Following the recent launch of its “Audiences” marketing tool, Shopify hopes that it has found a solution to skirt Apple’s changes to data collection for advertising, which put an end to third-party data being collected without the explicit permission of its users (most of whom had refused, according to the Financial Times).
While this is expected to have put a multibillion-dollar dent in the global advertising market, with Kaz Nejatian, VP of Product at Shopify, stating that independent merchants were paying twice as much to find new customers in mid-2022 compared with the year before, the colossal shift that saw years-old practices being challenged didn’t necessarily have such a negative impact on all businesses.
One such example is Amazon, which focuses its ad targeting on data that’s collected in-house; first-party data collection is still allowed under Apple guidelines.
Shopify Audiences processes similar sorts of data in-house, though despite integration with Instagram and Google integration, the company argues that this constitutes first-party data, thus bypassing Apple’s rules.
This is a move that Shopify hopes will see a healthy boost to its revenue after its share prices have dropped by around three-quarters since a 2021 post-pandemic high.
The early rise in the company’s value saw its founder and CEO, Tobias Lütke, admittedly overestimate the growth of the e-commerce sector following the easing of restrictions, according to the Financial Times.
It has since announced the redundancies of almost 15% of its workforce as it looks to make cutbacks in other areas of the business. Company president, Harley Finkelstein, explained that Shopify has shifted its focus to operations with a “much shorter-term payback” in an effort to claw back some market share.
While presenting a valuable tool to businesses seeking to grow their advertising revenue, Shopify’s Audiences tool has been met with some concern. This is largely centered around the fact that retailers must share their data more openly with potential rivals, though Finkelstein explains that this concern can often be negated when a company is able to sell more as a result.