Competition is heating up between Amazon and Google, with each moving into the other?s territory as they look to build mobile powerhouses. 

Amazon is eyeing a bigger role in mobile advertising, potentially giving mobile ad networks such as Google?s AdMob a run for their money by extending its mobile ad network to applications on any Android device. At the same time, Google is reportedly planning to introduce a new ecommerce service that would compete with Amazon Prime by offering same-day delivery from local retailers.

?This is a great move for both Amazon and Android app developers,? said Howie Schwartz, CEO of Human Demand.

?Android typically monetizes at a lower rate versus iOS, and this will provide lift to Android publishers, even if limited to Amazon store listed apps,? he said.

?I don't think this means Amazon is building a full-fledged mobile ad network today, but this is the foundation and I wouldn't be surprised if we see them lean more towards this over the next year.?

Google vs. Amazon
Over the past year, Amazon has been building its digital advertising strategy, including building a real-time bidding platform that lets marketers retarget users based on their browsing and purchasing behavior.

This week, the ecommerce giant took a major step toward expanding its mobile strategy by enabling developers to sell Amazon-based ads in apps on any Android device ? not just Kindle Fire ? as long as the app is available in the Amazon Appstore.

Over at Google, reports suggest that the company?s new ecommerce service will be up to $15 cheaper than Amazon Prime?s annual fee of $79. The service would also compete with eBay Now.

Amazon has begun offering a mobile ads API that will allow developers to put Amazon-based ads in their apps, putting Amazon in direct competition with Google and other ad networks. While apps must be a part of Amazon?s Android app store, the ads can appear on any app on any Android device and the ads will come from both Amazon and brand advertisers.

Amazon is offering several basic ad units with static and rich-media options available for smartphone and tablet apps. Advertisers will be able to target ads based on a user?s location and gender. Initially, advertisers will only be able to serve ads to users in the United States.

The Amazon Mobile Ads API is currently in beta.

Targeting mobile users
Industry sources believe Amazon?s mobile ad network could rival Google?s AdMob and Facebook?s nascent efforts to bring a mobile ad network to market.

The real potential here seems to be in the significant data Amazon has about its customers, potentially enabling advertisers to target users based on past purchases.

Since it is still early days for mobile advertising, Amazon?s entry may simply be another way for advertisers to reach mobile users instead of replacing any of their existing efforts.

?I don't think it?s an impact, since fill rates overall are so low,? Mr. Schwartz said.

?You have higher CPM units from iAds co-existing with other ad networks at a lower CPM,? he said. ?They are all mixed together as an app developer is trying to manage fill and yield optimization.?

Final Take
Chantal Tode is associate editor on Mobile Marketer, New York