Podcast: Shopify as a marketing operating system (with Venkat Prabhu)
On this week’s episode of the podcast, I am joined by Venkat Prabhu, Director of Product for Shop Campaigns at Shopify, to discuss the platform’s evolution into a comprehensive marketing operating system for eCommerce merchants. We explore the major announcements from Shopify’s Spring Editions, specifically focusing on how the platform leverages commerce data and AI to simplify advertising for businesses of all sizes. Among other things, we discuss:
- How AI-driven automation empowers small businesses to participate in the digital marketing ecosystem
- Whether centralized platforms like Shopify can solve the persistent problem of cross-channel attribution
- If risk-free advertising models will become the standard for merchants entering the digital economy
- Why the integration of commerce data into advertising algorithms creates a unique competitive moat
- What happens when a commerce platform evolves into a holistic marketing operating system
- How deep integration with AI agents like ChatGPT will redefine discovery for online shoppers
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Transcript
Eric Seufert: Welcome to the Mobile Dev Memo podcast. I am your host, Eric Seufert, and I am joined today by Venkat Prabhu. Venkat, welcome to the podcast.
Venkat Prabhu: Thank you so much for having me, Eric. Super excited to be here.
ES: We are recording this on Tuesday the 16th, but this will go live Wednesday the 17th when Shopify’s Spring Edition has launched. There is a lot to unpack in what has been announced, discussed, and clarified. I am grateful to have you on the show to do that. Before we dive into those topics, please introduce yourself to the audience.
VP: I am a director of product of Shop Campaigns at Shopify. I have been here at Shopify for close to a year. Before Shopify, I was at Amazon for nine years. Five out of those nine years I co-founded a product called Buy with Prime, and then prior to that, I used to lead Amazon’s social advertising initiative. This included all the ads that Amazon ran across Meta, Snap, Pinterest, and so on. As a part of Buy with Prime, I got to work closely with Shopify and got to know the Shopify executive team really well. I fell in love with the company culture, the way Tobi runs the company, and decided to join Shopify to lead parts of the advertising initiative. I feel there is a big opportunity ahead of us for Shopify to help our merchants grow their business on Shopify.
ES: I want to say you are the fourth Shopifiyer I have had on the podcast. I most recently had Amanda Engelman right before New Year’s in December. I have been following Shopify’s advertising journey for a long time. Shopify is a company that I admire quite a bit. It is cool to have you on to talk about Spring Editions. I had Andreas on either last year or the year before. Maybe we will turn it into a yearly tradition.
VP: Andreas was here in December of 2024. Then you had Jess Jacobs, who was not at Shopify when she spoke with you but now she is back. That was Q1 of last year. Then Amanda was there in December last year.
ES: Spring Editions has just dropped. Parsing Spring Editions and looking at Shopify’s advertising initiatives broadly, what is the state of the platform today and where is it headed? Give us a big lay of the land, broad-based overview of what Shopify is doing with advertising.
VP: As a part of Spring Editions, more broadly we are seeing the state of shopping change quite rapidly, especially with a lot of net new aggregated experiences getting built via agentic commerce. Shopify, through our capabilities like the UCP protocol that we have co-developed with other companies like Google as well as the catalog API, is making it super easy for a lot of developers to build net new commerce experiences. All of this helps merchants that are a part of Shopify because whatever net new experience gets built out there and wherever commerce goes next, we make sure that Shopify merchants are there first. That is a big part of our overarching story as a part of Spring Editions.
Coming specifically to advertising, I wanted to talk about the state of the platform, giving a little bit of historical context before we jump into the specific announcements that we are making. Shopify has always had channel apps. These are apps built by all the ad companies: Google, Meta, TikTok, Pinterest, Snap, AppLovin. Within those apps, we build platform capabilities that make it super easy for merchants to get started with commerce or advertising on any of those surfaces. We have historically identified value-differentiating capabilities that we as Shopify can build. Shopify Audiences is a great example of how we could help merchants get a better return on the ad spend on each of these existing surfaces.
