While the in-house platform is initially planned to replace ads supplied by Google Inc on Amazon's own website, the new system could challenge Google and Microsoft advertising business in the future, the newspaper cited the people as saying.
Amazon's system would resemble Google's AdWords, and is planned to make it easier for marketers to reach the company's users, the newspaper reported the people as saying.
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 could use the data it has about buying behaviour to help make these ads much more effective," Karsten Weide, an analyst at researcher IDC told WSJ. "Marketers would love to have another viable option beyond Google and Facebook for their advertising."
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.
"Amazon knows a lot about how people are searching on the site and consumer preferences and histories. It can use that to tailor advertising in ways that probably nobody else can," said Vice President of Media at digital agency iCrossing was quoted as saying in the WSJ report.
The company already has an advertising service it employs chiefly on its own website.
Amazon did not immediately respond to requests for comment.
Written with inputs from Reuters
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