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Mark Zuckerberg, chief executive officer of Meta Platforms Inc., left, arrives at federal court in San Jose, California, US, on Tuesday, Dec. 20, 2022. 

David Paul Morris | Bloomberg | Getty Images

For Matthew Hassett’s smart alarm clock company Loftie, the 2022 holiday shopping rush was the busiest in its five-year history despite a lackluster U.S. economy and persistent concerns of a recession.

Hassett, who’s based in New York, attributes the boon to one key decision. He reallocated his marketing budget, decreasing spending on Facebook and, for the first time during a holiday season, committing ad dollars to Amazon.

“So many people start their shopping on Amazon,” Hassett said in an interview. “I do personally for most things. So, we have to be there.”

Loftie is representative of a larger trend taking place in retail that’s having major ripples on Madison Avenue and Wall Street. Amazon’s increased advertising offerings for the millions of brands that sell on the site coupled with Facebook’s diminished targeting capabilities that resulted from Apple’s privacy changes have produced a significant realignment in the digital ad market.

Until a year ago, Amazon didn’t even disclose the size of its advertising business, leaving analysts and investors to guess how much the company was making in allowing sellers and brands to promote their wares on the site and apps. Now, the company’s ad division is a $38 billion annual business, and last week reported 19% year-over-year growth in the fourth quarter to $11.6 billion.

Facebook-parent Meta, meanwhile reported a 4% annual decline in revenue for the quarter to $32.2 billion, shrinking for a third consecutive period. Google has been less impacted by Apple’s iOS update, but the ad business is still being hit by the economic slowdown. Parent company Alphabet posted growth of 1% to $76 billion.

Amazon has catapulted to third in the global digital ad market, with 7.3% share, according to Insider Intelligence. Even as it takes share from Google and Facebook, it’s still well behind the two market leaders, which control 28.8% and 20.5%, respectively, of the industry. The Facebook figure includes Instagram.

Loftie continues to spend more money on Facebook than Amazon, but the equation has changed dramatically. In the days surrounding Black Friday in November, he allocated 10% of his marketing budget to Amazon, up from zero the year before. Facebook and Instagram fell to 40% of his budget from 71%. The rest of the money he pulled out of Meta went to Google, as he increased spending there from 29% over the holidays in 2021 to 50% last year.

Hassett said Facebook ads simply don’t work as well anymore, after the iOS update in 2021 began forcing app developers to ask users if they wanted to be tracked. With more consumers opting out of app tracking, the pool of potential customers has been “hollowed out and so we can no longer reliably target people,” Hassett said.

“Facebook has to serve the audience to a bigger pool of people in order to find the same people you’re finding before, and that’s just more expensive,” he said. “You have to pay a lot more than you did a year ago, and a lot of that is due to Apple’s privacy changes.”

Meta finance chief Susan Li told analysts on last week’s earnings call that growth in the company’s biggest verticals, online commerce and consumer packaged goods, “remained negative” in the quarter. She said the pace of the year-to-year decline in “online commerce has slowed compared to last quarter,” but was uncertain if the sector will significantly rebound anytime soon.

People take selfies in front of the logo of Facebook parent company Meta on November 9, 2022 in Menlo Park, California. Meta will lay off more than 11,000 staff, the company said on Wednesday.

Liu Guanguan | China News Service | Getty Images

For Loftie, Amazon and Google provide better value because a shopper is showing intent by searching for a particular item. Hassett purchased keywords like “white noise” as well as “Loftie” to make sure that consumers who wanted to find his products weren’t misdirected.

“The work we do off of Amazon on advertising definitely pays dividends on Amazon because people are going there and typing in Loftie,” Hassett said, adding that his shift in ad spending helped Loftie generate a record $250,000 revenue over a four-day stretch during the holidays.

Investment bank Cowen noted in a recent survey of ad buyers that “Amazon was the most popular survey response when we asked respondents which ad platform outside of GOOG / FB properties could emerge or is emerging as a meaningful part of buyers’ Digital ad spend, ahead of TikTok.”

The survey indicated that there continues to be “broad interest among advertisers” to grow their Amazon budgets in 2023, with 54% of surveyed Amazon advertisers saying they are planning to spend more this year than last.

While Facebook remains a core piece of a brand’s budget, its influence is diminishing, and the company’s investment in its TikTok-like Reels product will take a few years to make a significant financial impact, the Cowen analysts said.

“In the near term, we expect Meta ad share to decline further in ’23 given macro headwinds and the pivot to Reels,” they wrote.

A Meta spokesperson declined to comment for this story but sent CNBC examples of brands that the company says increased their allocation to Facebook and Instagram and have seen improved performance from ads on the site.