About a couple of years back we started out with Shop Campaigns, which was a way that merchants could drive more sales through the Shop app, which is Shopify’s first-party experience. We got some really good feedback from merchants. The most important thing that merchants love is the fact that Shop Campaigns is a risk-free advertising offering. Merchants come in and say how much they want to pay for customers. You can create different tiers of customers. You can say if it is a new customer, I will pay X dollars more, and if it is a returning customer, I will pay Y dollars, and so on.
That value proposition has really appealed to merchants, but the feedback from merchants was they want this to scale more. They want to see a lot more orders come out of the orders that we are seeing through Shop Campaigns. Over the past year, we have been accelerating our journey in expanding this program across a large range of third-party ad networks. At this Edition, we are announcing the extension of Shop Campaigns into advertising on OpenAI, specifically ChatGPT, Pinterest, and then we are also going to start advertising on the open web through our integration with Microsoft Monetize, which is an SSP. Merchants come into Shop Campaigns, tell us what outcomes they want to pay for, and these integrations allow us to drive significantly more outcomes and help merchants scale their Shop Campaigns trajectory. That is a big part of our Spring Editions announcement.
The other thing that we are announcing at Spring Editions, which we are all super excited about, is a product called Campaign Autopilot. Most merchants on Shopify do not have access to a marketing co-founder or a digital marketing agency. It takes a lot of money to get an agency to do marketing for you. We are expanding Sidekick, which is the agent that sits within Shopify’s admin that allows you to do a bunch of tasks. We leaned in that same construct and are launching Campaign Autopilot that basically builds the capabilities of a digital marketing agency straight into the Shopify admin. We are getting started with three launch partners. This allows any merchant to come in and talk to Shopify and tell them what their campaign objectives are. Shopify comes up with recommendations, and merchants have their budgets and can define their guardrails and be in complete control. Shopify is telling them the recommendations, and merchants are in control of the actual campaigns and can change any of the campaign setup that Shopify recommends to them. We are starting with Meta, Shop Campaigns, and Messaging as the first three surfaces. It is a combination of paid and organic surfaces, but over a period of time, we will expand to more channels with Campaign Autopilot as well.
ES: I want to start at Campaign Autopilot. It is abstracted above the individual channels and is a coordination layer. Why is that valuable to retailers? Why is that cross-channel coordination valuable and what becomes possible when Shopify can manage that optimization across channels instead of these optimization engines that have just been channel specific?
VP: I think the cross-channel optimization is a component of the benefit of Campaign Autopilot. The foremost benefit from our perspective is just the ability to access. This is an experience that sits right within the admin. I will give you simple examples of how this experience is different from a merchant going and running campaigns on their own. If I am a new merchant just getting started with my ads on Meta, I have to make a bunch of decisions. I need to make decisions like what should my budget be or what should my ROAS targets be. These are not easy decisions for merchants to figure out. One of the ways that we add value as Shopify through Campaign Autopilot is by helping merchants come up with out-of-the-box suggestions. We as Shopify sit on tons of transactions that happen across the Shopify network. To date, we have processed about 1.7 trillion of GMV through the Shopify platform. All of that has given us intelligence into really understanding what are the right campaign settings that actually help a merchant get started with the maximum probability of being successful. I would say that is one of the foremost things in terms of just getting started, because the reality is the majority of merchants on Shopify never run paid advertising. Just the ability for them to get started with paid advertising in a very easy manner is one of the most foremost benefits of Campaign Autopilot.
Imagine somebody who has now gotten started and they have activated a range of different channels. That is where the cross-channel coordination piece becomes important. For example, if we feel we have a high probability of getting an existing user re-engaged through an email marketing program, then that would be a more preferable path than actually paying money on paid advertising for that specific user. That is an example of an organic versus paid channel coordination piece. In the same way, if you think about attribution, today we end up passing basically all signals back to all platforms. For the same order, we may have three different platforms that might be claiming credit for that same order. By virtue of Shopify being the operating system for the merchant, we can very easily figure out which channel should get that attribution. In a future state, we may realize that there were three different transits that happened from three channels that resulted in an order, and so we could do weighted attribution as well. All of these things will help merchants figure out what is the best next place to put their next hundred dollars of marketing spend. There is a targeting component, there is an attribution and then a signals component, and Campaign Autopilot and the cross-channel coordination piece helps across all of that.
