Amazon encroaches on Google turf with 'Sponsored Links'
With Google dominating the digital ads market, Amazon is taking steps that could lead to the online retailer competing on the search engine's turf, anonymous sources told the Wall Street Journal.
Amazon's new advertising system will start on the retailer's website. But after the new ad system tests its legs, it could move beyond Amazon's website and pop up among content on other websites.
Functioning much like Google's AdWords, the new advertising platform would draw users back to the retailer's inventory and storefronts housed on Amazon's website. To help it launch quickly, Amazon's new advertising platform would allow marketing agencies to buy in bulk.
Amazon's newest ad platform, said to be called "Amazon Sponsored Links," will use data collected from customer browsing and purchasing habits to customize the ads it displays for each individual, which gives it an edge over Facebook and Google. As the United States' largest online retailer, Amazon is poised to make relevant plays for consumer attention and dollars.
With Google claiming a roughly 31.5 percent share of global ad revenue, Amazon will have a lot of ground to cover to compete with the search engine company. Google's ads draw in roughly $50 billion annually, while Amazon takes in around $1 billion.
Google's portion of ad dollars is followed by Facebook's 7.79 percent share and Microsoft's 2.54 percent slice of the global pie. Thus far in 2014, Amazon's portion of the world's digital ad revenue was 0.75 percent.
Back in July, Facebook expanded its approach to drawing in ad dollars by introducing its "Buy" button. Facebook's Buy button is a form of direct-response advertising that offers the social media company a chance to reap large rewards if the site's users become comfortable with buying third-party products and services through the feature.
Ralph Dangelmaier, CEO of BlueSnap, said Facebook's Buy button could fall flat with every country, except the U.S.
Payment systems that are popular in the U.S., such as PayPal and Visa, aren't available or as well-received in other parts of the world, Dangelmaier reasoned. Approximately 15 percent of Latin America's population has credit cards, making the Buy button useless to roughly 85 percent of the region's citizens, said Dangelmaier.
"The Buy button will appeal to a certain group of people," said Dangelmaier. "It's going to have a double-edged sword. It will work well for Americans, but if you're in Chile or South Africa or China, it's probably going to be a turnoff. That's just part of an American company not understanding the differences."