Shopify, with the release of its new “Audiences” marketing tool, thinks it has discovered a way around Apple’s modifications to data gathering for advertising, which ended the practise of collecting data from third parties without users’ consent.
There was a huge shift that saw decades-old practises being challenged, and while this is expected to have made a multibillion-dollar dent in the global advertising market (Kaz Nejatian, VP of Product at Shopify, reported that independent merchants were paying twice as much to find new customers in mid-2022 as they had the year before), it may not have had such a negative impact on all businesses.
Those Who Use Shopify
To illustrate, consider Amazon, which bases most of its ad targeting on information obtained internally; first-party data acquisition is nonetheless permitted under Apple’s restrictions.
Shopify Audiences also analyses comparable data internally, but the firm claims that since it integrates with Instagram and Google, this counts as first-party data and not subject to Apple’s restrictions.
After seeing its share price decrease by almost three-quarters from a post-pandemic peak in 2021, Shopify thinks this move would bring it a substantial revenue bump.
According to the Financial Times, the company’s founder and CEO, Tobias Lütke, overestimated the development of the e-commerce industry once limitations were relaxed, leading to an initial jump in the company’s valuation.
As a result of the need to reduce costs elsewhere, it has subsequently announced the layoff of over 15% of its personnel. Shopify’s president, Harley Finkelstein, said that the company is focussing on “far shorter-term payback” activities in an attempt to regain market dominance.
Some have voiced worries about Shopify’s Audiences tool, despite the fact that it is an invaluable resource for companies looking to expand their advertising income. This is partly due to the fact that shops have to be more open with their data to prospective competitors; but, as Finkelstein points out, this worry is generally outweighed by the benefits of increased sales.
Subtly charming pop culture geek. Amateur analyst. Freelance tv buff. Coffee lover