ES: There are two points there that are profound. One is what you said about the ability for a merchant to spend their first ever dollar on marketing. I have been hammering this point for a while. I did this podcast episode more than a year ago called Commerce at the Limit. I talked about the two axes of growth, how AI is going to push the frontier out on the digital economy across these two axes. One is efficiency conversion. Everyone gets that. We are going to get more conversions per dollar, and it is going to get better at targeting and matching. Everyone gets that, and no one argues with that. The other is onboarding new advertisers to the economy. Every dollar that is being spent now gets spent more efficiently, but there is this whole second axis, which is the increased participation from advertisers that never could have spent that first dollar. Getting that person onboarding, that tiny SMB Shopify retailer, having them spend their first dollar of marketing and then ramping that up as they see success, that is how digital advertising works. It compounds over time as you see ROAS and then you reinvest and you spend more because you are getting more from it. That is the second axis. That is what people don’t appreciate. When you read these research reports that say it’s a couple of percentage points of conversion optimization every quarter, that’s not the real value. The real value is these new dollars, the incrementally new dollars that are coming into the advertising ecosystem. That is really profound and that gets missed in this conversation.
VP: One hundred percent. We have a large majority of Shopify merchants that never run paid advertising. We do see the ones that do run paid advertising obviously have correlation with better outcomes over a period of time. There is something to be said around just sometimes the anxiety. I know advertising reasonably well, and for my own store, spending money on advertising, there is a degree of anxiety in putting a budget of a thousand dollars on Meta and seeing those dollars getting spent but not seeing any conversion. That causes me at some point to stop or not lean into it. With Shop Campaigns, the construct of Shop Campaigns is you pay only when you get a conversion. It is so anxiety-free for so many merchants that are out there because it is a set-and-forget-it thing. Even if I set something and it doesn’t drive anything, there is no anxiety. I am not worried about anything. That paradigm doesn’t necessarily exist across digital advertising at large. Access, keeping everything else like there are so many other differentiators and other things that can be baked in, but access in itself is extremely undervalued. That’s one of the things that we think Campaign Autopilot will really help with, making it really easy and comfortable for every single Shopify merchant to get started with paid advertising.
ES: The other point I wanted to hover on was the coordination piece, allowing for that budget optimization. That is a capability I overestimated the degree to which people would adopt these probabilistic attribution frameworks post-ATT. I thought you would see a lot more companies spinning up media mix models or doing incrementality measurement. The reality is you just don’t see that. Even across very large advertisers, it is pretty rare. Forget about it for an SMB. What you see is total channel dependency, anchoring their shop or their business to a single channel because they have no idea how to measure the effects across channels. It is impossible to do that sort of coordination, and you can’t do that at the platform layer because there is an incentive misalignment, but you can do it at a retail enablement layer, which is Shopify. I think that is genuinely something that leads to more spend. It is not that that just changes the mix for these advertisers. It is actually going to increase their spend because they couldn’t spend on multiple channels before because they couldn’t measure it and there was too much uncertainty. Now they can, and they probably are just going to spend more.
VP: This goes back to really fixing the underlying economics in a way where you create as little of a deadweight loss as possible. When people take a constrained view of it across just one platform or a channel, you may come to the conclusion that it’s actually going to reduce spend, but it is not. In the grand scheme of things, this is just building better economics across the entire ecosystem and that just allows more spend to happen and more outcomes happen. The good thing about Shopify is our incentives are fully aligned with merchant GMV. More incremental GMV that merchants make, Shopify’s fortunes are fully intertwined with merchant GMV. We operate with the exact same incentives that our merchants have across the board.
