- Users on Facebook and Instagram will now be able to shop Amazon using select ads while using those apps.
- The deal could drive greater product awareness and conversion for Amazon, given Meta's targeting capabilities and in-app checkout
- For Meta, the deal could accelerate on-platform shopping and help with measurement, aiding artificial intelligence (AI) targeting efforts for other ads.
Meta Platforms Inc. (META) announced a partnership with e-commerce giant Amazon (AMZN) that will allow users on Meta's Facebook and Instagram platforms to purchase some goods from Amazon in-application.
What Does This Mean for Users?
The tie-up with Amazon means Meta users can click on an Amazon advertisement and be taken directly to a shop-like experience to make purchases with their Prime account within the app they're using. Meta said that U.S. users will be able to see real-time pricing, Prime eligibility, delivery times, and product information.
However, Bank of America (BoFA) said in a research note that the customer impact for Amazon could be limited due to "probable overlap" between both companies' user bases.
What Does This Mean for Shareholders?
Some of the highlights of the Meta-Amazon deal include better targeting and optimization of ads, faster checkouts with a Prime account connected to Meta's applications, and more personalized ads.
Pinterest (PINS) signed a multiyear deal with Amazon eight months ago for a closed-loop shopping experience. The deal already has led to a third-quarter boost in revenue and profit for Pinterest. Like Meta, the company also noted an upturn in the advertising market after facing a recent tough macroeconomic environment for social media firms.
BoFA analysts, led by Justin Post, see increased monetization opportunities for Meta due to increased ad volumes from Amazon and the acceleration of Meta’s on-platform shopping capabilities. The group noted a positive impact for Amazon from the partnership through increased "top-of-mind product awareness" for its inventory, driven by Meta's strong targeting ability and better ad conversion.