Like Loftie, Robin Golf also had to move away from Facebook in promoting its catalog of golf clubs and related equipment. CEO Peter Marler said over the past year more of that money has gone to Amazon.

Between July 2021 and the same month a year later, Robin’s cost to acquire a customer jumped 260% to $180 from $50, Marler said. He attributed most of the surge in costs to Facebook’s reduced targeting abilities, and said Google also wasn’t performing as well.

“We started investing more heavily in Amazon,” Marler said. “We shifted budget away from Facebook, we shifted budget away from Google, and we shifted to Amazon, and our Amazon sales have shot up by about 600% in 2022.”

Overall, the value of the tracking cookie has withered because of a renewed emphasis on consumer privacy. There are very few major online ad platforms that don’t rely on targeting, Marler said.

“Changes in the efficacy of those platforms really have forced us to reexamine our reliance on them,” he said. “We are actively moving our budgets away and decreasing the amount of money that we are spending with Meta.”

‘Not our customer’

Reliance on Amazon has its own pitfalls. The company is a dominant force in online retail and can make or break a brand’s success based on its performance on the site. That’s particularly risky because Amazon has its own ballooning private label business, which regularly rolls out products that compete with sellers on the platform.

Vitamin company Manna Health has been increasing its presence on Amazon, committing more of its ad budget to the site since the iOS changes, with plans to possibly double its allocation in 2023 from less than 10% currently, said marketing chief Ryan Farmer.

How Amazon private labels work, from AmazonBasics to its 100+ other owned brands

But he worries about brand loyalty, when so many transactions take place on Amazon.

“It’s not our customer, it’s Amazon’s customer,” Farmer said.

Farmer likens Amazon’s online ad system to Google’s in that companies run ads based on keywords that they think resonate with potential customers who may be searching for certain products. Manna also uses Amazon’s demand-side platform advertising tool, which is helpful for placement in banner ads that can be seen by people “searching for certain things,” Farmer said.

Manna, like Loftie and Robin Golf, maintains a customized Amazon home page that contains graphics, slogans, and a listing of the company’s various products that it’s selling on Amazon. However, the system is a “black box,” Famer said, because it doesn’t provide the kind of demographic data or other information to help Manna retain and nurture its customers.

Manna doesn’t even get contact information for the buyer. CEO Jeff Hill said he wished that Amazon offered “more insight into the customer, obviously, and sharing emails would be a bare minimum” so Manna could build a community and talk to clients.

“‘Hey, you bought this joint supplement, you know you might also be interested in our new bone supplement,” Hill said, describing a potential follow-up email. “It would help our company out and we would be able to buy more on Amazon and it would be mutually beneficial for us to make it to the customer and drive more traffic back to Amazon and the products.”

Amazon declined to provide a comment for this story.

Rachel Tipograph, CEO of marketing technology firm MikMak, said there are other unforeseen costs tied to Amazon advertising.

Unlike Meta, which just requires you to login to Facebook’s business manager to start buying ads, advertising on Amazon comes alongside listing products on the platform and a host of other services that brands are often buying, including warehouse space. Premium ad placement is the equivalent of slotting fees in retail stores, where brands pay for shelf visibility.

A Target customer looks at a display of board games while shopping at Target store on December 15, 2022 in San Francisco, California.

Justin Sullivan | Getty Images

Tipograph expects these costs will “cause the pendulum to swing back” towards brand promotion, and companies will rely more on channels that direct traffic to their own website and give them more control over their expenses.

“What CFOs want is profitable advertising, profitable growth,” Tipograph said, “and they want to know that they are driving incremental growth.”

Ryan Flannagan, the CEO of e-commerce marketing firm Nuanced Media, said that as Amazon’s ad business has grown, so has the competition to run “premium copy and visuals.”

Companies that aren’t investing in Amazon ads are “basically losing market share, because they’re not defending themselves,” Flanagan said.

Amazon has plenty of work ahead to keep its ad offerings attractive enough for brands to continue forking over bigger portions of their budget. But for now, companies like Loftie are happy with the returns they’re getting from Amazon, given the challenges with Facebook.

The way Hassett sees it, even with the rising expenses and associated risks, Amazon is providing enough value to justify the headaches.

“I think you have to be there,” he said.

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Zuckerberg says Biden administration pushed Meta ‘super hard’ to take down vaccine content

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Zuckerberg says Biden administration pushed Meta 'super hard' to take down vaccine content

Meta CEO Mark Zuckerberg appears at the Meta Connect event in Menlo Park, California, on Sept. 25, 2024. Meta debuted its first pair of augmented reality glasses, devices that show a combined view of the digital and physical worlds, a key step in Zuckerberg’s goal of one day offering a hands-free alternative to the smartphone.

