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Shopify’s worst-kept secret debuted Tuesday, as the Canadian retail technology firm unveiled Shopify Audiences, a new tool that uses machine learning to help merchants find motivated shoppers.
The system takes aggregated conversion data from all participating merchants, zeroing in on who’s buying particular items, so it can create custom audiences for specific products.
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According to a Shopify blog post, “Merchants simply select the product they want to sell more of, machine learning builds an audience of high-intent buyers tailored per merchant, and the audience is directly and securely exported to their ad network of choice.” At launch, that includes Facebook and Instagram, with TikTok, Snap, Pinterest, Microsoft Advertising, Criteo and others to follow.
The company teased the tech as early as last summer at an invite-only event, mere weeks after Apple launched privacy changes in iOS. The update made it easy for iPhone owners to stop apps from tracking them, and the vast majority of users did just that, roiling businesses that rely on ad-targeting — from brands and marketplaces to tech platforms like Facebook, which makes most of its revenue from online advertising. Facebook parent Meta acknowledged that the Apple update would cost its business $10 billion this year.
Although Shopify doesn’t position Audiences as a response to the iOS 14 update, the hangover clearly continues on its platform as well.
“We know that independent merchants may have to pay twice as much to find a new customer as they did a year ago. In fact, one merchant told us their customer acquisition cost climbed 80 percent over the last year,” said Kaz Nejatian, Shopify’s vice president of product.
“We’ve also seen merchants’ return on ad spend drop, reflecting the growing difficulty of using digital marketing to find new buyers. That’s why we’re launching Shopify Audiences to fix it — without compromising privacy standards.” The data is aggregated, so it doesn’t identify individuals, and merchants must opt in before their data goes into Audiences’ modeling.
Even so, Shopify Audiences promises to do more than just boost new business. The company says it can drill into the granular details of where those shoppers came from by focusing on “audience-level measurement, rather than campaign.” The information allows merchants to know which marketing tactics worked best and adapt strategies.
Shopify has been testing Audiences since late last year, and it now rolls out to all eligible Shopify Plus merchants in the U.S. and Canada.
The impact of this move could be meaningful, as it launches on a retail platform with more than 1.7 million merchants that, as it was, already drove more than 5 million jobs and nearly $444 billion in global economic activity last year, a 45 percent increase over 2020. But whether the new tool overcomes the iOS effect seems less certain, as Apple cracks down on a variety of user-tracking maneuvers — including from outside sources, if they’re used to track people across other iPhone apps.
This, in part, has led to speculation that launching Shopify Audiences may not be the goal but the means to some other end — like a way to extend Shopify’s proliferating retail universe even further.
The platform features a sprawling set of initiatives across logistics and fulfillment, payments, shipping, capital and more. But in Audiences, the company now has a jumping off point to pursue a more robust advertising system, if it so chooses. The system could go beyond homing in on targets to actually buy ads based on the data.
That would put Shopify into a fundamentally different type of business. But it’s hard to ignore that the pieces seem to be falling into place.
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