Is retargeting effective?

Is retargeting effective?

Do you ever feel like you’re being watched online?

Like, say… you click a link from your friend’s Facebook post taking you to her new favorite dog food, and from then on you start seeing ads all over the web for that particular brand of dog food? You’re not the only one.  While retargeting has been in use for over a decade it’s really seen widespread adoption within in the past 5-7 years. Now, nearly 70% of marketers surveyed claim to spend at least 10% of their ad budget on retargeting.

What is Retargeting?

In a nutshell, retargeting is target marketing aimed at people you’ve previously engaged with.  This can take a variety of forms but is always designed to engage users further who have already had an interaction with your brand, product, or service. Because display ads are so cheap (relative to other digital media) it is the most popular method of retargeting, which is why you see those banner ads everywhere for those shoes you looked at the other day. But while display ads dominate, any form of targeted engagement to previous users can be considered retargeting.

Without going into the nitty-gritty technical details, how retargeting works is fairly easy to comprehend. You may have heard the term “cookies” being used in relation to the web, and more likely, your browser. Cookies are, at their core, a way for a website or web services to store information on your computer that they can retrieve on future visits. That’s how a website’s “Remember Me” function works, by storing a cookie with your browser that information can be passed to that website the next time you visit. If the website stores your username and an encrypted security token, that can then be used to automatically log you in without needing to enter your password each time. Online ad networks work much the same way. They’ll store information in cookies as you browse websites, and recall that information on future websites you visit. When web pages are set up a certain way, the ad network can tag you as a previous viewer of a particular product, service, or content on any web page. Then anytime you visit another web page that uses that same ad network, they have the ability to show you ads targeted directly at you.

What about remarketing?

The two terms are often confused or even used interchangeably. While they are similar, generally remarketing is used for a more specific kind of retargeting, specifically email marketing. Remarketing relies on information about the user being collected and then targeting that user based on that information. Retargeting relies on cookies.

Retargeting is not Just for Websites

I gave a simple example earlier (and the most common) of looking at a website and then seeing ads for that product on other websites you visit. There are many ways to retarget online though, and the initial action doesn’t need to be from looking at a web page. Many marketers use various retargeting strategies solely within Facebook’s advertising platform. That’s why sometimes you’ll see sponsored Facebook content based on websites you’ve visited, or even based on interactions you’ve had on Facebook. It’s possible to run a video ad on Facebook, and then retarget users who watched more than 30 seconds of your video before moving on in their feed. This level of control and detail provides opportunities to really fine-tune your messaging. You could, for example, only show a video to users who have already seen your first video. Aside from Facebook; Google, Twitter, and countless other platforms have their own ad exchanges that offer various flavors of retargeting.

Why do Retargeting?

According to a study by Adroll (one of the largest ad networks offering retargeting services), only 2% of users will convert and make a purchase the first time they visit a site and see a product. 1 Obviously, this is an average with a high standard deviation. Users are much more likely to buy highly commoditized products they’re familiar with (like K-cups) on their first visit than they would be to buy a new TV. That speaks even more to the amount of research users do before making a purchase. Combine that with:

  • 72% of users will abandon their shopping cart without making a purchase. Without retargeting, 8% will return and complete the purchase.  With retargeting, 26% ultimately return to purchase. Users are more than three times more likely to convert with retargeting vs. without.
  • Many users rely on independent publications and blogs during the research phase when deciding on purchases. Retargeting allows you to advertise on many of the networks these websites use, allowing you stay in front of your potential customers even when they’re reading about your competitors.
  • For non-ecommerce sites, Hubspot found that users who were retargeted were 70% more likely to convert than users that weren’t.2
  • 70% of marketers now claim to spend at least 10% of their media budget on retargeting efforts.

How does retargeting compare?

When stood up next to other forms of traditional and digital media, retargeting performs well and fills a previously void advertising need. We’ve known for decades that targeted marketing is more effective than blasting out a message for all to see, retargeting gives us the ability to give that second look, that message that reinforces what we hope the user already knows.

Digiday reports that the average click-through rate for all display ads is .07%, while the average CTR for retargeted ads is .7%.3 That’s a 10x increase in performance.

But it’s important to remember that it’s not an either/or decision. By definition, retargeting it marketing to someone who you’ve engaged with previously. Other forms of digital and traditional marketing are still valuable in gaining that initial engagement. Just remember to set aside a part of your media budget for retargeting, the effectiveness is hard to deny.

Impact on Customers

Another important consideration is the effect retargeting has on customers. Many users feel uneasy about being “watched”. We’ve all heard people complain about glancing at a page quickly, only to be inundated with that product ad for weeks afterward, seemingly seeing it on every site they visit. Some stories even sound scarier, people swear up-and-down that they never saw anything on their computer but only talked out loud about a topic with someone else in the room; then later started seeing ads on that topic repeatedly throughout the web.

This isn’t to say you shouldn’t retarget, more just to be aware of people’s weariness and take active steps to minimize it. The example above isn’t nearly as prevalent as it once was.  Now that more marketers are utilizing retargeting, there’s much more competition and more ads to choose from to display to users. Generally speaking, the inundation of the same ad being shown over and over only happens on new computers now before that person has built up their “retargeting profile.” But even with that, it would be smart to organize your campaign in a way that you aren’t bombarding your users with the same ad over and over.

Inskin Media, Rapp, and Research Now did a study on the impact of retargeting on people’s emotions.  The study found that the two most common emotions when users are retargeted are annoyance and anger.  That survey also showed that 60% of users have deleted cookies to actively avoid retargeting.4 Timing and placement are key in these cases when ads are shown on sites the users consider high quality, with a certain frequency, and in the right timespans related to their initial engagement; the feelings of annoyance and anger are minimized or removed altogether.

Retargeting is Effective, If Done Correctly

Retargeting works, but there are pitfalls we all need to be mindful of to ensure the effort doesn’t become counter-productive. Like anything in marketing, it requires a strategy and well thought out plan to maximize the effectiveness.

Contact us to get your strategy started today.




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