Amazon.com, Inc. (NASDAQ:AMZN) is all set to challenge Google Inc (NASDAQ:GOOGL) for its online advertising business. The company is working on its in-house software for placing ads online and it is supposedly considered as an alternative to the Google Adwords platform. Amazon.com, Inc. (NASDAQ:AMZN) is banking on the data offered by millions of web shoppers to perfect their platform.
Online advertising is a $500 billion industry with Google Inc (NASDAQ:GOOGL) having a 10% share in it but with a lack of worthy opponents, Amazon.com, Inc. (NASDAQ:AMZN) might be able to successfully launch their advertising platform. Further, with the dominance of Google in online advertising, an additional platform will receive a welcoming gesture from online marketers.
However, entering Google Inc’s (NASDAQ:GOOGL) territory and overthrowing it would not be an easy option. For instance, ads comprised of only 5% of the total revenue ($74.5 billion) of Amazon.com, Inc. (NASDAQ:AMZN) last year whereas Google made 93% of its total revenue ($59.8 billion) from online advertising only. Further, the profit margins are comparatively lower for Amazon whereas Google has a high profit margin over every single ad unit.
In addition to it, Google Inc attracts ad revenue from a dozen other insurers including The Progressive Corporation (NYSE:PGR), Expedia Inc (NASDAQ:EXPE), and Apollo Education Group Inc (NASDAQ:APOL). Further, Google is investing considerable amount of money in e-commerce with Google Shopping Express same-day delivery program and new methods of contacting Android users when they are near one of the products they searched online.
However, tapping into the online advertising agency is not the sole purpose of this new ad-placement software developed by Amazon. With an in-house ad program, Amazon would be able to place ads over its ecommerce portal and restrict Google ads from the website. Consider all of these parameters; we can certainly hope to witness more competition in the online advertising industry.
This article has been written by Prakash Pandey and edited by Serkan Unal.