ES: I do think the degree to which any given platform would be motivated to overstate performance is exaggerated. A platform doesn’t want to do that because at some point the money is going to run out. If you are actually getting less than what they are telling you you are getting, you are going to realize it. You are going to wake up to it at some point because you might just go broke or you might go out of business. Nonetheless, there is a question there, especially when you think about attribution dynamics and claiming credit. You really cannot make that argument for Shopify. There is no way to make the argument that Shopify is exaggerating the impact, because you are being billed on the performance basis, but also because you want what they want, which is increased sales. If you sit on top of all the channels, you don’t have to really question incentive misalignment.
VP: If you think about this a little more broadly, a merchant has a fair amount of budget and they break down this budget into a marketing budget, a promotions budget, and you obviously have your money tied up in inventory and a bunch of these things. In some ways, the promotion budget that most merchants have, if you just add the dollars that merchants end up paying buyers on like a first-time sale, it is a substantial amount of those dollars as well. If you can think about all of this as a combined budget pool that the merchant has in order to drive the maximum free cash flow for their business, I think as Shopify over a period of time we can help merchants optimize the pools of these dollars that currently may appear separate. At the end of it, the whole goal is how can I make the highest profit, how can I maximize my free cash flow? I can definitely see a world as an evolution of Campaign Autopilot for us to get there.
ES: I think maybe the other benefit that Shopify has here is you are not dependent on a CAPI flow to understand the revenue stream. You are the revenue stream. You process the entirety of the revenue stream, so you see all that. There is no question that you have access to all the relevant data because that is what Shopify does: it processes the transaction. You have access to all of the revenue. You don’t have to worry about the incentive misalignment problem that I was talking about, but you don’t have to worry about data blind spots because you are the source of all the data.
VP: That’s the reason even with attribution capabilities that our merchants use, that allow them to understand which channel got attributed to which conversion, Campaign Autopilot basically sits on that same underlying attribution layer and merchants can change their attribution logic and different attribution models all as a part of the Shopify platform itself.
ES: You are essentially closest to the metal. You sit closest to the data but also you sit at an elevation that is higher altitude than any single channel.
VP: That’s the cross-channel orchestration piece overall from a Campaign Autopilot perspective.
ES: I’m going to talk about the expansion of Shop Campaigns in this context. It feels like Shopify is becoming a marketing operating system rather than just an e-commerce platform. Is that a fair characterization, and if so, what are we trending towards here? What does the end state look like?
VP: I think about Shopify as the commerce operating system for our merchants. Obviously there is e-commerce, there is retail through POS and so on. It is the overall commerce operating system and marketing is a component of that. I think most merchants were managing their marketing through a bunch of these channel apps even prior to the Campaign Autopilot announcement. I agree with that characterization on this becoming the marketing operating system for merchants. I think with Campaign Autopilot, it is this uber level that operates across a range of different platforms that just allows better orchestration across these different platforms.
Shop Campaigns is one of the platforms that’s now a part of Campaign Autopilot. One of the things that I’m really curious to see is, for example, merchants could run their own ads on Meta and a merchant could opt into Shop Campaigns and could opt into having Shop Campaigns operate on Meta. I am eager to see with some of these dynamics. I think it is a combination of a product mix, a buyer mix, where maybe for some buyers it ends up being the Shop Campaigns version that ends up driving the order because maybe the buyer already has the Shop Campaigns app enabled, so the conversion experience is a lot more smoother. For many other buyers, it actually ends up going through the direct Meta integration. I do agree with the overall marketing operating system characterization.
ES: You made the point that the majority of retailers don’t spend money on marketing, which again, think about the enormous opportunity then. That is all upside. I always point to this from the quarterly census data dump, just the proportion of retail sales in the US that are e-commerce is 13. something percent. You have 86. something percent to go, and digital advertising is the most efficient way to do demand rooting. All of that 86 percent is upside and all of that revenue that is captured by that 86 percent can be optimized and made far more efficient. I always think about e-commerce especially, but D2C, these are the marketing cowboys traditionally. They are at the very frontier of adopting new approaches and adopting new techniques, being willing to experiment, being open to trying new things with creative, with measurement. You’ve got, especially at the SMB scale, the group of retailers that are the most open-minded about this kind of stuff. You’ve got some that don’t need any convincing, they are going to onboard to this and they are happy to let the machine do as it wants. Then maybe some that are more tentative that need to see it proven out, but presumably over time they will.
