Facebook Partners With American Express to Get Small Businesses Hooked on Buying Ads

Facebook has partnered with American Express to let AmEx cardholders redeem their Membership Rewards points for Facebook Ads credit. Card holders can receive $50 in ad credit for 6,750 Membership Rewards points which they earn for each dollar the spend and can be redeemed on American Express OPEN’s Facebook Page or the Membership Rewards site.

The partnership values the reward points at $0.0074 each – a significantly better rate than the $0.0050 per point American Express users can get when they redeem for traveller’s cheques. This favorable rate is likely designed to help Facebook get businesses hooked on its ads, while increasing the relevance of the Membership Rewards program to American Express’ customers.

The announcement comes just a week after location-based service Foursquare announced a partnership with American Express to offer cardholders big bonuses when they check in and make purchases at select businesses. For example, cardholders who check in and spend $50 at Sports Authority get a $20 credit added to their AmEx account.

With virtual currency such as Facebook Credits powering new purchase incentive and loyalty programs, American Express appears determined not to be left behind. Its partnerships with Facebook and Foursquare could boost appeal of its services to both younger entrepreneurs conducting marketing on the social network, as well as early adopters who make purchase decisions based on discounts sourced through their mobile devices.

The two companies worked together last year to launch American Express’ “Small Business Saturday” campaign where businesses could sign up for financial services to gain a $100 Facebook Ads credit. American Express also offers similar deals for free ad credit with Bing and Yahoo.

For Facebook, the American Express partnership could help it introduce its Ads product to small businesses, one of the financial service company’s core client bases which it handles through its American Express OPEN division. A recent study showed that only 22% of local business owners had used Facebook Ads despite 94% being aware of the marketing channel. This indicates that there’s plenty of runway for the revenue of Facebook’s self-serve ad business to grow if it can attract the long-tail of small and local businesses.

If American Express card holders find the ad credit earned through their Membership Rewards redemptions help their business, they might ramp up spend or at least keep it constant over time, quickly helping Facebook recoup any initial loss through the promotion. To increase the likelihood that the initial ad runs of these new clients go well, Facebook and American Express are providing guides to ads tool best practices.

If Facebook can adequately educate the new advertisers secured through the partnership have a positive experience with Facebook ads, it could have success converting cardholders into long time advertisers, and it might seek to establish more partnerships like this one to extend ad credits to small businesses.