pitfall

Pitfall? Get it? I couldn’t resist.

For online marketers, retargeting is like sharp paring knife: perfect for a certain type of job, but dangerous if used clumsily. And all too often retargeting is poorly implemented, leading to data losses that can set back your entire marketing campaign. This article tells you what to look for and how to avoid these pitfalls.

So what is retargeting?

Retargeting addresses a common problem: that vast majority of prospective customers who visit your site, look around for 20 to 60 seconds, and then leave without doing anything.

Presumably these visitors were interested in something about your site.  Some of them even get pretty far into the purchase process only to abandon the sale. This is naturally a little frustrating for marketers, since we spent so much time and effort getting these visitors to the website in the first place.  How can we bring them back?  Retargeting attempts to solve this problem.

Retargeting is simply a way to follow up with visitors who came to your site but left without doing anything.  It works by tagging your site visitors with some identifier, which is usually a browser cookie. Then, using an ad network, you show ads all over the Internet to anybody with that cookie, reminding them of your company’s existence, and ideally giving prospects that little extra push that will motivate them to take action. Thus the name: you targeted them once (which got them to your site) and now you’re re-targeting them (in order to bring them back to your site).

You’ve probably seen retargeting yourself in the wild. For example, while looking for a bathrobe, you might go to Macy’s website, find some suitable candidates, and then leave without buying anything. Then suddenly, you’ll notice that ads for Macy’s are everywhere on the Internet — maybe even ads for that bathrobe you looked at. That’s retargeting in action.

Does retargeting work?

Retargeting can work pretty well, since we humans are distracted and forgetful creatures, and there’s no bigger distraction than the Internet. Retargeted ads can remind people about their initial search, and even provide people with an incentive (like a discount or coupon code) that can prompt them to go back and visit you. Thus retargeting often increases sales by helping you squeeze everything you can out of your initial “targeted” marketing. (For the purposes of this article, I’ll call this initial marketing your “prospecting” advertising.)

So retargeting works, but it’s often hard to know how much. The problem comes when you start trying to figure out how much value retargeting really adds on its own, and then reconcile that data with your other online marketing efforts. This is essential because you need to know how much to pay for these ads in the first place.

The controversy boils down to this: how much “credit” do you give retargeting for its contribution to a final purchase? After all, if a prospect visited your site in the first place, maybe she was really motivated to buy, but she just didn’t have the time or information necessary to complete a purchase. In this case, she would have come back even if she had never seen the retargeting ads, and the ads weren’t worth very much. Even though retargeting ads were the prospect’s last external touch, they shouldn’t be overvalued in this case.

In other cases, the visitor may have gone away and never come back, but it was the retargeting ad that brought them back.  In this case the retargeting ad is worth more.  But even if the retargeting ads did prompt a final sale, how much was that helping hand worth to you? After all, it’s just an “assist.” The heavy lifting was done by the first ad a customer saw — the one that caught their eye and brought them to the site in the first place. Should you pay as much for a retargeting ad as a prospecting ad?

These are tough questions, and there are some fairly complicated tests you have to do to figure them out. But this is not why retargeting is dangerous. What’s dangerous is when unskilled marketers get their hands on it and end up making some really poor decisions.  This is best illustrated by some case studies.

When good retargeting goes bad

Retargeting is good, but it often goes wrong when it starts impacting your “normal” marketing.  The way is this happens is best illustrated by example.  The following case studies are real but anonymized, and they are pretty typical of what happens at many companies.

Case Study 1: Company X does retargeting and finds that 40 percent of sales are attributed to retargeting ads. The marketers love it, and the ads are cheap too! The marketers allocate more budget to retargeting, and reduce the budget for prospecting ads, even letting their relationship with an online ad agency lapse. After all, why pay more when retargeting is doing so well?

