While the in-house platform is initially planned to replace ads supplied by Google on Amazons own website, the new system could challenge Google and Microsofts advertising business in the future, the newspaper cited the people as saying.
Amazons system would resemble Googles AdWords, and is planned to make it easier for marketers to reach the companys users, the newspaper reported the people as saying.
The Journal said: Amazon has told potential ad partners that it may begin testing the new placement platform, dubbed Amazon Sponsored Links, later this year.
At present, Amazon has an affiliate programme that offers websites Amazon product ads and pays small commissions when those website users click through and buy a product on Amazon. To attract more websites, and help their owners earn more, Amazon is also testing a way for them to get paid any time a user sees an ad; that initiative was earlier reported by the technology blog Zatznotfunny.com.
The retailer is also building a tool that would help advertising agencies buy in bulk for thousands of advertisers, the Journal said, citing the people.
Amazon is known as a sleeping giant in the ad industry because it has rich consumer data but has been tentative about using it for a lot of advertising.
The company already has an advertising service it employs chiefly on its own website. Amazon did not immediately respond to requests for comment.