"The big opportunity is in having a third-party ad network," said Schachter. "There are only a few Amazon sites. Expanding beyond that, they can take advantage of millions of other websites out there."
Amazon quietly started serving ads on other websites in the fourth quarter of 2010. This part of its business remained un-named until about the middle of last year, when the company formally christened it the Amazon Advertising Platform.
(Related Article: Analyst: Hard Not to Be Bullish on Amazon)
It currently serves ads on thousands of websites in the United States, Britain and Germany, according to its website.
Amazon's Mariani declined to name websites. However, she said Amazon buys ad inventory - or online ad space - from content publishers or through exchanges, which are online markets for buying and selling inventory.
The company's in-house technology serves the ads to third-party websites in real time. A campaign Amazon ran for Kimberly-Clark's Huggies diapers, and another for video game designer Ubisoft, included ads served off Amazon websites.
This is where its advantage lies. It has tracked what millions of shoppers browse, search, and buy on Amazon.com for more than 15 years, using that information to recommend related products to customers. Now, it's using that data to buy ad inventory more efficiently and serve ads to the right consumers, on the right websites, at the right time.
A large entertainment company worked with Amazon to promote one of its movies last year, according to a person at the entertainment company. Data on purchases of related DVDs, books and music on Amazon.com helped identify potential customers who were likely to see the movie at the theater and ads were targeted at this audience. Results were above average, based on the number of impressions served and the number of clicks on the ads, the person said. They did not want to be identified as they were not authorized to speak publicly about the company's ad spending.
"Amazon spent a lot of time developing algorithms to make recommendations to consumers shopping on Amazon.com," said an executive who oversees an ad exchange that is a partner of Amazon's.
"Now they can do this outside of the Amazon world for other companies. It's really an extension of one of their core competencies," said the executive, who declined to be identified because Amazon is an important partner.
(Related Article: Microsoft Targets Amazon)
Armed with consumer information, Amazon can bid more aggressively on exchanges because it is confident that ads created from that inventory will be clicked on more often. The company can also charge advertisers more because its ads are better targeted, according to industry insiders and analysts.
"Amazon is not a retailer anymore, it is the largest behavioral marketing company in the world," said Yaakov Kimelfeld, chief research officer at Kantar Media Compete, which helps global brands improve their online marketing. "Amazon will be the best positioned to predict whether to buy inventory or not and be the most efficient in this market."
Amazon's purchase data helps advertisers spend more efficiently because they only have to buy access to those consumers most likely to respond to their messages, according to Mark Pavia, an executive at media buying firm Starcom USA, which represents clients including Kellogg, Samsung Electronics and Mars.
"I can spend 100 percent of my dollars, if you will, against only the people I want to get because of the purchase data," Pavia said. "That level of targeting is highly interesting."