Selling on Amazon is becoming a more expensive fight for visibility, and the latest earnings numbers suggest advertising is growing faster than the sellers paying for it.
Amazon's Q2 2026 results show advertising services revenue grew 26% year over year to $19.81 billion, per a report by Variety.
Meanwhile, its third-party seller services business grew by 16% to $46.8 billion.
That puts a 10-percentage-point gap between the growth rates of Amazon's advertising business and the third-party seller ecosystem that depends on the marketplace.
The figures don't necessarily prove that advertising costs are rising at the same rate.
However, they do suggest that advertising is becoming a larger part of the marketplace's economics, and that sellers may be spending more aggressively to compete for visibility.
For Alex Stoykov, Founder and CEO of Olifant Digital, this growing scenario raises an important question for brands that rely on Amazon PPC.
"Advertising can drive sales, but brands should question whether those sales are adding profitable growth to the business," he says.
"When ad costs rise faster than revenue, brands need to look beyond campaign-level performance and understand how their advertising spend is affecting total revenue and profitability."
What Amazon's Advertising Growth Means for Sellers
Amazon's growth clearly shows that advertising has become a major part of the marketplace economy.
It also means more brands have a financial reason to compete for the placements that can put their products in front of shoppers.
But when competition gets fierce, sellers can face pressure in several ways:
- Higher CPCs can raise acquisition costs. A keyword that generated profitable sales at one bid may become considerably more expensive later on.
- Maintaining visibility can require more spending. Brands may find themselves increasing bids or budgets simply to preserve the traffic they already receive.
- Campaign efficiency can deteriorate. A campaign can continue generating attributed sales even as the cost of producing those sales rises.
- Revenue can hide declining profitability. Higher spend tends to eat into sales numbers once costs are taken into consideration.
That last point is where the real issues start.
Amazon PPC makes it relatively easy to see how much revenue an ad generated.
But often, it's harder to determine whether that revenue represents genuinely incremental business the brand might have captured anyway.
"Growing Amazon ad revenue does not necessarily mean sellers are getting more value from their advertising dollars," Stoykov adds.
Measure PPC Against the Whole Business
Paid search remains an important way for brands to reach shoppers, particularly when competition for organic visibility is intense.
The real problem comes when advertising performance is evaluated too narrowly. Return on ad spend is a prime example of this.
ROAS tells sellers how much attributed revenue an ad generated relative to its cost.
But it doesn't tell them whether the business is becoming more dependent on advertising to generate that revenue.
This is why teams must look beyond individual campaigns or the usual metrics. Instead, experts at Olifant Digital recommend teams to take the following steps:
1. Track TACoS alongside ROAS
Total Advertising Cost of Sales places advertising spend against a brand's total Amazon revenue rather than only the revenue attributed to advertisements.
This lets teams identify if ad spend and total revenue are growing at a near-equal rate.
If it isn't, the campaign may have become overly dependent on paid traffic to sustain its sales.
As such, sellers should watch out for:
- TACoS over time
- Total Amazon revenue growth
- Advertising spend as a percentage of total sales
- Changes in organic sales alongside paid sales
2. Bring profitability into the equation
Advertising metrics also need to be considered alongside the costs that sit outside the ad dashboard.
Product margins, fulfillment expenses, Amazon fees, discounts, promotions, returns, and other costs can substantially change the economics of a sale.
A campaign producing a 4x ROAS may look successful until the brand calculates how much profit remains after those expenses.
Given this, teams need to ask themselves how much profitable revenue their Amazon ad campaigns actually create.
Of course, the answer will differ from one product to another.
A high-margin product may support a more aggressive acquisition cost than a low-margin product, even when both campaigns report identical ROAS.
3. Measure incremental growth
The final step is determining whether additional advertising is creating sales that would not otherwise have happened.
This distinction matters because some campaigns inadvertently capture existing demand that would have found them organically.
As such, sellers should examine whether increasing spend produces a meaningful increase in total sales or simply shifts more existing demand into the paid channel.
Doing so helps identify where additional budget is justified and where rising costs are simply buying attribution.
After all, the goal of increasing ad spend on Amazon is to create efficient and profitable growth.
Stop Treating Amazon PPC as a Visibility Tax
Amazon's Q2 results point to a marketplace where advertising is becoming a larger part of the commercial equation.
For sellers, that makes it tempting to treat PPC as the price of staying visible. If competitors are bidding more, the instinct is to bid more. If CPCs rise, budgets rise with them.
That approach can work for a while. But it can also become an expensive and ineffective habit.
"Advertising should be treated as an investment with a measurable return for the entire business," Stoykov says.
"That means sellers need to establish how much they can afford to spend to acquire profitable demand and recognize when additional spending stops producing enough value."
After all, PPC is a tool for growing a business, not a scoreboard for how much money a brand can push through Amazon's system.
