Did Amazon Just Go After Google?

Amazon.com

is up fractionally today, but the real big move may come later when analysts start to realize how important this morning's news is that Amazon is effectively launching its own

The company is buying Web advertising inventory and then reselling it at a premium. What makes this different than Google's

advertising network, is that it is using the data that Amazon customers have, such as certain purchases and then targeting the ads to those same customers. Now that Amazon is branching out to third-party sites, this could be potentially worth billions to the company, and make shares look undervalued, even at these levels. There are concerns over whether Amazon has the right to sell this data, and could potentially raise privacy issues, but that is for a later date. The real key here is that Amazon can use the vast knowledge it has about you, such as what you've looked at, bought and then charge a higher premium for the ads than other networks do. Jeff Bezos, CEO of Amazon, may have hit a real home run with this announcement, and it is going largely unnoticed by the Street this morning. From the press release this morning: San Francisco, Calif. – June 28, 2011 – Triggit today announced that it has been selected by Amazon.com to serve as a Demand Side Platform (

) for Amazon's digital display advertising. Triggit will provide Amazon with its sophisticated real time bidding (RTB) software to enable Amazon to show the right ads to the right users across nine ad exchanges and more than four million websites. “To be selected to provide technology to a company as technically advanced as Amazon is humbling and incredibly exciting,” said Zachery Coelius, Triggit's CEO. “We are looking forward to working with the Amazon team to hopefully bring some of the amazing innovation they have brought to ecommerce to the world of advertising”.

Analysis

For a company growing its revenues at nearly 40% year-over-year, this is an enormous potential to add billions in revenue that it does not really have to do much work on. It already has the data and can sell it at sharply higher margins than competitors because of the information it already holds. This is known as "re-targeting," and it looks as if Amazon is going to hit another home-run with this initiative. If Amazon is able to deliver targeted ads to its customers on thousands of websites and charge a premium for them, then this $90 billion market-cap company should see significant upside as these estimates begin to get baked in. Amazon is growing like a weed, and this is another initiative taken by Bezos that continues to show why he is a rockstar.