E-retailer Amazon is gearing up to throw the gauntlet to Google AdWords as the company is looking to develop its own in-house software that will place ads online.

The Amazon platform, dubbed Amazon Sponsored Links, will be replacing the ads that are currently generated by Google Inc. for its website. The Seattle-based company will likely begin testing by end 2014.

The information is courtesy of The Wall Street Journal's reliable sources.

"Amazon.com Inc. is gearing up to more directly challenge Google Inc.'s dominance of the online advertising market, developing its own software for placing ads online that could leverage its knowledge of millions of Web shoppers. Initially, Amazon plans to replace those ads on its pages that Google chiefly supplies with a new in-house ad placement platform, said people familiar with the matter," revealed [subscription required] the WSJ report.

Currently, Amazon has different types of product ads on its pages that are placed by Google and other parties, as well as the company itself.

According to WSJ's sources, the e-retailer's system will look to compete with Google and Microsoft's advertising business in the long term. Amazon's ad platform will be along the lines of AdWords and attempt to make it simpler for marketers to reach its 250 million active users.

Amazon will likely be able to use the extensive data it has on buyer behavior to aid the effectivity of the ads.

"Amazon knows a lot about how people are searching on the site and consumer preferences and histories. It can use that to tailor advertising in ways that probably nobody else can," says Reid Spice, VP of media at digital agency iCrossing.

Allegedly, Amazon also has a tool in the works that will aid ad agencies in bulk buying. The creation of such a system will also help the e-retailer give a fillip to its existing business by putting up ads on third-party sites.

With another feasible option available in Amazon Sponsored Links, marketers will be able to look beyond Google and Facebook to fulfill their advertising needs in the near future.

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