Key takeaways
- The FTC lawsuit turns Amazon ad pricing into a margin and disclosure issue for retail media advertisers.
- Advertisers should analyse actual CPC as a percentage of maximum bid, not just campaign ROAS.
- UK sellers need product-level margin reporting that includes marketplace fees, fulfilment, returns and ad cost.
- Brand, category and conquesting campaigns should be split so incremental sales are not hidden by blended ROAS.
- Historical Amazon Ads exports should be stored now, especially for peak periods such as Prime Day and Black Friday.
Amazon ad pricing has moved from a retail media footnote to a board-level cost question. If the FTC’s allegations stand up, the issue is not simply whether Amazon charged advertisers more. The sharper point is whether advertisers were given enough information to set bids, protect margins and judge incrementality properly.
UK sellers and retailers should pay attention even if the case is in the US. Retail media fees already sit close to gross margin, logistics cost and marketplace commission. A small change in auction pricing changes which products deserve budget, which campaigns pass ROAS targets and which sales are genuinely incremental. That is the same discipline we apply when diagnosing Performance Max brand leak, because reported platform efficiency often looks healthier than the commercial reality underneath.
The lesson is blunt: do not let any ad platform’s auction explanation become your pricing strategy. Your job is to prove what each paid click adds after fees, not to accept platform ROAS as the final answer.
What’s changed in Amazon ad pricing
The FTC and 22 state attorneys general have sued Amazon, alleging the company secretly overcharged advertisers by changing how prices were calculated in its ad auctions. The central mechanism is a 2019 pricing feature called a soft reserve price, which Amazon says helps determine the market value of placements.
The FTC alleges that Amazon’s soft reserve pricing increased what winning Sponsored Products advertisers paid, even where another advertiser’s bid did not require that higher CPC. The complaint also alleges that more advertisers ended up paying their full bid over time, with the reported figures rising from around 30% to 40% in 2021, to 70% in 2022 and roughly 80% by 2024. You can read the regulator’s own framing in the FTC press release on the Amazon complaint.
Amazon disputes the allegation that advertisers were harmed. It says advertisers never paid above their maximum bid, that reserve prices are common in digital advertising, and that its relevance-based auction model improved outcomes. That disagreement is exactly why this matters. The fight is not about whether a bid cap existed. It is about whether advertisers understood how often that cap became the real price.
Why retail media pricing squeezes your margin
Amazon ad pricing matters because retail media works on thin commercial tolerances. A Google Search advertiser selling high-margin services can absorb CPC movement if conversion quality improves. A marketplace seller paying referral fees, fulfilment costs, promotions and returns cannot treat CPC as an isolated metric. Every extra penny paid for the same click comes straight out of contribution margin unless conversion rate, basket value or repeat purchase rises enough to cover it.
Here is the mechanism. If advertisers believe an auction behaves like a second-price system, they set maximum bids differently. A maximum bid feels like a ceiling that guards against rare expensive auctions, not the likely charge on a large share of wins. If the platform then uses a reserve price that pulls the final CPC closer to the bid more often, the advertiser’s own aggression becomes the platform’s price discovery tool. The advertiser thinks they are signalling willingness. The auction treats that signal as money available to take.
That changes budget allocation. Products with tight margins start receiving spend that looks acceptable in the ad console because the campaign reports sales, but the net profit after Amazon fees and ad cost deteriorates. Branded terms look safer than non-brand because they convert better, but some of that demand would have bought anyway. Bestseller campaigns soak up spend because the algorithm sees conversion volume, whilst long-tail products lose oxygen even where they deliver better incremental margin.
The accounts at risk are not only Amazon-first sellers. UK ecommerce teams using Amazon Ads alongside Google Shopping, Performance Max and paid social will face harder cross-channel decisions. If Amazon CPCs are being compared against Google Ads CPCs without margin and incrementality, budget shifts to the channel with the cleanest platform story rather than the one with the strongest commercial return. Our Q2 2026 CPC analysis found like-for-like CPCs across the same 53 UK accounts rose only about 4% year-on-year from Q2 2025 to Q2 2026. Blended MCC-wide CPC rose far more, but that was a mix artefact caused by new accounts and channel shift, not defensible inflation. That distinction matters. Bad cost analysis leads to bad budget decisions.
Amazon’s defence leans on advertiser outcomes: bids, CPCs, conversion rates and claimed savings. That is a fair commercial argument, but it does not remove the disclosure problem. Advertisers optimise from the information they are given. If the pricing rules are more complex than the sales material suggests, bid strategy becomes a guessing exercise wrapped in platform reporting. If you run search alongside your marketplace spend, the same trap shows up in a managed Google Ads account whenever automation hides how the auction actually resolves.
PPC Geeks’ View
The specific problem advertisers will face is margin leakage hidden behind acceptable ROAS. Amazon ad pricing sits inside a marketplace where the platform controls the auction, owns much of the conversion data and charges the seller through multiple routes. That combination makes platform-reported return a weak substitute for proper profit analysis.
We see the same pattern most often in ecommerce accounts where paid media teams optimise to revenue and finance teams judge success on contribution margin. The dashboard says the campaign is hitting target ROAS. The product-level P&L says the order barely breaks even once marketplace fees, fulfilment, discounting and ad spend are included. That disconnect gets worse when the advertiser does not understand how close actual CPCs sit to their maximum bids.
