Snap's new arrangement allows users to "shop Amazon's Snapchat ads and pay for it within the social media app," as announced by Amazon in a statement. Last week, Meta enabled a similar function which enables Facebook and Instagram users to link their accounts to Amazon's so that they can more easily purchase products within the apps. In its third-quarter financial report, Snap noted that they will not make any formal forecasts "owing to the unpredictability of war."
Snap shares went up 8% on Tuesday when the company verified an arrangement with Amazon that allows users to purchase products from the e-commerce platform without having to leave the app. The agreement follows a similar agreement between Meta and Amazon and aims to make shopping easier for Snap users. According to a statement from an Amazon spokesperson, "Customers in the USA will be able to observe current costs, Prime eligibility, estimated delivery times and info concerning select Amazon advertisements in Snapchat as part of the new experience. Shopping with Amazon while in-app is accessible for selected items promoted on Snapchat and sold either by Amazon or independent retailers from Amazon's store." The Information was the first to report about the partnership.
Snap wants to revive their declining growth ever since Apple's iOS privacy change in 2021 which made it harder for social media businesses to advertise to users. Last month, Snap reported a 5% increase in year-over-year revenue for the third quarter after having two consecutive periods of decline. The company declared that it was not giving official guidance and alerted investors about "pauses in spending from a majority of mainly brand-focused advertising campaigns shortly after the beginning of the war in the Middle East."
A week before that, Meta introduced a new feature associated with Amazon which enables Facebook and Instagram users to connect their accounts for faster and simpler buying of goods advertised on Amazon without having to leave Meta's apps.
Maurice Rahmey, the joint CEO of digital marketing organization Disruptive Digital, told CNBC then that the Meta-Amazon deal is a "win-win" for everybody and demonstrates how "these two walled gardens are coming together". Bank of America analysts stated in a Monday report that the "collaboration should boost top-of-mind product consciousness for Amazon inventory approving Meta's robust targeting capabilities and most likely improve ad transformation due to less obstruction before purchase."
While Meta's stock has risen about 180% this year, investors have been more conservative with Snap, whose shares are now up by 37% in 2021 after Tuesday's jump. Watch: Buying on weakness in Google stock is the "right move for Meta."
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