Amazon advertising costs continue to climb, and Amazon’s Q2 2026 earnings report shows that the trend is speeding up. For Amazon sellers, this is one of the biggest takeaways from the quarter. Sales across the platform are growing, but advertising revenue is growing even faster.
Amazon reported $200.6 billion in total net sales, a 20% increase compared to the same quarter last year. Third-party seller services generated $46.78 billion, growing by 16%. At the same time, Amazon’s advertising business reached $19.8 billion, increasing by 26%.
The difference of that 6% shows where Amazon is making more of its money. You must have seen this. Sellers are paying more to compete for visibility, and advertising has consolidated as one crutial pillar of the business.
Advertising Is Becoming a Bigger Cost for Sellers
Advertising revenue grew 10 percentage points faster than third-party seller services.
Is the trend continues, many brands will likely need to spend more on ads just to maintain the same level of visibility.
If you’re planning budgets for the next year, it’s worth considering that higher ad costs may become the norm for the rest of the year.
A few numbers stand out:
- Amazon advertising revenue increased 26% year over year.
- Third-party seller services increased 16%.
- Worldwide paid units grew 17%.
- Third-party sellers represented 61% of paid units, recovering from 60% in Q1.
Sponsored Prompts Show Strong Early Results
Amazon also shared performance data for Sponsored Prompts for the first time.
According to the company:
- Shoppers who click Sponsored Prompts convert 48% more often.
- Those customers spend 21% more per order.
These numbers suggest that Sponsored Prompts could become one of Amazon’s most competitive advertising placements. Amazon’s interest is likely early adoption before competition increases.
If your account already has access, testing this placement before major shopping events could provide useful performance data.
AI Is Playing a Bigger Role in Shopping
Artificial intelligence was another major theme in the Amazon Q2 2026 earnings report.
Amazon reported that its Ads Agent targeting is helping advertisers lower costs by:
- Reducing cost per impression by 8%.
- Lowering cost per acquisition by 6%.
The feature has expanded into 11 additional countries this year.
Alexa is also becoming more involved in the buying process. During the past 12 months, more than 350 million customers used Alexa for Shopping. Active users nearly doubled during Q2, while shopping interactions increased more than five times compared to last year.
Amazon also introduced features like Price Alerts and Auto-Buy, allowing Alexa to place repeat orders automatically when conditions match a shopper’s preferences.
What Amazon Sellers Should Do Next
Amazon’s latest earnings suggest that advertising will continue taking a larger share of budgets.
A few practical actions can help you prepare:
- Review your TACoS projections for 2027 and account for rising advertising costs.
- Check if Sponsored Prompts are available in your account and test them before peak shopping events.
- Audit your top-selling ASINs to make sure product attributes are complete.
- Review your pricing history to avoid large price swings that could affect automated purchasing tools.
Amazon’s marketplace continues to grow, but competition for visibility is growing even faster. Sellers who plan ahead and adjust their advertising strategy early will be in a stronger position as new ad formats and AI-powered shopping tools become more common.
Ready to Stay Ahead of Rising Amazon Ad Costs?
The Amazon Q2 2026 earnings report how that advertising is becoming a larger part of selling successfully on the marketplace. Waiting until ad costs increase even more can make growth harder and more expensive.
Our team helps brands build advertising strategies based on real marketplace data, improve campaign efficiency, and prepare for new Amazon features before they become highly competitive.
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