Amazon Applies For Ad-Auction Patent

by Glen Shapiro, LawAndTax-News.com, New York

26 March 2003

Internet retailing giant, Amazon.com last week filed for a patent on a method of auctioning advertising space.

In its application, Amazon described the new system as:

'A method...for allocating display space on a web page. In one embodiment, the display space system receives multiple bids each indicating a bid amount and an advertisement. When a request is received to provide a web page that includes the display space, the display space system selects a bid based in part on the bid amount. The display space system then adds the advertisement of the selected bid to the web page.'

However, the patent application has caused some confusion amongst the internet community, as according to reports, Amazon does not itself operate such a system. The idea itself is not a new one either, according to observers. However, several companies which sold advertising space on websites via auction found - to their cost - that the method was inherently unstable, and subsequently sank without a trace following the bursting of the dot-com bubble.

Speaking to technology news service, CNet News following Amazon's patent application, Forrester Research advertising analyst, Jim Nail mused:

'The question is would anyone want to buy advertising that way? In order to have an auction, you need to have a standardized product so that advertisers would want it. There are subtle differences in advertising audiences that make it virtually impossible to get a whole lot of buyers who want the same placement at the same time.'

Speculating on the firm's motives in the light of these problems, experts have suggested that Amazon may intend just to sit on the patent for this business method until other companies decide to offer such a service.

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