In the ad, Shopify is pushing to fill the void left by the Apple privacy breach

Shopify is trying to fill the lucrative marketing data gap created by Apple’s anti-privacy push by offering retailers a new way to target potential customers through the world’s largest advertising platforms.

Shopify President Harley Finkelstein told the Financial Times that after forming alliances with Meta and Google in 2022, its Audiences marketing tool will be the focus as a slowdown in the e-commerce industry forces the $46 billion company to hit $46 billion in revenue. was the main area in the center. layoffs in other parts of its business.

The new tool allows retailers to aggregate their customer data and upload it to Meta and Google’s advertising platforms. Marketers can then target ads to “lookalike” customers who are more likely to buy their products because they have purchased similar products from another retailer.

The system is designed to break Apple’s rules against tracking iPhone users, which cost the online advertising industry multibillion-dollar losses last year, and to compete with Amazon’s booming advertising business.

While Shopify Audiences may not yet be a significant moneymaker for the e-commerce company, it could offer a much-needed growth opportunity as the looming recession and cash-strapped consumers squeeze retailers.

“Especially right now, merchants want to be able to find more customers,” Finkelstein said.

Shopify’s stock price nearly quintupled between the start of the pandemic and November 2021 as the lockdown forced retailers and consumers to turn to e-commerce in unprecedented numbers. However, its shares have lost three-quarters of their value since last year’s peak, leaving them close to where they were before the pandemic hit.

Shopify founder and CEO Toby L├╝tke admitted he overestimated the rate of e-commerce growth after lockdown restrictions were eased this summer. The Canada-based company announced about 1,000 layoffs in July, or 14.5 percent of its workforce, mostly sales and support staff.

Shopify is prioritizing initiatives with “shorter payback,” Finkelstein said, including expanding its business lending arm Capital into new regions and expanding its fulfillment network, bolstered by its $2.1 billion acquisition of Deliverr in July.

While fulfillment and lending are multi-year initiatives, Shopify’s Audiences marketing tool is its newest project, which went public last year.

Advertising has already become big business for Shopify’s rival Amazon, allowing third-party merchants to promote their products on its marketplace. Amazon’s ad revenue rose 30 percent to $9.5 billion in the third quarter of 2022, excluding currency changes. Traditional retailers including J Sainsbury in the UK are already emulating the strategy.

Apple’s introduction of a new requirement for mobile developers to obtain consent to track users across apps and websites has caused upheaval in the online advertising industry over the past 18 months. Most iPhone owners have opted out, denying the data they’ve used to target ads for years.

Many say that it has become more expensive and less effective, especially on Facebook and Instagram, without the ability to fine-tune ad targeting. However, no clear alternative has emerged.

Amazon is a beneficiary of Apple’s new policy because its ad targeting is based on “first-party” data: information an advertiser holds about its customers. Apple allows targeting based on these details, not “third-party” data collected from other companies’ websites.

Shopify’s proposition is that it can offer retailers similar targeting capabilities as Amazon, but beyond the Seattle-based retailer’s online store, including through Instagram, Google search results and YouTube.

Merchants can choose to add their customers’ data to Shopify’s claimed pool.

However, some retailers are concerned about sharing their data with a larger group that could include competitors who could then target their customers.

“There’s always going to be some concern about sharing data,” Finkelstein said. “But it’s often offset by net, do I make more money, do I sell more?”

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