After the recent launch of its Audiences marketing tool, Shopify hopes to have found a solution to circumvent Apple’s changes to advertising data collection, which allow third-party data to be collected without the express permission of its users (most of whom had refused after the financial times (opens in new tab)).
While this is expected to have hurt the global advertising market by billions of dollars, Kaz Nejatian, VP of Product at Shopify, explained that in mid-2022 independent merchants were paying twice as much to find new customers compared to the previous year, the colossal shift leading to this that has led to years of practice being called into question has not necessarily had such a negative impact on all companies.
Shopify Audiences
One such example is Amazon, which focuses its ad targeting on internally collected data; First-party data collection is still allowed under Apple policies.
Shopify Audiences processes similar types of data internally, although despite the integration with Instagram and Google integration, the company argues that this constitutes first-party data and thereby circumvents Apple’s rules.
It’s a move Shopify hopes will provide a healthy boost to sales after its stock prices have fallen about three-quarters from a post-pandemic peak in 2021.
Founder and CEO Tobias Lütke admittedly overestimated the growth of the e-commerce sector after the easing due to the early increase in company value financial times.
Since then, the company has announced that it will lay off almost 15% of its workforce as it looks to make cuts in other areas of its business. Company President Harley Finkelstein explained that Shopify has shifted its focus to operations with a “much shorter-term payback” to regain market share.
While Shopify’s Audiences tool is a valuable tool for businesses looking to increase their ad revenue, it has encountered a few concerns. This is largely because retailers need to be more open about sharing their data with potential competitors, although Finkelstein explains that these concerns can often be allayed when it allows a company to sell more.
