Shopify is venturing into the advertising industry in a big way with their Shopify Audiences product. Currently, the company is tight-lipped on too many details of how this will work. All we know is that Shopify users could use it to target people interested in certain products and services before making a purchase decision.
As companies increasingly rely more on customer data for marketing purposes like these ad campaigns, there’s hope that personalized ads will begin appearing across websites all over the internet.
Understanding the current benefaction.
Shopify Audiences is a data exchange network that uses mass conversion data to generate custom audiences across all opted-in merchants on Shopify. This process helps sellers target their audience based on past purchasing behavior, rather than simply looking at generic demographics like age or gender.
Merchants can reach more of their potential customers by using Facebook, Snapchat, and Twitter to advertise. Suppose they use custom audiences or one with similar interests from social media platforms for advertising. In that case, ads will be higher-performing with less cost per conversion than merchants using individual demographic information instead.
Let’s consider an example of a merchant selling “anti-aging serums.”
- Once the merchant opts-in to Shopify Audiences, they permit to use and share information about purchased skincare products.
- Shopify can create a custom audience of people interested in particular products you sell. The credit goes to data shared by other merchants. For example, Shopify can use data from anti-aging serums and facial skincare often bought together for an individual’s specific skin care needs.
- The data collected can be utilized to leverage your social media followers and create highly targeted, more engaging ads and increase the likelihood of conversion.
The reason behind “Opt-in”
Opt-in to the Shopify program would mean good news for merchants who are using this particular platform. They will have a better marketing efficiency in making sales than those who don’t use it. The key here is understanding how each category has many players – there’s no single winner taking everything home every time.
Why is Shopify doing this?
Shopify has always been about giving the little guys an edge in a world of big businesses. So it’s no surprise that they’re doing this with Shopify Audiences as another way to stand in competition with Amazon.
It’s like an exclusive club for Shopify merchants. They get to leverage the targeting data/insights that all other 1.7M+ merchants generated. This data can be fed into their marketing campaigns with more ease than they would be able otherwise.
Benefits for Shopify
- The new feature retains sellers as they target shoppers based on their browsing behavior for a more efficient marketing strategy before they go elsewhere. In turn, this increases Shopify’s intended use.
- Increase in Shopify’s transaction revenue because more efficient ads mean a better return on ad spends. This would increase the number of merchants who are bullish about their advertising campaigns and investing in them.
Distribution and substantiating Take Rates
Shopify has a surprisingly low take rate because it’s more of an infrastructure provider than a marketplace that drives sales for its merchants.
Shopify can drive incremental distribution for its 1.7M+ merchants to reach more potential customers through various advertising channels. Doing so will allow the company to increase transaction rates from outlets other than their own branding and marketing efforts across online and offline channels.
Shopify Audiences is an innovative new product. Shopify merchants can advertise across other platforms to acquire more customers cheaply. Leveraging the captive audience of 1.7M+ consumers already established could help drive additional revenue for both parties involved. Moreover, it creates a sustainable platform where users are not bombarded by ads or invade their privacy.
This blog is brought to you by Out Origin. We are a digital web solutions agency with expertise in digital marketing and multi-channel advertising. Book your call, or let us do an audit where we can counsel you on building better revenue prospects for your business.