David Paul Morris | Bloomberg | Getty Images

Meta CEO Mark Zuckerberg told Joe Rogan in a podcast published on Friday that his company was pressured by the Biden administration to remove content on side effects of Covid vaccines.

Early in a conversation that lasted about three hours, Zuckerberg told Rogan that he’s generally “pretty pro rolling out vaccines” and that they are “more positive than negative.”

“But I think that while they’re trying to push that program, they also tried to censor anyone who is basically arguing against it,” Zuckerberg said.

A Biden administration representative didn’t immediately respond to a request for comment.

The remarks come days after Meta said it would stop relying on third parties to check facts published on its widely used applications and instead turn to community notes, letting users add commentary regarding truthfulness. The strategy puts Meta more inline with X, whose owner, Elon Musk, has been advising President-elect Donald Trump and was a major backer of his campaign.

It’s also the latest in a string of announcements and comments following Trump’s election that appear targeted at appeasing the incoming president. Last week, Meta replaced its president of global affairs, Nick Clegg, with Joel Kaplan, the company’s current policy vice president and a former Republican Party staffer.

Meta was one of several large technology companies to announce that it was contributing $1 million to Trump’s inauguration, NBC News reported.

Zuckerberg has expressed criticism in the past about the Biden administration’s handling of Covid-related content.

In a letter to the Republican-led House Judiciary Committee in August, Zuckerberg said the administration “pressured” Meta to “censor” Covid-19 content, adding that he regretted some of the decisions the company made following those requests.

“And they pushed us super hard, to take down the things that were honestly were true,” Zuckerberg told Rogan. “They basically pushed us and said, you know, anything that says that vaccines might have side effects, you basically need to take down.”

Zuckerberg didn’t specify who from the White House made the requests, acknowledging that “I wasn’t involved in those conversations directly.” But he said the company’s response was that it wasn’t going to take down content that “is kind of inarguably true.”

The Food and Drug Administration said in 2021 that headache, fatigue, muscle aches, nausea and fever were the most common side effects of Johnson & Johnson’s single-shot Covid vaccine. Worldwide, Covid vaccines are credited with saving tens of millions of lives a year when the pandemic was raging.

On a separate matter, Zuckerberg said that the U.S. government hasn’t done enough to protect its technology industry, leaving too much power in the hands of regulators abroad. He said the European Union has fined technology companies more than $30 billion over the past 20 years.

“It’s one of the things that I’m optimistic about with President Trump, is I think he just wants America to win,” Zuckerberg said.

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Amazon to shut down ‘Try Before You Buy’ rival to Stitch Fix

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Amazon to shut down 'Try Before You Buy' rival to Stitch Fix

Packages with the logo of Amazon are transported at a packing station of a redistribution center of Amazon in Horn-Bad Meinberg, western Germany, on Dec. 9, 2024.

Ina Fassbender | Afp | Getty Images

Amazon is shutting down “Prime Try Before You Buy,” a competitor to Stitch Fix that allowed Prime members to try out clothes, shoes and accessories and only pay for items they wanted to keep.

The service will be discontinued on Jan. 31, according to a notice posted to Amazon’s website. The notice then directs users to browse Amazon’s fashion homepage.

Try Before You Buy is the latest example of Amazon CEO Andy Jassy’s ongoing efforts to rein in costs across the company. Beginning in 2022 and extending throughout 2024, Amazon initiated the largest layoffs in the company’s history, cutting more than 27,000 jobs across the company. It has also shuttered several of its experimental projects, such as a speedy brick-and-mortar delivery service, its telehealth offering and a quirky video-calling device for kids.

An Amazon spokesperson confirmed the move, which was first reported by The Information.

“Given the combination of Try Before You Buy only scaling to a limited number of items and customers increasingly using our new AI-powered features like virtual try-on, personalized size recommendations, review highlights, and improved size charts to make sure they find the right fit, we’re phasing out the Try Before You Buy option, effective January 31, 2025,” the spokesperson told CNBC in a statement.

Amazon rolled out the service, which was previously called Prime Wardrobe, in 2017. It was only available to members of Amazon’s $139-per-year Prime subscription program, which also includes perks such as speedy shipping and access to streaming services.

Users could test out a mix of luxury, staple and Amazon-owned brands, and return whatever they didn’t want to keep for free within seven days of receiving the items. The service operated similarly to wardrobe subscription services including Stitch Fix and Rent the Runway, as well as newer entrants such as Urban Outfitters‘ Nuuly.

