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Shopify bets on 'Audiences' tool to combat Apple's tracking restrictions for retailers

The ecommerce giant hopes its millions of customers will benefit from the Apple-compliant customer-targeting capabilities

Shopify has committed to providing its retail customers with new avenues to target prospective customers in the wake of Apple's ongoing privacy crackdown.

According to CEO Harley Finkelstein, Shopify aims to invest heavily into its 'Audiences' marketing tool which launched last year. Further development of Audiences aims to enable retailers housed on the platform to boost engagement with customers now it's more difficult to track iPhone users' shopping habits.

Finkelstein told the Financial Times that the rollout of Audiences with be a “key area of focus” moving forward. The tool allows retailers on the platform to consolidate customer data, improve outreach and ad targeting, and is integrated with Meta and Google’s advertising platforms.  

Through this, the company said that marketers will be able to better target ads at “lookalike” customers based on purchases from other retailers. Shopify told the FT that the system is designed specifically to compensate for Apple’s current rules on tracking iPhone users.

Similarly, Finkelstein said the new tool will enable Shopify to compete with Amazon’s rapidly-expanding advertising business. 

Competitive landscape 

The expansion of Amazon’s advertising division poses a significant challenge for Shopify, which is used by more than 1.7 million retailers globally. Advertising revenue at Amazon increased rapidly across the second and third quarters of 2022, surging by around 30% in Q3 and surpassing $9.5 billion. 

While this poses a lingering threat to Shopify, ongoing changes to how Apple processes and shares user data are also prompting concerns amidst a significant slowdown in the global ecommerce industry.  

New requirements on data processing for iPhone users mean that users can now choose to opt out of tracking between apps and websites. The decision sparked major upheaval across the advertising industry, with businesses raising concerns that they will be effectively blocked from targeting users.  

Meta was a vocal critic of the move, with the social media giant claiming that advertising on its family of platforms will become less effective without the ability to target users.  

However, while the move by Apple raised concerns across the industry, Amazon is among a number of firms set to benefit from the decision due to its policy of targeting ads based on first-party data.  

Shopify believes that the expansion of its Audiences tool will allow retailers to continue targeting customers in a similar fashion to pre-Apple changes and engage with customers via Instagram, Google’s search engine, and YouTube platform.  

A key factor in this move is that retailers will be able to opt in to adding customer data to a broader pool, which it claims will constitute “first-party” data.  

But although Finkelstein insisted there will be long-term benefits for merchants leveraging the platform, some have raised minor concerns about sharing data within a larger pool that might include rival businesses’ data sets.  

There’s always going to be some apprehension about sharing data,” Finkelstein said. “But that’s often offset by, net net, am I making more money, am I selling more?” 

Industry disruption 

Shopify announced last year that it planned to implement more than $46 billion in cutbacks across the business while company share values dropped by nearly 75% compared to a 2021 peak.  

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In July, the firm also announced more than 1,000 redundancies after encountering an unexpected slowdown in ecommerce sales in the wake of a pandemic-induced boom.  

The ecommerce giant appears concerned over the prospect of heightened industry competition ahead of a looming recession. As such, enabling retailers to bolster engagement and outreach could be crucial as the company weathers difficult market conditions.  

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

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