You need a catalog to create any kind of dynamic ad on Facebook or Instagram.
Dynamic ads automatically change the products that are displayed for each viewer, based on purchase and browsing history. For this, Facebook needs up-to-date information about all the products in your store. This is achieved through the product catalog or product feed (a list of your products with which contains all relevant information like image, price or availability).
Types of dynamic ads that you can create with a catalog are:
Dynamic Product Ads (DPAs):
These ads show viewers the same products that they have viewed on your site, along with other relevant products. Since your potential buyer has already shown interest in these products, DPAs tend to have the highest conversion rates.
Prospecting ads with the objective 'Catalog Sales':
These are shown to 'cold' or new audiences. Facebook decides which products to show each viewer based on the click-through rate of each product and the past behavior of the potential buyer.