Retargeting Will Feature in Your Future

Even in an environment where online ad targeting becomes more effective every day, retargeting is something special.

It's a fact: retargeting, the hidden gem of behavioral targeting, has generated vastly better results lately for our advertisers than any other single method of targeting. The retargeting portion of a recent campaign generated a conversion rate 270 percent higher than the average for the campaign's remaining advertising, and its cost per acquisition was 50 percent lower; in another campaign, although it represented only seven percent of ads served, retargeting was responsible for 25 percent of the sales and 50 percent of the revenue generated by the campaign as a whole. This kind of performance naturally sends shivers of excitement down the spines of direct marketers, but it should seem wonderful and fascinating even to unbiased observers. Chances are high that if you operate somewhere in internet advertising, retargeting will feature in your future. It does its job ruthlessly well, and any advertiser who is in a position to take advantage of it -- or publisher to offer it -- should take a long hard look.

Don't bin your remaining ad spend on the strength of it, though, because retargeting is a highly specialized tool-- certainly not a replacement for anything you already have. Like a soccer team's striker, it needs other, less glamorous players to deliver the ball with which it scores. Retargeting brilliantly converts prospects into buyers, but advertisers will still need to identify and reach those prospects in other ways.
 
How does it work? The basic principles are plain enough. First, prospects are driven to an advertiser's site through normal advertising channels. Next, key interactions -- such as product purchases or transaction values -- between the consumer and the site are flagged, and the consumer is identified as either a prospect or a customer. Finally, those prospects and customers are retargeted with messages specific to them when they visit other areas of the advertiser's site or any other site on an advertising network. (A publisher network is a key element in retargeting: it can provide initial traffic to the advertiser site as well as, for most campaigns, be the indispensable supplier of the actual retargeting opportunities themselves.)

What can it do? The possibilities of retargeting, if not endless, are enormous. People who have window shopped can be re-pitched with the product they almost bought, while purchasers can be retargeted with ads for supplementary or complementary purchases, more of the same, service contracts, promotions or special offers.

It's a straightforward concept, and has always looked plausible on paper. But while lots of ideas in this space have looked good on paper, only to fizzle dismally in practice, retargeting results have been consistently stunning. It's the rare instance in advertising where praxis fully bears out the promise of the theory.

Who is it for? Retargeting is, as I've said, a specialized tool. It works best for advertisers who are selling things or who want to extract a commitment of some kind from the user; ecommerce sites in general are ideal candidates for it. A consumer electronics site, for example, can segment prospects and customers in virtually limitless ways-- according to purchase and browse history, perhaps, with ads for the latest gaming platform, with games specific to their platform or with special promotions in the run up to a holiday. PSP owners could be delivered ads for memory sticks, games or movies specific to their platform. Shoppers who have abandoned shopping carts filled with CDs or Xboxes could be delivered 15-percent off CD coupons. The result in every case: fewer wasted impressions from mismatched products and consumers and increased conversion rates.

What does it need to succeed? In our experience, the essential factors for retargeting success are:

• a sound source of prospects
• well defined segments with compelling offers for those segments
• a clear call in the retargeted ad to a definable action (probably the purchase of a good or service)
• a robust ad serving platform
• a carefully customized setup to ensure that the whole thing delivers the best possible results for each advertiser
• and a large, sophisticated network to deliver the reach needed to find and retarget the previously identified prospects and customers in large numbers. 
  

All the other things that make a campaign successful -- a valuable offer, decent creative, et cetera -- are naturally requirements too, but the last two of these factors -- customization and reach -- are absolutely vital.

It's real. New things come along all the time, of course; good or bad, there's always someone ready to sing their praises. Retargeting, though, is real: it doesn't depend on a temporary edge that will be blunted once it becomes popular or on technology that, once matched by others, will no longer be effective. It's a solid, rational, workable approach that extracts maximum value from a specific situation and builds upon proven direct marketing principles that have been used for years in areas like circulation marketing and direct mail. Nothing online comes close to doing what retargeting does, and it will quickly become one of the top tools for any advertiser who can use it effectively. 

Jack Smith is vice president of product strategy at 24/7 Real Media.