Explain It in 30 Seconds
A shopper searches Amazon for:
running shoes for flat feetThat query reveals more commercial intent than a generic social-media impression.
A brand may pay to appear in front of that shopper.
Amazon therefore monetizes the same visit through more than one mechanism:
product transaction
+
seller fees
+
advertisingWhere It Sits in Amazon
Amazon Ads sits across commerce and media.
Prime Video / live sports
The platform increasingly spans the customer journey from awareness to purchase.
The Problem It Solves
For sellers and brands:
How do I get noticed when customers have many competing options?
For Amazon:
How do I monetize high-intent traffic without owning more inventory?
Advertising solves both problems.
Sponsored Products
Sponsored Products remains Amazon Ads' largest offering according to Andy Jassy's Q2 2026 earnings commentary. [S17]
The basic logic is:
seller / brand chooses product
↓
bids for visibility
↓
ad appears around relevant shopping activity
↓
customer clicks
↓
possible purchaseThis is especially powerful inside a marketplace because the product can often be purchased immediately after discovery.
Display and Video
Amazon's FY2025 10-K says advertising services include sponsored ads, display and video advertising. [S1]
That expands Amazon beyond lower-funnel sponsored listings.
Display and video can target broader brand and awareness objectives.
Prime Video Advertising
Prime Video gives Amazon a large entertainment surface.
Advertising can therefore reach users when they are not actively searching for a product.
This changes the ad platform from:
mostly shopping-intent mediainto:
shopping-intent media
+
entertainment media
+
live sportsLive Sports
Amazon highlighted sold-out advertising inventory across major sports properties in Q2 2026 commentary. [S17]
Live sports matters because it can create:
- large simultaneous audiences;
- premium brand inventory;
- new advertiser relationships;
- cross-media campaigns.
Alexa for Shopping
Conversational shopping creates a new advertising surface.
Amazon said shoppers who clicked a Sponsored Prompt in its conversational experiences converted to a sale more often and spent more on average than those who did not, according to Q2 2026 commentary. [S17]
The exact performance metrics can change.
The durable strategic point is that AI interfaces can become ad inventory.
How Amazon Makes Money
Amazon recognizes advertising revenue as ads are delivered, including based on clicks or impressions. [S1]
FY2025 advertising-services revenue:
$68.635BQ2 2026:
$19.8B
+26% YoYWhy Advertising Economics Matter
To grow first-party retail revenue, Amazon often needs more merchandise throughput.
To grow advertising revenue, Amazon can monetize attention layered over existing traffic.
That makes the economic structure different.
same shopper session
↓
commerce transaction
+
advertising opportunityAmazon Ads + Marketplace
The marketplace creates many competing offers.
Competition creates visibility demand.
more sellers
↓
more alternatives
↓
more need to stand out
↓
advertising demandThis is one reason marketplace and ads reinforce each other.
Amazon Ads + Prime Video
Prime Video gives Amazon a non-shopping attention surface.
This can help advertisers reach customers earlier in the purchase journey.
A campaign may combine:
streaming impression
↓
later product search
↓
sponsored product
↓
purchaseThe ability to connect media exposure with commerce outcomes is strategically valuable.
AI Tools for Advertisers
Amazon is using AI to automate parts of campaign creation, targeting and optimization.
In Q2 2026 Amazon highlighted Ads Agent expansion to additional countries. [S17][S43]
This can reduce the operational effort required to create and manage campaigns.
What It Depends On
Traffic
Advertising inventory is valuable because people use Amazon surfaces.
Purchase intent
Commerce signals differentiate Amazon from many general-media platforms.
Seller / brand demand
Advertisers must believe Amazon can generate measurable outcomes.
Media inventory
Prime Video and sports expand reach beyond shopping pages.
Measurement and privacy
Advertisers need useful measurement while Amazon must operate within evolving privacy and regulatory constraints.
What Depends on Amazon Ads
- seller customer acquisition;
- brand visibility inside Amazon;
- monetization of Prime Video ad inventory;
- sports advertising economics;
- broader retail-media strategy.
Why It Matters to Amazon
Advertising gives Amazon another way to monetize the demand already flowing through its ecosystem.
It is also one of the company's fastest-growing large revenue lines.
FY2025 advertising revenue exceeded FY2025 subscription-services revenue. [S1]
That is a major structural fact about modern Amazon.
Before / After
Earlier Amazon
traffic
↓
transaction
↓
retail / seller-service economicsModern Amazon
traffic
↓
transaction economics
+
advertising economics
+
streaming / sports media economicsWhat Most People Misunderstand
“Amazon Ads is only sponsored products.”
No.
Sponsored Products is important, but Amazon also sells display and video inventory. [S1]
“Amazon Ads only targets sellers.”
No.
Advertisers include sellers, vendors, publishers, authors and others. [S1]
“Prime Video is unrelated to Amazon Ads.”
No.
Prime Video and live sports are now meaningful advertising surfaces. [S17]
“Advertising requires Amazon to sell the advertised product itself.”
No.
Third-party brands and merchants can advertise regardless of whether Amazon owns the inventory.
Key Milestones
Marketplace expansion
More sellers increase demand for visibility.
Sponsored advertising growth
Sponsored Products becomes a major seller-marketing channel.
Prime Video ads
Streaming expands Amazon's upper-funnel advertising inventory.
Live sports
Sports adds premium simultaneous audiences.
2026
Q2 advertising-services revenue reaches $19.8B, up 26% year over year. [S17]