Amazon’s Ads nears $20 billion in Q3 as it bets on agentic AI to fuel further growth

Those perusing the earnings report will note how revenue fell from $19.81 billion in Q2 to $19.64 billion in Q3, a decline of approximately 0.9%, although one caveat is that the sequential comparison is complicated by Prime Day occurring in Q2 this year rather than Q3.

While Amazon has not provided a specific dollar Q4/FY 2026 revenue forecast for its advertising services division — total revenue is expected to be in the range of $240 to $247 billion — it is expected to be a key pillar in its overall growth strategy.

“We expect year-over-year advertising revenue to grow in the high teens in fourth quarter 2026,” reads its official filing, which also trumpeted its recent launch of Amazon Ads Agent, a key growth engine for the division.

Amazon Ads Agent

Intuitively, Amazon is putting AI at the center of its advertising business, previewing the consolidation of previously separate buying tools into a single platform that gives its technology greater responsibility for planning, executing, and optimizing campaigns — a concern for some.

Unveiled at the e-commerce giant’s flagship advertising conference, unBoxed, in San Francisco, California, last month, Amazon Ads Agent brings sponsored advertising, display, video, and audio into a unified buying experience.

The platform builds on Amazon’s earlier integration of its demand-side platform and advertising console, extending its conversational AI assistant across campaign creation, targeting, optimization, measurement, and customer support.

Advertisers can now use natural-language instructions to plan campaigns, generate creative, forecast audience reach, adjust budgets, and analyze performance. The system can also recommend and execute optimizations, reducing the manual work traditionally associated with programmatic advertising.

The pitch: simplify execution and expand reach

Delving deeper into Amazon’s publicity material, two offerings underpin the overhaul: Full-Funnel Campaigns and Digital Video Audio, or DVA+, as it’s more commonly termed.

One key aspect is Full-Funnel Campaigns, which combine sponsored ads, display, video, and streaming TV within a single campaign. Advertisers specify their products, creative and budget, while Amazon’s AI determines how campaigns run and continuously optimize toward objectives including new-to-brand customers and long-term sales.

The system also shares signals across upper- and lower-funnel advertising, including campaigns running on third-party open-internet inventory, with Amazon claiming beta testing shows up to 67% higher return on long-term ad spend and 29% lower cost per new-to-brand customer than manually configured full-funnel campaigns.

Meanwhile, DVA+ consolidates sponsored display, sponsored TV, and programmatic display, video, and audio buying. Advertisers can select an objective, budget and creative, leaving targeting and optimization to Amazon, or use advanced settings to retain conventional DSP controls.

For Amazon, the commercial opportunity extends beyond simplifying campaign management, as making programmatic buying accessible to smaller advertisers without specialist teams could expand adoption of its advertising infrastructure.

Meanwhile, integrating sponsored advertising with upper-funnel formats gives Amazon another opportunity to capture budgets traditionally managed through separate agency teams and buying platforms.

‘Caveat emptor’

However, Amazon’s expansion comes amid renewed scrutiny of how large advertising platforms operate, a familiar debate in countless antitrust filings, and one underlined by recent charges against the e-commerce giant’s ad offering. In August, the Federal Trade Commission and 22 state attorneys general ⁠sued Amazon over alleged deceptive and unfair advertising auction practices.

The complaint alleges Amazon secretly introduced surcharges into auctions, resulting in Sponsored Products advertisers paying their own winning bids approximately 80% of the time by 2024, despite representations concerning second-price auctions. Amazon disputes the allegations, which remain unproven in court.

While the lawsuit concerns existing auction practices rather than the newly launched agentic platform, it highlights questions surrounding the transparency of automated advertising systems. Sources consulted by Digiday, who asked to remain anonymous to protect industry relationships, noted the maxim of “caveat emptor,” or, more simply, “buyer beware.” They cautioned:

• Whether they can inspect and challenge AI-made decisions
• Whether independent data and measurement providers can verify performance
• Whether fees, inventory sources, and auction mechanics remain visible as buying becomes increasingly automated

Amazon’s transparency assurances 

Amazon maintains that automation does not necessarily require advertisers to surrender control. Speaking ahead of the formal unveiling of the new platform, Kelly MacLean, vp, Amazon demand-side platform, told Digiday that DVA+ advertisers retain authority over objectives, products, creative approval, budgets, pacing, flight dates, and location targeting.

Advanced settings also preserve controls over bidding, audience targeting, supply selection, and frequency. MacLean characterized that configuration as “human-led, AI-supported,” maintaining that buyers can retain the conventional DSP experience while using AI-assisted recommendations.

Amazon also says it provides reporting on where ads are delivered and is developing explanations for its agent’s recommendations. However, those explanations remain a work in progress, with MacLean acknowledging that Amazon is still determining how much information advertisers need to understand the rationale behind automated decisions.

Asked whether the new tooling would explain how individual Sponsored Ads auction prices were determined, including the role of reserve or calculated prices, Amazon did not commit to providing that information. Furthermore, company spokespeople maintained that the company “strongly disagrees with the FTC’s filing.”

Speaking separately with Digiday ahead of the recent unBoxed launch, Amit Bhattacharyya, Amazon Ads’ vp, Full-Funnel Products, AI & Modeling, acknowledged limitations in the controls available through Full-Funnel Campaigns.

For example, advertisers approve creative but cannot select individual channels or specific audiences. “We are figuring out how to give them more transparency on the audience side,” he told Digiday.

Bhattacharyya also noted that Amazon provides format-level reporting, while its long-term sales measurement uses shopping signals to predict sales over 12 months and then displays accumulated actual sales against those forecasts.

Questions around independence

For Alex Brownstein, founder of AHB Advisors and a former McKinsey consultant, the challenge extends beyond whether Amazon provides reporting. “Transparency on an agent buy comes in five layers, and Amazon is more open on some than others,” he said.

Those layers encompass data, decisions, pricing, delivery and results. Brownstein also noted that DVA+ offers publisher-level reporting, while full-funnel campaigns provide format-level visibility without equivalent detail about channel pricing.

He also questioned how advertisers can independently validate outcomes when Amazon controls both the buying technology and much of the underlying purchase data. “Amazon is open where openness brings it more of the budget and closed where its advantage sits,” Brownstein said.

To mitigate any risk, Brownstein suggested advertisers use their own customer data and independent incrementality testing to assess whether Amazon’s reported performance translates into additional sales.

Meanwhile, Jay Mandel, co-founder of the Marketing Accountability Council, raised a related concern about the incentives governing automated buying decisions. “My concern is whose interests the AI agent serves when Amazon’s revenue goals and the advertiser’s business goals diverge,” he told Digiday.

Mandel argued that advertisers should be able to audit automated changes, inspect fees and inventory decisions, and challenge platform performance claims using independent measurement. He further opined, “If spending less with Amazon is better for the advertiser, will its agent recommend that?”

Amazon’s new platform offers advertisers a simpler route into programmatic buying while extending the company’s influence over how advertisers allocate budgets, and that’s a story that it’s selling to Wall Street.

However, its longer-term success will depend not only on whether automation improves performance, but also on whether advertisers can independently determine how those results were achieved, a story Madison Avenue will be more eager to hear.