What Amazon’s Q3 Numbers Mean for Your Ad Budget

Amazon’s quarter, read from a brand’s side

Amazon reported its third-quarter results yesterday, on October 29. Net sales rose 12% to $201.9 billion. Most of the coverage focused on cloud computing and AI spending. For brands that sell on Amazon, two lines in the release matter more.

First, third-party seller services. The commissions and fulfillment fees sellers pay brought in $46.5 billion, up from $42.5 billion a year earlier.

Second, advertising. It brought in $19.6 billion, up from $17.7 billion.

Together, that is about $66 billion in one quarter, much of it from the sellers and brands who use Amazon. In the same quarter, the products Amazon sells itself brought in $75.3 billion and grew 1.7%.

Services now make up 62.7% of Amazon’s sales. Advertising is the part growing fastest, and Amazon expects ad revenue growth to return to the high teens in the fourth quarter, the holiday quarter.

A note on the numbers

The quarter’s growth rates need some context. Amazon moved Prime Day into the second quarter in most countries this year, and it estimates the shift reduced third-quarter advertising growth by about 8.5 percentage points. Before this quarter, ad revenue had grown 22% a year for four straight quarters, then 26% in the second quarter.

So the slower growth in the third quarter does not mean brands are spending less on Amazon ads. Amazon’s advertising business keeps growing faster than its own retail sales, and brands are investing more in it each year.

Where your ad dollars go when you don’t hold the Buy Box

Every product page on Amazon has one default offer, the Buy Box. Whoever holds it gets the “Add to Cart” click. When an unauthorized seller undercuts you and takes it, your advertising does not simply keep working for you. What happens depends on the ad type.

Sponsored Products, the most common Amazon ad, only runs when the advertiser holds the Buy Box. When a reseller takes it, your ad stops serving. You are not charged, but you lose your placement in search results at the moment a reseller is pricing below you.

Other ad types do not stop. Sponsored Brands, Amazon DSP and offsite campaigns keep running whoever holds the Buy Box, so your brand keeps paying for the traffic while another seller makes the sale.

The table shows two separate losses. When your Sponsored Products stop, you lose the shoppers you would have reached. When your brand campaigns keep running, you pay to reach shoppers and the reseller gets the sale. Either way, the money you put into building demand for your product produces sales for someone you did not authorize.

The holiday multiplier

This matters most in the next eight weeks. The holiday quarter is when brands put the most behind their advertising, and Amazon expects its ad business to grow faster in the fourth quarter than in the third. Every hour a reseller holds your Buy Box in these weeks costs more than the same hour in a quiet month.

Pricing is also becoming automated on every side. In the same results, Amazon highlighted new Seller Assistant workflows that handle routine tasks like restocking and pricing around the clock. Resellers have used repricing software for years. As we described in The Buy Box Just Got Crowded, Amazon now lets more sellers compete for the Buy Box, which makes price the main lever. A reseller’s software can take the Buy Box from you overnight, and your Sponsored Brands campaign will keep running until someone notices.

The full cost of a unit sold on Amazon

Brands often judge Amazon by its referral fee. That is only part of what they pay. Once referral, fulfillment, storage, returns and advertising are added up, selling on Amazon costs roughly 30% to 45% of a product’s average selling price.

That investment pays off when the sales it produces are yours. A brand that pays for ads but shares its listing with unauthorized sellers carries the full cost of building demand and keeps only part of the revenue. The reseller pays fees on the units it sells, but nothing toward the advertising that brought the shopper to the page.

What to check before you spend

1. Check Buy Box share for every advertised product. Look at it by product and over time, not as a monthly average. A product can look healthy on average and still lose the Buy Box during the hours that matter most.
2. Match each ad type to how much control you have. Sponsored Products protects itself by stopping when you lose the Buy Box. Sponsored Brands, DSP and offsite campaigns do not. On products where resellers regularly take the Buy Box, pause or reduce those campaigns until you fix it.
3. Measure your return per unit you actually sold. When another seller wins the Buy Box, the sale is not attributed to your ad. Compare your ad spend with your share of total listing sales to see how much of your demand is going to others.
4. Fix the supply, not just the price. Every unauthorized offer on your listing came from somewhere. Cutting your price to win the Buy Box back costs margin on every unit. Closing the leak in your distribution stops the problem for good.

Why one accountable seller changes the math

When one authorized seller holds the Buy Box, every advertising dollar points at one offer, at one price, from a seller who keeps the listing in stock. Sponsored Products keeps serving. Brand campaigns send shoppers to a sale you control. Any other seller on the listing is unauthorized by definition, which makes each one easy to spot and trace back.

How Rocciani can help

We will prepare a free seller and price report for your brand. It lists every seller on your Amazon listings, the prices they advertise, and how often you have held the Buy Box on the products you advertise.

As your authorized retailer, we run your marketplace advertising, and every campaign puts our own results on the line alongside yours. We purchase inventory from you, keep your listings accurate and in stock, report every unauthorized offer, and check Buy Box share before we spend, so your advertising pays for sales of your product, not someone else’s.

Pricing is our specialty. Our pricing team holds PhD and Master’s degrees in Economics and Data Science, and we use our own monitoring software to track advertised prices and sellers continuously.

Request your free seller and price report →