VP: One of our operating principles with Campaign Autopilot, and this is the case with all things at Shopify, is it’s all in the merchant’s control. With any recommendation that comes through Campaign Autopilot, merchants can approve those recommendations, they can change any of the parameters, they can change the budget, they can change the target ROAS, and they can also pause any of these tactics at any point in time. All of these are recommendations. We may have some merchants who might say I just trust your recommendations and want to move forward, but again, that’s a merchant control thing. I do see this becoming the uber layer going back to your question on the marketing operating system. Campaign Autopilot is designed to be the overall marketing operating system, which is also another reason why as a part of the Editions announcement within the experience that our merchants see within what we call as admin, we are creating a new tab that’s called Growth and Campaign Autopilot basically sits within that tab. It’s one of the primary levers. It’s like a growth or a marketing co-founder for the merchant in some ways.
ES: My broader point was my sense is within the Shopify universe of retailers you’ve got every profile there. Some platforms face the issue with introducing automation because they skew one way or the other. They may skew too far to the D2C side or just the very direct response side, and they have a hard time expanding from there and they’ve got to just service this immediate conversion process. Some have the opposite problem where they’ve got the much larger brand-oriented advertisers and they can’t really introduce end-to-end automation because bigger brands might be a little bit more reluctant to do it. You’ve got this very diversified group where you have representation at every part of the spectrum. You’ve got the people willing to test out at the very frontier and then you’ve got the people that maybe need more convincing over time, but you can reach everybody.
VP: That’s the goal.
ES: I want to switch gears a little bit to Shop Campaigns. This was announced in the Spring Editions. You are operating across Shop, social platforms, ChatGPT, Pinterest, and the open web. The open web one is interesting. Can you walk through that expansion and explain the role that Shop Campaigns plays in the broader advertising ecosystem now?
VP: Shop Campaigns continues the promise of the premise of being a risk-free advertising product, and all of the expansion is a way for us to help merchants drive more incremental orders, drive more incremental GMV through Shop as the surface area. As a part of this expansion, all of these surfaces for the most part that we have expanded onto, most of our merchants don’t advertise on these surfaces. If you think about Microsoft, the integration through Microsoft Monetize, advertising on the open web, you spoke about D2C advertisers as really being at the forefront as it pertains to digital advertising, but still the number of D2C advertisers that are reaching the inventory that is on the open web through some sort of an SSP is going to be very few. This is effectively a capability that is now going to make every Shop Campaigns advertiser be able to surface their products in the form of ads across the open web. Our launch encompasses a lot of premium websites and apps, different news outlets, lifestyle blogs, review articles, places where shoppers already are browsing for relevant recommendations.
In fact, on a lot of these surfaces, the costs for us to reach net new customers is actually much lower. One of the things with all of the third-party expansion of Shop Campaigns, Shopify ends up taking the risk from an advertising perspective. The way all of our third-party advertising programs work is Shopify is acting as the uber advertiser and Shopify is putting its ad dollars on each of these channels with the goal of driving these outcomes for merchants. Shopify ends up taking this risk to drive outcomes for merchants, and our whole goal here is we sort of operate in some ways like an infrastructure. Our goal here is with most DSPs and so on there is a markup. Our goal here is to not make any money in this whole third-party advertising business. We want to scale this program in a way that can drive the highest amount of incremental GMV for merchants. We’ve been advertising on ChatGPT for a while, since the time ChatGPT announced the pilot. We have had some really good learnings. Pinterest and Microsoft Monetize have been more recent announcements.
ES: I want to hover on the Microsoft Monetize piece. That particularly interests me because it is extending into the open web. How should merchants think of that? Does that mean Shop Campaigns with that capability is evolving into a commerce-focused DSP, or is that the wrong mental model? Do you just view this as another surface area and the fact that it is open web is not really that significant or meaningful?