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Meta announces end of DEI programs. Read the internal memo

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Meta announces end of DEI programs. Read the internal memo

Companies are walking back DEI promises: Here's what you need to know

Meta on Friday told employees that its plans to end a number of internal programs designed to increase the company’s hiring of diverse candidates, the latest dramatic change ahead of President-elect Donald Trump‘s second White House term.

Janelle Gale, Meta’s vice president of people, made the announcement on the company’s Workplace internal communications forum.

Among the changes, Meta is ending the company’s “Diverse Slate Approach” of considering qualified candidates from underrepresented groups for its open roles. The company is also putting an end to its diversity supplier program and its equity and inclusion training programs.

Gale also announced the disbanding of the company’s diversity, equity and inclusion, or DEI, team, and she said that Meta Chief Diversity Officer Maxine Williams will move into a new role focused on accessibility and engagement.

Several Meta employees responded to Gale’s post with comments criticizing the new policy.

“If you don’t stand by your principles when things get difficult, they aren’t values. They’re hobbies,” one employee posted in a comment that got reaction from more than 600 colleagues.

The DEI policy change follows a number of sweeping policy reversals by the social media company this month. Last week, Meta replaced global affairs head Nick Clegg with Joel Kaplan, a veteran at the company with longstanding ties to the Republican Party. On Tuesday, Mark Zuckerberg announced a new speech policy that included bringing an end to the company’s third-party fact-checking program.

Axios was first to report the DEI changes at the social media company. Meta didn’t immediately respond to a request for comment.

Below is Gale’s full internal memo, which CNBC obtained.

Hi all,

I wanted to share some changes we’re making to our hiring, development, and procurement practices. Before getting into details, there is some important background to lay out:

The legal and policy landscape surrounding diversity, equity and inclusion efforts in the United States is changing. The Supreme Court of the United States has recently made decisions signaling a shift in how courts will approach DEI. It reaffirms long standing principles that discrimination should not be tolerated or promoted on the basis of inherent characteristics. The term “DEI” has also become charged, in part because it is understood by some as a practice that suggests preferential treatment of some groups over others.

At Meta, we have a principle of serving everyone. This can be achieved through cognitively diverse teams, with differences in knowledge, skills, political views, backgrounds, perspectives, and experiences. Such teams are better at innovating, solving complex problems and identifying new opportunities which ultimately helps us deliver on our ambition to build products that serve everyone. On top of that, we’ve always believed that no one should be given — or deprived — of opportunities because of protective characteristics, and that has not changed.

Given the shifting legal and policy landscape, we’re making the following changes:

  • On hiring, we will continue to source candidates from different backgrounds, but we will stop using the Diverse Slate Approach. This practice has always been subject to public debate and is currently being challenged. We believe there are other ways to build an industry leading workforce and leverage teams made up of world-class people from all types of backgrounds to build products that work for everyone.
  • We previously ended representation goals for women and ethnic minorities. Having goals can create the impression that decisions are being made based on race or gender. While this has never been our practice, we want to eliminate any impression of it.
  • We are sunsetting our supplier diversity effort within our broader supplier strategy. This effort focused on sourcing from diverse-owned businesses; going forward, we will focus our efforts on supporting small and medium sized businesses that power much of our economy. Opportunities will continue to be available to all qualified suppliers, including those who are part of the supplier diversity program.
  • Instead of equity and inclusion training programs, we will build programs that focus on how to apply fair and consistent practices that mitigate bias for all, no matter your background.
  • We will no longer have a team focused on DEI. Maxine Williams is taking on a new role at Meta focused on accessibility and engagement.

What remains the same are the principles we’ve used to guide our People Practices:

  1. We serve everyone. We are committed to making our products accessible, beneficial and universally impactful for everyone.
  2. We build the best teams with the most talented people. This means sourcing people from a range of candidate pools but never making hiring decisions based on protected characteristics, (e.g., race, gender, etc.). We will always evaluate people as individuals.
  3. We drive consistency in employment practices to ensure fairness and objectivity for all. We do not provide preferential treatment, extra opportunities or unjustified credit to anyone based on protected characteristics. Nor will we devalue impact based on these characteristics.
  4. We build connection and community. We support our employee communities, people who use our products and those in the communities. We operate our employee community groups (MRGs) continue to be open to all.

Meta has the privilege to serve billions of people every day. It is important to us that our products are accessible to all, and useful in promoting economic growth and opportunity around the world. We continue to be focused on serving everyone and building a multi-talented, industry-leading workforce from all walks of life.

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