- Meta debuted a feature that lets users connect their Facebook and Instagram accounts to Amazon so they can more easily buy goods promoted on their feeds.
- "For the first time, customers will be able to shop Amazon's Facebook and Instagram ads and check out with Amazon without leaving the social media apps," Amazon said.
- Over the past year, Meta has been improving its online ad system with artificial intelligence, which has helped lift overall sales despite a tough digital ad market.
The company debuted a new feature allowing users to link their Facebook and Instagram accounts to Amazon so they can buy goods by clicking on promotions in their feeds.
"For the first time, customers will be able to shop Amazon's Facebook and Instagram ads and check out with Amazon without leaving the social media apps," an Amazon spokesperson said in a statement. "Customers in the U.S. will see real-time pricing, Prime eligibility, delivery estimates, and product details on select Amazon product ads in Facebook and Instagram as part of the new experience."
Meta is looking for new ways to bolster ad revenue after Apple's iOS privacy changes in 2021 made it more difficult for social media companies to target users. The update was a major blow to Meta's business and, alongside a brutal digital ad market, pushed the stock down 64% last year.
But following three straight quarters of revenue declines, the business has bounced back this year, lifting the stock by more than 160%. Meta has pointed to its hefty investments in artificial intelligence as a key technology that's helped it land retailers looking to serve customers targeted promotions.
Stuart McMullin, client solutions manager for e-commerce at Meta, said on LinkedIn that the new shopping service "was a long process in the making and a huge deal." He was responding to a post from Maurice Rahmey, co-CEO of digital marketing agency Disruptive Digital, who described the rollout as "the most significant ad product of the year" and compared it to a similar partnership between Pinterest and Amazon.
"While additional details are still scarce, this partnership could be a massive revenue opportunity for Meta, Amazon and most importantly, advertisers," wrote Rahmey, who was previously a Facebook client solutions manager.
Amazon has been ramping up its ad business for several years, luring spending by brands and small businesses looking to improve their placement on the company's apps. Amazon said last month that sales in its online ad business grew 26% from a year earlier in the third quarter to $12.06 billion.
By partnering with Amazon, Meta can make it easier to allow shops to sell goods on Facebook and Instagram without creating custom storefronts on those apps.
Meta provided some details about the new feature on Tuesday on a support page titled "Purchase with Amazon without leaving Facebook or Instagram."
"For a more seamless shopping experience from an ad on Facebook and Instagram, you can choose to link your Meta and Amazon accounts," the page says. "You can check out with Amazon without leaving Facebook or Instagram, and experience more relevant ads."
Rahmey told CNBC that the agreement shows "these two walled gardens are kind of coming together."
Amazon's online ad business has traditionally been more like Google's in that it's "intent-based," meaning customers search with keywords to find the items they want, Rahmey said. Meta has more of a "discovery-based" model in which people can receive targeted ads without searching, he said.
"Amazon can start to extend their reach and help merchants find new customers that maybe haven't searched for them," Rahmey said. "I think it's a win-win for everybody."
He noted that Pinterest has gotten a sales boost the past few quarters after its deal with Amazon.
Still, Rahmey said some questions remain about the partnership, such as how the revenue sharing will work and how merchants will choose where their ads run.
"If I'm an Amazon seller, am I going to go in and check a box that says 'sell on Meta,' and then it just runs out there?" Rahmey said. "Or, if I'm a Meta advertiser, can I choose to send my potential customers to buy on Amazon instead of to my website or to other shops for example?"
— CNBC's Annie Palmer contributed to this report