VP: Our whole goal is to actually remove the complexity from these third-party platforms and remove all of that complexity off of merchants. For merchants, they’re still setting up a simple campaign, they’re telling us what outcomes they want, and we as Shopify are then figuring out the best way to drive those outcomes for merchants. In some ways, the merchant doesn’t really need to know the specifics of how some of these pipes are getting built. From their perspective, the more of these pipes that Shopify builds as extensions either for Shop Campaigns or for Campaign Autopilot, it just allows them to show up in the most relevant surfaces across the internet. Merchants still pay the same. If we drive a conversion for the merchant, they still pay the same cost per acquisition that they told us that they value a user on their side. In some ways, this is exciting for merchants because it just increases the surface area where their ads show up, but they still pay the same risk-free advertising model that they signed up for.
ES: In a sense, it’s just the Shopify Shop Campaigns traffic monolith. The underlying provenance is totally abstracted away. Would they know? Do they see the source of the conversion?
VP: A lot of the third-party expansion has happened over the past six to nine months, so we are still catching up in terms of some of our analytics capabilities, the ability for merchants to really understand where specifically did a conversion come from. Currently, this all gets bucketed as a Shop Campaigns conversion within the merchant’s attribution reports. Better analytics, better incrementality measurement capabilities for our merchants are two of the most important things from our forward-looking roadmap standpoint.
ES: With doing the orchestration across multiple channels, how should merchants think about performance? How should they evaluate it? What kind of measurement, attribution, and incrementality tools are you providing to validate results specifically to the context of Shop Campaigns?
VP: Within Shop Campaigns, at this point in time, whenever there’s an order that a merchant ends up seeing, first of all, all of these Shop Campaigns orders primarily happen on Shop. There are a few of these orders that a merchant may come on Shop, they might link out and go to the merchant storefront and make a purchase over there, which we attribute to Shop Campaigns as well, but that’s a very small minority of orders. Any order that is driven through Shop Campaigns gets attributed and tagged as Shop Campaigns for merchants. That’s the visibility layer that they have, and we are working on building more visibility layers around which specific third party was responsible for driving an order if it actually came as a part of the third-party program for Shop Campaigns. Merchants can opt out of third-party advertising. For example, we have a few merchants who feel they run ads on all of these. These are typically some of the larger merchants who have dedicated marketing teams. These are merchants who are running ads across the surface area of the internet. They might have a 10-member marketing team, somebody responsible for Google, somebody for Meta, somebody for TikTok, Pinterest, and so on. Some of these merchants decide to opt out of third-party advertising. For the most part, we actually see smaller merchants. They actually in general with our expansion into third-party advertising, smaller merchants on the platform now see a disproportionate portion of their orders come through Shop via Shop Campaigns as a percentage of their overall D2C orders and GMV. This is definitely helping the smaller merchants on the platform just get started in a much better manner. We have a bunch of incrementality capabilities on our roadmap. We do have merchants that have tried to do incrementality testing themselves, like turn on and off Shop Campaigns for a period of time, do a measurement, turn third-party advertising on and off, and so merchants have figured ways to try to understand their own incrementality. We are yet to build much more sophisticated tooling around incrementality measurement.
ES: Could you just implement a fairly simple geo test and have Shop Campaigns running in some geos and not in others and just test?
VP: Not yet built, that’s just what I’m saying. Totally right, very easy way to do it. Merchants could use many of their existing tooling. Merchants use a bunch of third parties to measure incrementality. What you’re talking about is basically how we will execute on this.
ES: Shopify sits closer to the transaction than any advertising platform. It is the transaction layer. As Campaign Autopilot and Shop Campaigns expand, what unique advantages does Shopify’s commerce data provide relative to the optimization systems that are channel specific?
VP: I think that’s a really good question. The most important one, and I touched upon this a little bit around Campaign Autopilot as well, is just helping somebody get started and what should be the right set of settings that help get a merchant started with advertising across a range of third-party ad networks that are out there. We underestimate sometimes the complexity that’s involved in getting started, not just from a campaign settings perspective, but even just getting the merchant’s catalog set up for advertising. On Google or Bing, for you to get started with advertising, you need to have shipping costs that need to be baked into your entire product catalog. That tends to be something that ends up taking quite a bit of time for most merchants to really figure out the right way to plumb across shipping costs across a large number of geographies as a part of the Google catalog feed. There’s a whole access component, there’s an ability for somebody to just get started with the right set of settings, which I think is the predominant differentiator as someone gets started.
