If there’s one thing Amazon advertisers should understand heading into the 2026 Holiday season, it’s that generating revenue and generating profit are not always the same thing.
With increased Amazon fees, fuel surcharges, increased operating costs, and the usual increased competition, sellers on Amazon have plenty to consider before deciding how aggressively they want to advertise or which type of strategy they should execute.
At the same time, Amazon continues to try and keep pace with the rest of the world and continues to roll out new advertising technology, including several major AI announcements at its recent Accelerate and unBoxed conferences.
While there is no shortage of opportunities for revenue during Q4, I believe whether or not a brand determines if they had a successful holiday season will come down to the strategy they employ and how intelligently they manage their budgets.
The Cost of Doing Business on Amazon Continues to Climb
Amazon has introduced a 3.5% fuel- and logistics-related surcharge on fulfillment fees, and its peak seasonal fulfillment fees are now in effect through January 14, 2027.
While 3.5% and peak seasonal fulfillment fees might not seem significant, when you multiply them by increased volume due to holiday shopping, they certainly add up fast. They can drastically impact any Profit and Loss (P&L), especially for a seller operating on thin margins.
And that doesn’t even take into consideration the increased competition for sponsored advertising placements during the peak holiday shopping time.
Because of all the reasons mentioned, I believe advertisers should rethink not only their overall Amazon advertising strategy during Q4, but also revisit their break-even ACOS/TACOS and profitability goals before aggressively increasing their bids and budgets.
The same ROAS/TACOS that was acceptable during Q1 to Q3 might not be acceptable for Q4.
Spend More Strategically, Not Blindly
One of the bigger opportunities, but also one of the most overlooked during the holidays, is to focus your ad budget on the products and campaigns that are already working.
While this may sound obvious, it is surprisingly common to see brands spread their budgets across their entire product line rather than focusing on driving profitable sales in areas where you are already finding success.
The holidays aren’t the right time to give every product an equal share of the budget. If certain products are converting better, sell at a profitable or acceptable ROAS, and have strong inventory positions, those are the products that I would focus the majority of your budget on.
There’s a time and place for testing or giving underperforming products more of your time and budget, but I wouldn’t leverage the holiday shopping season to do so.
Amazon’s New AI Tools, Not With My Money
One of the biggest announcements during Accelerate or unBoxed was the introduction of Amazon Ads Agent. This new feature brings more AI leverage to your Campaign Manager. The tool allows sellers to use AI to plan, target, and leverage other campaign management capabilities.
In addition, Amazon has recently introduced other campaign intelligence tools that can help advertisers identify keywords, bids, budgets, or use a target ROAS goal rather than using CPCs.
While all of these new tools bring the advertiser actionable insights to their fingertips in mere seconds, just like everything else that has come out regarding AI, you need to do your due diligence before accepting their recommendations. The more you look into the data, or push back on why one of the new AI or smart tools made a certain decision, the more you realize that while some of it may be useful, or even correct, there are a lot of errors or misjudgment that occurs.
The bids, budgets, competition, and stakes are too high for me to allow the decisions to be out of my hands, let alone by a brand new tool that no one knows how to manage correctly, or what will happen when everyone is using the same AI tools during the peak season. You already see highly increased CPCs when leveraging these tools today, and that’s before everyone is planning to increase their budgets for the holiday rush.
I think these tools are useful and down the road might be able to play a big part in the success of campaign management, but I would not be willing to use my money during the busiest shopping time of the year to find out.
Don’t Make Major Changes Just Because It’s the Holidays
Finally, I would caution advertisers against making significant changes to campaigns that are performing well simply because Black Friday is approaching, especially if you are using automated bidding strategies.
While you absolutely want to make sure your strongest campaigns have ample budget and high enough bids to support the volume you want, making aggressive bid changes can cause unnecessary account volatility during the time of year when you want to take advantage of every profitable sale you can get.
I would recommend coming up with a strategy that takes into account if/when to increase bids and budgets to make sure the volatility doesn’t impact busy shopping days; many of my clients do. However, if there isn’t a well-thought-out and structured strategy around your brand, categories, or products, I would recommend taking advantage of increased shopping demand, monitoring performance closely, and adjusting where data supports it.
Sometimes the best decision is knowing that less can be more, especially when it comes to Amazon Advertising.
Final Thoughts
The 2026 holiday season will bring opportunities for Amazon sellers, but higher costs and lower consumer sentiment mean advertisers will need to be more strategic than ever if they hope to turn a profit.
Between rising fees, new advertising technology, and the increased holiday competition, there’s more to manage than simply increasing your bids and budgets.
Focus on profitability and prioritize your strongest products because selling more products is great, but making more profit is the goal.
