnitionOne CEO Will Margiloff: “I’ve always believed that the best data is conversion data. Who has more conversion data in e-commerce than Amazon?”
“The truth is that they have a singular amount of data that nobody else can touch,” said Jonathan Adams, iCrossing’s U.S. media lead. “Search behavior is not the same as conversion data. These guys have been watching you buy things for … years.”

At the same time, the article points out that Amazon doesn’t exactly need an ad business in order to drive its other business, and this new adventure could be harder to explain to consumers. Comparatively, Google needs the ads to finance all the products it offers for free to consumers, Android OS included. The same goes for Facebook, which offers its social networking services free of charge, and other companies. But Amazon, while it does sell some of its own products at cost, it can’t really justify the need to push ads to its customers through various means. After all, consumers don’t always want to be bothered by ads, whether Google’s, Facebook’s, Amazon’s or anyone else’s.
Will Amazon be able to establish itself as a power player in the ad business as well? Time will tell, but we’re certainly going to keep tabs on this new potential Amazon vs Google rivalry.

SOURCES AdWeek The Verge

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