There’s the second aspect, and this is something that we leverage with audiences. When merchants opt in and contribute to a pooled data set, that pooled data allows everyone in the network to become better. With Shopify Audiences more specifically, we have broadly two audiences that are a part of Shopify Audiences: there’s a retargeting audience and then there’s a prospecting audience. We see merchants benefit from both of these audiences. On the retargeting audiences, we see a significant increase in the match rate even on platforms like Meta that have pretty good identity graphs themselves. That’s the other layer around pooled data and the ability to power intelligence using that pooled data, whether it comes to better identity resolution layers, better machine learning models to help predict who are going to be the customers who might have the highest propensity to buy a certain brand or a certain product.
Then the third layer is given the fact that we actually know when a customer ends up purchasing. Not just do we know when a customer ends up purchasing, but we actually then know the behavior of that customer over a period of time, not just for that merchant but across the entire network. If you think about this from an ability to just understand not just the attribution at the point of purchase, but as you think about this in terms of helping platforms understand what is the right value of that user to that brand and the ability to actually map out lifetime value measurement capabilities for the merchant using the power of the network data that Shopify has, that just helps with better attribution capabilities, better value signals that can be passed back to the ad platforms. All of this will help not just drive more incremental GMV but also more incremental ad spend on each of these ad platforms. That’s the way I would characterize the core differentiators.
ES: I would imagine signal engineering is the topic that is driving a lot of research and proprietary tool development now for the mid-sized advertisers that can do this kind of thing. It’s a data science exercise. There’s some infrastructure involved. Shopify would probably be really good at knowing what to send and how to interpret it in order to predict propensity to buy, propensity to engage. That seems like a huge benefit being close to that, essentially existing at the data layer and not being reliant on what you get from CAPI because you are the one sending via CAPI. You’ve got access to all the data and then across all merchants, that’s a really valuable asset.
VP: I think there’s a bunch that we need to do on this front, but we have the foundations in place to actually be able to build on these things. There’s a huge network effect that’s responsible for the foundation layer that we have.
ES: Another aspect to the dynamic here is that you’re not a threat to any of these ad networks. In fact, they should love to integrate with you because you are closer to the data than they are and you’ve got these capabilities that those advertisers on their own wouldn’t have. You’d rather have Shopify act on behalf of these retailers than them just trying to do it themselves. If you think about the capability for any retailer to do signal engineering and prediction from that, it’s probably pretty low for the most part, but having Shopify do that on their behalf just makes everybody better off.
VP: I could not emphasize this point more. In fact, if you just think about the three things that I just mentioned, these are all an ‘and’ to the platform capabilities that are provided. Neither of these are an ‘or.’ These all are in addition to. All the goodness that comes from machine learning optimization, better ROAS, all of that is going to be further enhanced if the signals that are being passed are more closer to the true value that the merchants end up getting. This is completely an ‘and.’ None of this is an ‘or,’ and that’s the reason why partners are incredibly happy and willing to work with us as we build a bunch of these capabilities.
ES: Venkat, this was fantastic. Thank you for coming on the podcast, thank you for walking me through the Spring Editions disclosures. Talk to me more about how people can engage with all the stuff that you announced at Spring Editions, how they can get onboarded, how they can start using these tools.
VP: To access everything that we just spoke about, anybody can go to shopify.com/editions and they can view the full brochure of all of the announcements. We spoke quite a lot about the advertising side of it, but we have a huge suite of features that we have announced even outside of advertising. All of it is available on shopify.com/editions.
ES: Fourth Shopifiyer on the podcast. Maybe Tobi is fifth. We’ll see. Let’s keep our fingers crossed. Venkat, nonetheless, it was great to have you on, and I really appreciate your time today.
VP: Thank you so much, Eric. It was great chatting with you.
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