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Amazon Replaces Its Product Ads with Text Ads

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Aug. 25 2015, Updated 10:07 a.m. ET

The end of pay-per-click ads

Amazon (AMZN) announced an end to the pay-per-click advertisements that previously appeared at the end of its search results. These product ads were a hit among small retailers who didn’t sell their products on Amazon, but who could showcase their merchandise via these ads. These ads gave small retailers access to Amazon’s 280 million customers. In return, Amazon earned a fee ranging from 10 cents to $2.05 per click from the advertisers, according to a recent report in the Wall Street Journal.

The product ads showcased images of merchandise along with the link to the retailer’s site. Text ads, on the other hand, are simple and do not include any images of merchandise.

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Text ads along with product searches

Going forward, Amazon will include text ads along with the product searches, removing the product ads that showcased pictures of merchandise linked to retail sites outside its platform.

This action could be a step toward challenging Google’s (GOOG) monopoly in the online advertising space, as shown in the above chart. Baidu (BIDU) and Alibaba (BABA), leading Internet companies in China (FXI), have marked their entrance in the global digital advertising market.

Google has been placing links on Amazon.com search results, in turn drawing valuable data about Amazon and its users. The data includes information about products that lead users away from the retailer’s site. The introduction of text ads should help Amazon prevent Google from extracting this valuable information from its site.

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