Retail media advertisers need to stop treating bid caps as harmless intent signals. If your max bid regularly becomes the price, your bidding strategy is not cautious, it is telling the platform how much margin it can take.
— Siobhain McConnell, Senior Client Manager, PPC Geeks
The practical takeaway is immediate: rebuild your Amazon Ads reporting around product margin, not campaign ROAS. Pull bid, CPC, ordered revenue, fees and gross margin into the same view. If that sounds basic, good. The basics are where most retail media waste hides.
This is exactly the type of issue we look for in a free Google Ads audit, especially where automation, attribution or campaign structure is making performance look cleaner than it is. The same thinking applies across Amazon Ads, Shopping and Performance Max.
What advertisers should do next
Do not wait for the court process to finish before tightening your own controls. The legal outcome will take time. Your margin leakage is happening this month.
- Export historical Amazon Ads data now. Pull campaign, ad group, keyword, ASIN, bid, CPC, spend, sales and ROAS by day from 2019 onwards where available. Store it outside the platform. Include Prime Day, Black Friday and seasonal sale periods as separate labels so you can isolate high-volume pricing pressure from normal trading periods.
- Build a bid-to-CPC ratio report. For every major campaign, calculate actual CPC as a percentage of the maximum bid. Split by Sponsored Products, brand, non-brand, category and ASIN. A campaign where CPC regularly sits near the max bid needs different governance from a campaign where competition still sets a meaningful gap.
- Replace ROAS-only targets with margin bands. Group products by gross margin after marketplace fees and fulfilment cost. Give low-margin products stricter CPC ceilings and higher incrementality tests. Give high-margin or repeat-purchase products more room, but only where new customer value justifies it.
- Separate defensive brand spend from growth spend. Create separate campaigns for own-brand protection, competitor conquesting, category generics and product expansion. If brand spend is mixed with non-brand, blended ROAS hides whether Amazon Ads is creating demand or charging you to recapture existing demand.
- Run a 14-day incrementality test on selected ASINs. Pause or sharply reduce ads for a controlled set of products with stable organic rank and stock. Compare total marketplace sales, not only ad-attributed sales. If total sales barely move, the campaign was harvesting existing demand.
- Document platform pricing assumptions. Keep copies of Amazon Ads auction explanations, bid guidance and internal bid rules used by your team. The Search Engine Journal report on the case is useful context for the allegations, but your own archived rules matter more for decision-making.
- Compare auction language across channels. Google explains that your actual CPC is often less than your maximum bid, in its Google guidance on actual cost-per-click. Do the same exercise for Amazon Ads. Write down what your team believes happens, then test whether your bid-to-CPC data supports it.
If you run both Amazon Ads and Google Ads, connect the analysis to your wider measurement setup. Poor conversion tracking creates the same failure mode: the platform reports activity, but the business cannot tell which spend created profit. Our guide to PPC conversion tracking explains why that gap becomes expensive once automated bidding or retail media algorithms control more of the spend.
What this means for your campaigns
Amazon ad pricing is now a margin governance issue, not just a legal story. The lawsuit puts pressure on retail media platforms to explain how bid, relevance, reserve pricing and final CPC fit together. Advertisers should welcome that pressure, but they should not outsource commercial judgement to a regulator or a platform help page.
The right response is tighter evidence. Know how often you pay close to your max bid. Know which products remain profitable after every fee. Know which campaigns create incremental sales and which simply tax demand you already owned. Then set bids from margin reality, not from platform optimism.
UK advertisers that apply this discipline across Amazon Ads, Google Shopping and Performance Max will make better budget calls when retail media costs rise. Those that rely on blended ROAS will keep paying for comfortingly green dashboards whilst profit slips away.
If you’d like a second pair of eyes on how this affects your account, our team offers a free Google Ads audit, with no strings. For the detail behind this, see Amazon’s own guide to Ads pricing transparency.
Frequently asked questions
What is the Amazon ad pricing lawsuit about?
The FTC alleges Amazon changed its ad auction pricing through soft reserve prices without giving advertisers enough disclosure. Amazon disputes the claim and says advertisers were not harmed because they never paid above their maximum bids.
Why should UK advertisers care about a US lawsuit?
UK advertisers use the same retail media logic: bids, CPCs, marketplace fees and ROAS targets. If platform pricing rules are unclear, sellers need stronger controls over margin, incrementality and bid governance.
Should advertisers reduce Amazon Ads spend now?
Do not cut spend blindly. Export your data, segment campaigns by intent, calculate bid-to-CPC ratios and test incrementality by product group. Reduce spend where total sales do not fall when ads are paused or capped.
What report should Amazon advertisers build first?
Build a product-level report that combines max bid, actual CPC, spend, sales, gross margin, marketplace fees and fulfilment cost. Campaign ROAS alone is too blunt for retail media decisions.
Does this affect Google Ads strategy?
Yes. It reinforces the same principle across paid media: understand how final CPC is set, check whether reported conversions are incremental and set bids from profit data rather than platform averages.
