According to foreign media reports on April 24th, Beijing time, Amazon is called a sleeping giant in the advertising industry because it has a large amount of consumer spending data which many advertisers call untapped opportunities.Now, Amazon has realized this potential. After years of posting ads on its own website, Amazon is beginning to transform into an Internet advertising network, using the information it possesses to post targeted ads for some of the largest advertisers on thousands of other websites.A mobile ad network released by Amazon at the end of last year posts ads through applications on smartphones and tablets, including Apple's iPhone and Android-based mobile devices.For Amazon, the advertising business is a brand new revenue channel with higher profit margins than its retail business. For Google, Facebook and other leaders in advertising, Amazon is a threat because it has data that other online advertising giants do not possess.Google knows what people are searching for, Facebook knows what people like and their friends, and Amazon knows that users wanted to buy running shoes last week and also knows that they bought running shoes last year; this kind of data makes advertisers drool.Jeff Lanctot, Chief Media Officer of digital advertising company Razorfish, said that in today's marketing world, data is gold, and Amazon is Fort Knox (where the US federal government has stored gold since 1936).Lanctot said that Amazon has clearly decided to enter the advertising market now, and it has been listening to the types of data and large-scale customer groups that advertisers need.Another billion-dollar business?The competition in the online advertising market is fierce. Market research firm eMarketer's data shows that Google, Yahoo, Microsoft, Facebook, and AOL occupy two-thirds of the U.S. online advertising market.Industry insiders pointed out that the consumer information it holds will give Amazon unique advantages. Despite fierce competition, Amazon's investment is worthwhile.Analyst Ben Schachter of Macquarie Investment Company indicated that the profit margin of online advertising businesses is typically between 20%-30%, while Amazon's retail business profit margin is less than 5%.When Amazon releases its earnings report on Thursday, analysts will look for signs of growth in high-profit-margin businesses such as advertising and cloud computing. For years, Amazon has been investing in these businesses.Amazon does not disclose the performance of its advertising business. But analysts estimate that the advertising business generates at least $500 million in annual revenue for Amazon. Former Amazon executive David Selinger recently predicted that Amazon's advertising business revenue would reach $1 billion this year.The advertising business accounts for only a fraction of Amazon's revenue. But in the long term, Amazon will capture a larger share of the online advertising market. Market research company eMarketer's data shows that the U.S. online advertising market size will exceed $50 billion in 2015. Schachter said that Amazon could surpass Yahoo, Facebook, or AOL in the online advertising market.Posting ads on other websitesSince 2011, the display advertising business on Amazon's website has grown rapidly, but what truly excites the advertising industry and Wall Street is Amazon's recent business of posting ads on other websites. Schachter said that a major opportunity lies in owning a third-party advertising network. Amazon owns only a few websites, but it can post ads on millions of other websites.Amazon quietly began posting ads on other websites starting from the fourth quarter of 2010. In the middle of last year, Amazon named its third-party advertising business as the Amazon Advertising Platform, which was previously unnamed within Amazon.Amazon states on its website that currently the company posts ads on thousands of websites in the U.S., UK, and Germany. Amazon spokesperson Kristin Schaefer Mariani did not mention the websites collaborating with Amazon, but she said that Amazon purchases online ad space from content publishers or advertising networks.Amazon uses internal technology to post ads in real-time on third-party websites. This is Amazon's advantage. Over the past 15 years, Amazon has attracted millions of shoppers to browse, search, and purchase goods on its website, using the information it possesses to recommend products to consumers. Now, Amazon uses this data to more effectively purchase ad space, posting ads to the right users at the right time on the right websites.An insider from an entertainment company revealed that the company collaborated with Amazon last year to promote one of its films. Data on purchasing related DVDs, books, and music on Amazon's website helped identify target customers who might watch the movie in theaters and posted ads to them. The aforementioned insider stated that both the impressions and click-through rate of this ad were above the industry average.An executive from one of Amazon's advertising partners said that Amazon has invested a lot of time in developing product recommendation algorithms. Now it can use this technology for its advertising business, expanding its core competencies.Because it possesses a large amount of user information, Amazon will be more aggressive in bidding for ad spaces, as it believes that the ad click-through rate will be higher. Industry insiders and analysts pointed out that Amazon can raise ad prices because its ads are more targeted.Yaakov Kimelfeld, Chief Research Officer of online marketing company Kantar Media Compete, said that Amazon is no longer just a retailer, but the world's largest behavioral marketing company. Amazon will be the best at predicting whether to purchase ad space, and will be the most efficient in this regard.Mark Pavia, an executive at advertising company StarcomUSA, indicated that Amazon's user information helps advertisers improve the efficiency of their advertising budget usage, as their ads will only be posted to users who are most likely to respond to the ad.