How Amazon sellers are rewriting their marketing plans amid tariffs, rising platform fees

Prices for sponsored products ads — pay-per-click ads that promote individual product listings in Amazon search results — were 48% higher in the first quarter of 2025 than in the first quarter of 2019, Andy Taylor, head of research at ad agency Tinuiti, told Modern Retail in an email. Meanwhile, prices for Google’s paid search ads have risen 41%, Instagram’s ads have climbed 37%, and Facebook’s ad costs have fallen 24% over the same period. Tinuiti manages $4 billion of annual digital ad spend across its client base, giving it a large sample to analyze average ad costs.

As the cost of Amazon’s ads has risen, so have the company’s advertising revenues. In 2024, Amazon’s ad business generated more than $56 billion in sales, an 18% increase compared to the previous year. EMarketer forecasts that Amazon’s ad business will generate over $85 billion in revenue by 2026.

“Everything is just getting more expensive,” said Will Haire, co-founder and CEO of BellaVix, a marketing agency that works with marketplace-native and omnichannel brands. That includes “inventory placement fees, FBA referral fees, getting your products to fulfillment centers,” and more, Faire said. Modern Retail has previously reported on how Amazon’s rising platform fees are squeezing sellers. As such, brands are looking for ways to drive traffic and sales without simply throwing more money at Amazon. 

That sentiment is widely shared. While Amazon’s ads business remains central to many sellers’ strategies, the days of pouring all spending into Amazon ads are fading. Instead, brands are testing a wider mix of channels, including social media campaigns, influencer gifting, off-platform marketing and social commerce, to stretch budgets. 

“You can’t just play at the bottom of the funnel anymore,” said Amit Dodeja, the CMO at Spreetail, an e-commerce accelerator that helps brands sell products on major marketplaces. Whereas Amazon sellers used to prioritize ad spend on search ads, “now it’s critical that you have a full-funnel playbook,” he said. That includes top-of-funnel awareness, influencer partnerships and driving traffic from off-Amazon. 

“Amazon Ads is the best place for brands and independent sellers of all sizes to grow their businesses, and we deliver outsized value across our full-funnel offerings compared to other advertising partners,” an Amazon Ads spokesperson told Modern Retail in an email. “On their own, Sponsored Products are highly relevant for customers and effective for brands, delivering a strong return on investment.”

Shrinking ad budgets

At the ad agency Digishopgirl Media, founder Katya Constantine is seeing a shift. Although her clients are still investing in Amazon ads, “we’re not investing as much as we did before.” The first ad product to go has been mid- to upper-funnel ads, such as demand-side platform ads, as part of a broader strategy to reduce marketing expenses and maintain profitability in a challenging economic environment. Her clients have also been “tightening up a bit” on sponsored product ads. 

Despite the shift in strategy, Amazon sellers aren’t abandoning ads on the platform entirely. “You need to have advertising on Amazon to be successful,” Constantine said. “You can’t get away from it completely.”

Jared Mason, vp of brand services at Pattern, an e-commerce accelerator, pointed to tariffs as one reason sellers are adjusting their playbooks. He said brands are already increasing prices to protect margin, which Modern Retail previously reported. That means discounting less aggressively, even around big tentpole events like Prime Day, he said. “When you’re not discounting as much, you need other ways to generate demand.”

Constantine said her brand clients were raising prices, on average, between 5-7%. They’re also discontinuing lower-margin products.

“We’ve had some brands — this is a minority — who are basically saying, ‘You know what? My margin on other channels is just much better,” Constantine said, citing other marketplaces and wholesale retailers as examples. “They’re considering going dark on Amazon.”

Modern marketing tactics

As Modern Retail previously reported, AI is also beginning to play a larger role in how brands approach advertising on Amazon. 

BellaVix’s Haire said the agency is using ChatGPT to analyze product listings and competitor content to improve brands’ chances of their products showing up in Rufus, Amazon’s AI-powered shopping assistant that the company released last year.

Rufus analyzes product titles, descriptions and bullet points to understand a product’s features and benefits. It also analyzes customer reviews and Q&A sections to gauge customer sentiment and identify common pain points. As such, products with positive reviews and relevant information are more likely to be recommended by Rufus.

Because Rufus is intended to make online shopping easier for customers, Rufus automatically generates suggested questions based on the product being viewed. For instance, a product listing for a cat bed may include Rufus-generated consumer questions such as, “Are the removable covers machine washable?” or “Is it suitable for pets with arthritis or joint issues?” BellaVix’s method is to pepper those questions into product listings to improve their visibility. 

Meanwhile, Spreetail has developed a “listing quality score” that uses AI to assess relevancy, advertising potential and conversion rate. Spreetail has also been using AI to optimize listings, including image selection, title length and keyword integration. 

Lastly, social commerce is increasingly appealing to emerging brands trying to break through without massive ad budgets. Ashvin Melwani, co-founder and CMO of the collagen supplement brand Obvi, said his team is upping its investment in creator marketing, both in the U.S. and abroad. “If we’re already finding creators we love, we’re going to use them to launch in new markets,” he said. 

Currently, Obvi reaches out to at least 500 new affiliates a month and wants to “double these efforts” by hiring more employees to help with creator outreach. Obvi is also focusing on offering higher commissions of up to 50% to incentivize influencer partnerships. 

Amazon’s Creator Connections, a program that connects affiliates with brands, has become an increasingly popular advertising channel for sellers as brands shift their marketing dollars towards product discovery.

“For every single account that we have in our portfolio where [Connections] is available, our clients are running those programs,” Constantine said. “It’s actually cheaper than advertising [because] all you’re funding is a revenue-share agreement.”

This story has been updated to include a comment from Amazon.