Amazon’s Twitchy ad finger

The Wall Street Journal reported over the weekend that Amazon is preparing to challenge Google’s dominance of online advertising by launching an ad platform of its own. Purportedly called Google Sponsored Links the service would resemble Google’s AdWords and allow advertisers to place ads on third-party sites as well as on (and presumably Amazon mobile devices).

Given its huge trove of individual purchase-history data, Amazon has long been the sleeping giant of online advertising. Its potential ability to target ads at people who have purchased specific items in the past, or searched for items on its site, could make it a very enticing platform for advertisers.  But even a giant faces a steep challenge to dislodge Google from its throne. Google AdWords has a 14-year head start and millions of advertisers already in the fold. Its Google AdSense widget is nearly ubiquitous among online publishers.

Where area where Amazon could still gain an edge on Google, however, is video advertising. YouTube is a major video ad platform, but it’s not nearly as dominant as Google is in search advertising. There’s simply too much video inventory available on too many other platforms for any one publisher to dominate the market.

One such place where there’s a lot of potential video inventory is, the live-streaming gaming site the boasts more than 40 million unique monthly visitors worldwide. And sure enough, reports surfaced Monday that Amazon was looking to step in front of Google to snap up Twitch for something in the neighborhood of $1 billion.

If Amazon can leverage its data trove to build a real-time video ad business on Twitch (and eventually Amazon Prime Instant) it would certainly earn Google’s attention if not yet its crown.

Update: It’s apparently a done deal, for $970 million in cash.