Result: Within a month, sales volume starts dropping. Marketers make irritated calls to the retargeting provider, asking what’s wrong.  The retargeting providers say they need to increase their bids, which the marketers do to no effect. The ads don’t scale and sales keep dropping.  Nobody knows what to do.

What happened? It’s simple: the company stopped bringing in new customers. Retargeting is easy, because it is shooting fish in a barrel.  Unfortunately, if you stop stocking the barrel with fish (that is, if you stop doing targeted advertising), you soon run out of fish, and you starve to death. Since prospect advertising takes a while to ramp up and optimize, neglecting it can lead to very bad long term effects, like the ones Company X experienced.  Lesson 1: Don’t let retargeting replace your normal targeted marketing.

Case Study 2: Company Y does retargeting and finds that 60 percent of conversions (that is, sales) are attributed to retargeting ads. Sales go up by 10 percent — a win! — but nearly half of conversions are no longer accounted for in their prospecting campaigns.

Result: Conversion data connected to Company Y’s prospecting campaigns disappears. Company Y’s marketers don’t know which ad copy is working for them, during what times, on what sites. Without conversion data, marketers can’t understand or optimize their prospecting campaigns, making their efforts impossible to scale. Sales go up a little, but marketing spend and ROI stagnate. Soon nobody knows what’s working, and when the CMO ask to increase spend, the marketers do it blindly, without effect.

What happened? Company Y had a poor attribution system in place, which gave credit to only one ad based on the “last click” methodology — that is, the last ad that somebody saw. Sometimes this is compounded by the ad network, which may also show ads multiple times to a customer, but will only attribute a conversion to the last click or last view a customer made before returning to the site.

In this case, the retargeting campaign “stole” all the conversions from the initial prospecting campaign. Inexperienced marketers may see this and think their retargeting campaign is working great! Experienced marketers who see this will do a face palm, however, because in this case retargeting is causing you to lose all the rich data that typically comes from a prospecting campaign (such as value propositions, ad copy, keywords), leaving you with only the paltry data that comes from a retargeting campaign.

So Lesson 2: Don’t let retargeting destroy your normal targeted marketing metrics. Prospecting data is the only data that will let you actually significantly scale your marketing.  Lose that, and you lose the intelligence to grow your customer base.

How to avoid retargeting abuse

So here’s how to prevent retargeting from destroying your online marketing:

  1. Don’t assume retargeting is a miracle cure. Retargeting is like a vitamin: it supplements your diet, but you still need to eat food or you will die.  Likewise, retargeting will probably help you, but don’t ever think it is a substitute for normal prospecting marketing.
  2. Get the measurement right. Don’t let a last-click methodology erase your prospecting data. In Google Adwords, for example, you can open up a retargeting campaign in a completely different account. That way prospect campaign conversions use a different conversion pixel and are counted separately from your retargeting conversions. You’ll have some double counting, but later you can use a more sophisticated attribution system to tease them apart.
  3. Test carefully to determine retargeting’s value. Every retargeting conversion is not an incremental customer. At a minimum, use pre- and post-implementation testing to see what actual lift you get from retargeting. And even that’s not very sophisticated: check with your retargeting vendor to see if they can do simultaneous tests on your visitors, to see in real time what’s happening.

In summary, don’t let retargeting campaigns steal all your conversions. This can lead to massive and irreversible losses of data, as well as some very poor decision making. A wise setup in advance can help you realize the promise of retargeting without corrupting your valuable data.

 

One Response to The Pitfalls of Retargeting

  1. […] Retargeting. DSPs reach all over the Internet, making them great for chasing a customer around the Internet for a few days. The danger with retargeting, however, is that it overstates its own value, since most prospects in your cookie pool have already sold themselves and would have bought with or without the retargeting. Direct marketers need to account for this, and make sure that they aren’t overattributing value to retargeting, and taking it away from the channels that actually made the customer aware of your product. (This is a complicated issue, so I’ve written more about the dangers of retargeting.) […]

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