Why Brands Are Rethinking Their Amazon DSP Spend in 2025

Amazon’s demand-side platform (DSP) has historically been a powerful tool for brands to deliver targeted ads through precise shopper insights and programmatic ad placement. But as we head into 2025, retail brands are beginning to reassess how—and where—they allocate their programmatic ad dollars.

Key Takeaways

• 🔸 Ad budgets are shifting toward efficiency-driven channels in 2025.
• 🔸 DSP costs are climbing amidst greater competition.
• 🔸 Customer retention-focused advertising is growing.
• 🔸 Lower-funnel strategies are steadily outperforming awareness campaigns.
• 🔸 Brands are leveraging tools like Amazon Marketing Cloud for advanced data insights.

Why Brands Are Rethinking Amazon DSP in 2025

Amazon DSP offers refined targeting capabilities, enabling brands to reach shoppers both on and beyond Amazon’s ecosystem. However, with increasing competition driving up costs, many brands are pausing to assess if their spend delivers both short-term ROI and long-term growth impacts. According to a recent report by AdExchanger, CPMs for programmatic ads have risen steadily in key categories, forcing advertisers to choose between higher budgets or sharper targeting strategies.

Internal studies reveal that lower-funnel campaigns, such as Sponsored Display ads, often outperform broad awareness DSP campaigns for brands seeking immediate sales lift. While DSP campaigns excel at brand building, adjustments to ad strategies in 2025 reflect a broader industry pivot toward conversion-first goals.

How Brands Can Maximize ROI Amid Rising DSP Costs

Brands are employing several tactics to align their ad budgets with tangible returns:

• 🔸 Tying DSP budgets to performance-based KPIs.
• 🔸 Leveraging Amazon Ads Verified Partner tools for cross-channel efficiencies.
• 🔸 Increasing spend allocation to repeat-customer campaigns.
• 🔸 Incorporating robust post-campaign measurement strategies through services like Amazon Marketing Cloud.

For private-label brands, optimizing DSP spend has grown more complex as customer acquisition costs rise and third-party cookie policies evolve. Exploring alternative strategies, like dynamic retargeting and loyalty-driven ad spend, can serve as viable substitutes. Fifth Shelf’s insights on ecommerce PPC reveal additional opportunities for brands to reduce experimentation costs.

The Emerging Role of Growth Accelerators

While agencies traditionally supported brands on Amazon DSP, the rise of ecommerce accelerators introduces a new model of value creation. Accelerators like Fifth Shelf blend operational management with ad expertise to deliver holistic growth solutions.

To summarize, brands in 2025 can rethink their DSP strategies by aligning with lower-funnel goals, performance-driven ad tools, and repeat-customer campaigns. As competition rises, only well-optimized campaigns will thrive.

Fifth Shelf, recognized as an Amazon Ads Verified Partner, specializes in helping brands optimize spend while scaling marketplace growth. Learn more about our Direct Wholesale and Custom Solutions models.