Amazon.com Inc. is looking to go toe-to-toe with Google in online advertising, with plans to launch its own system for ad placements based on its database of Web shoppers, reports the Wall Street Journal.

Citing anonymous sources, the paper said the first phase of Amazon's offensive against Google will be the replacement of ads provided by the search giant with its own ad placement platform. The ultimate goal is to build a system that will provide an alternative to Google, which rakes in $50 billion from its ad business.

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Amazon has a small ad placement business on other sites, which it could expand with new types of ads, according to the paper.

"Amazon could use the data it has about buying behavior to help make these ads much more effective," Karsten Weide, an analyst at researcher IDC told the Wall Street Journal. "Marketers would love to have another viable option beyond Google and Facebook for their advertising."

The paper said Amazon been telling potential ad partners about its new placement platform, called Amazon Sponsored Links and set to be unveiled later this year. The goal is to make it easier for marketers to reach its nearly 250 million active users.

The Wall Street Journal noted that the skirmishes between Amazon and Google are on the rise as each one tests out new services and products that the other offers. Google's Shopping Express is a direct competitor to Amazon's e-commerce business. On the other hand, Amazon has entered the smartphone wars with its own line, and offers online storage services like Google. Both companies declined to comment to the story, the paper said.

The Wall Street Journal's anonymous sources said Amazon Sponsored Links will be similar to Google's AdWords, which it uses to place keyword-targeted ads alongside Google search results and on more than two million other websites. Amazon is currently one of the biggest customers of AdWords, which is integral in Google's business.

Amazon is estimated to generate this year $1 billion from online advertising compared to more than $700 million last year.

Amazon is building a tool that will help advertising agencies buy in bulk for potentially thousands of advertisers, according to the Wall Street Journal. This will allow Amazon to boost its business placing ads on third-party websites, a service provided through AdWords.

The report noted that Amazon will face an uphill climb in its bid to challenge Google, which has already AdWords among other publishers due to the good prices it can fetch from advertisers looking to use it.

Success, however, has a huge potential to boost Amazon's profits. The Wall Street Journal pointed out that Amazon's retail operations fetch  hin profit margins, and lead to losses whenever it invests for expansion. Keeping Google's keyword ads from Amazon's site has other benefits as well. Amazon will have more control on the pricing of those ads, and it prevents Google from getting data on Amazon's customers.

TagsAmazon, Online ads