What is Retargeting and How it Works
Over the past few months, we’ve set up a few Retargeting campaigns for some of our clients, however, we’ve noticed that there’s some confusion as to what Retargeting is, how it works, and why is it different from other display ads media buys. Hopefully, this article will help clarify some of these questions, but if not, feel free to leave your comments at the bottom of this page.
What is Retargeting?
Rather than coming up with my own definition, here’s Wikipedia’s definition that I believe explains it very clearly:
Personalized retargeting is a display advertising technique used by online advertisers to recapture consumers who visit a retailer’s site and leave without making a purchase. It functions as a complement to search, SEO and other marketing campaign tactics.
I will add to the above that the way you retarget those consumers is with banner ads promoting your services or products on display networks across the Internet, basically on other websites. The way it works is similar to other forms of retargeting. Online retargeting uses basic information, pulled from cookies that are placed on a user’s web browser, to serve display advertisements. The advertising banners that appear in each visitor’s web page are unique to each user and reflect products that the visitor has previously viewed on a retailer’s website.
How Can Retargeting Complement my Campaign?
The key word to remember is actually “retargeting” as in “targeting again.” A retargeting campaign will only target those web visitors that have already visited your website and therefore have had an experience with your brand. For example, if you already have an AdWords campaign in place, or if you already have display ads (banners) in place through a separate media buy, your retargeting campaign will actually complement those two marketing components by targeting visitors that may have arrived at your website as a result of a separate campaign interaction.
With retargeting, you can also select visitors that viewed a particular section or page of your website, or simply went to the home page directly. Either way, your budget will only be spent on people that have previously visited your website since they are the only ones
being retargeted. Check out this typical retargeting sequence:
Visitor Searches on Google → Visitor Sees Your Google AdWords Ad → Visitor Clicks on Ad and Arrives at Your Website → Visitor Leaves Your Website and Goes to Another Website → Visitor Sees Your Retargeting Display Ad → Visitor Clicks on Ad and Goes Back to Your Website
The above scenario will also work whether the visitor initially arrives at your website from a separate banner ad, from a referral, organic search or by any other method. The fact is that once the visitor navigates through your website, he will be retargeted when he visits other websites that are part of the retargeting network.
How Does Retargeting Work?
The way retargeting works is quite simple. All you have to do is place the provided retargeting pixel on your website with the instructions provided by your agency. After that is done, your website visitors arrive, you start building an “audience” for your campaign. The audience receives a cookie and when they visit other websites from the participating display networks (websites that accept third party campaign banner ads) they will see your ads on those websites. Of course, the larger your audience the more effective your retargeting campaign will be. If you don’t have much traffic on your own website, you will not get much retargeted traffic either. In all cases, it is always recommended to build traffic first and add retargeting after that.
When you set up your campaign, you can select which websites you want to show your ads on, very much like you would do with a regular display ad media buy.
The very cool feature is that once a person from the audience converts (clicks on the retargeting ad) a “burn pixel” is triggered which removes them from the audience. In some cases, a retargeting campaign also allows you to show a different banner to those converted visitors. It can actually get quite sophisticated.
How Do I Measure Results?
Retargeting agencies typically employ a variety of pricing models to charge advertisers for the ads viewed by visitors. The most commonly used tracking methods are:
- CPM (cost per thousand)
- CPC (cost per click)
- CPA (cost per action)
Cost per Impression (CPM) is a common metric used in the online advertising industry to charge advertisers for inventory based on a set price per thousand page impressions. An impression is defined as any time a banner ad loads on an individual’s web browser.
Pay per Click (PPC) also referred to as Click Through Conversion, charges advertisers for every verifiable click that leads consumers back to your website. Unlike the CPM model, which charges advertisers a flat rate, advertisers working under the PPC model are only charged when a visitor actually clicks on an ad.
Cost per Action (CPA) is a pricing model in which advertisers are charged based on pre-arranged action (a purchase, a view through, etc.), although a completed sale is the most common action used under the CPA model.
As you can see, retargeting actually gives credit to both click-though, and view-through conversions. Your ad agency will be able to report to you all of the above actions and based on your budget, you can adjust your campaign as needed to obtain the desired results.
Is Retargeting Effective?
The simple answer is YES. Everyone in sales already knows that you can close a lot more sales when you get a second opportunity to sell to a particular prospect, or when you get that prospect to come to you for a second meeting. Retargeting accomplishes just that, albeit in the Internet arena. That’s what makes retargeting one of the most effective ways to close a sale by targeting a visitor that has already been exposed to your brand. If that visitor happens to be “on the fence” retargeting will be a sure method to entice that visitor once again and convince him or her to buy your product.
Ok, so now that we all have a basic understanding of how retargeting works, here are a few tips to ensure that your campaign is not just a waste of money or a misused channel.
In our experience, retargeting works best when you already have some type of pay-per-click campaign in place, like AdWords. The reason for this is because the way to really convert your visitors into buyers is to have properly designed and optimized landing pages that have been tested (A/B, etc.) and proven to work well through your existing AdWords campaign. We all know that a truly effective AdWords campaign takes a lot of work, research, testing, adjusting, etc. Retargeting is no different. However, if you use your existing findings from your PPC campaign and complement it with a retargeting campaign, your conversion rate should improve.
All banners are not created equal. Re-purposing banners for your retargeting campaign may not always work. Retargeting display ads work better when they are a bit more personal and direct. A general display ad does a good job advertising your brand and your offer, but a retargeting banner needs to go beyond that. It’s like the difference when you are introduced to a person for the first time or when you run into the same person a second time. The first time, you’re more formal. The second time, you can be more casual and spontaneous. Apply the same formula to your retargeting banners.
Don’t Overdo It. Like everything else, too much of a good thing can really fire back on you. People in general and your “audience” as we described it above in particular, doesn’t like to be followed. Seeing a few display ads from you will be effective, but being constantly exposed and bombarded with your banners everywhere they go will ultimately irate them and it will give them negative feelings about your brand. It is better to spread your budget over time rather than add a ton of money to a condensed time frame.
Longer is Better. Just like AdWords campaigns work better over a longer period of time, simply because it allows you to optimize your campaign and fine tune your ads to the point that they convert at higher rates while costing you less per click, you will want to run your retargeting campaign for a few months at a time. Reason number one is that over a longer period of time you will be able to build a larger audience. Remember, “audience” in your case are the visitors that previously visited your site and received the cookie. Secondly, like I said in the above point, you will want to spread your efforts over a longer period of time so that your exposure is not too condensed into say, a 30 day period, and your audience gets annoyed by your ads.
In sum, retargeting can be extremely effective, but there’s no shortcut to it. Those who put some serious time into their ad campaigns will be the ones that also benefit the most from PPC and retargeting working in tandem. If you’re just in for the magic pill expecting immediate results, I will tell you right now that you’re in for a great disappointment. Our team at MGR Consulting Group can help you determine if a Retargeting campaign will work for you.
Let me know what you think. Have you had any experience with retargeting campaigns? If not, is it something that you would consider in the future? Feel free to add your comments below or contact me directly with your questions.
Until next time, this is Manuel Gil del Real (MGR) – MGR Consulting Group