The Retargeting Trap: How Targeting Conversions Hurts ROI
Data are wonderful things. Properly applied, data can provide insights into where to trim budget and where to increase it. Data will indicate what’s working versus what’s not, what’s a signal versus what’s an outlier. And, data help to determine the proper media mix for the overall campaign strategy.
Data-driven, performance-based advertisers reviewing their online display metrics often find it easy to justify spend on retargeting. After all, it’s very simple to see that retargeting is a big winner when it comes to display. But beware! There’s a trap in that data.
It’s easy to increase remarketing spend at the expense of prospecting initiatives because there is a clear conversion path to retargeting campaigns. However, sacrificing your prospecting spend in the process doesn’t help anyone.
Prospecting campaigns can grow your business across search (both paid and organic) through the growth of branded as well as non-branded searches, search click-through rates, as well as boosting open rates for your email marketing program. While immediate conversions can’t be directly attributed to prospecting, it is still essential. This is fundamental as this is the part of your media strategy where you’re actually filling the top of the purchase funnel.
Giving Credit Where Credit Is Due
Retargeting, on the other hand, sits at the bottom of the funnel, often as the last touch before conversion. As a result it is often times is given sole credit for many of the conversions that could or should be associated with marketing activities that have taken place beforehand. More specifically, retargeting continues to receive credit among marketers using last-click attribution as their method to attribute particular marketing channels to a customer conversion.
There are several other pitfalls to take into consideration that will affect your display mix in favor of retargeting, to the detriment of your overall marketing success.
1. Assuming Linkage Between Top-Of-The-Funnel Impressions & Bottom-Of-The-Funnel Conversions Is Intact
Most marketers are aware that third-party cookies are deleted on average every seven days by security programs, and many devices and browsers are not accepting third-party tracking cookies.
What they miss, however, is that because of this deletion, top-of-funnel impressions are often disassociated from the following conversion event that occurs days or sometimes weeks afterwards.
These broken linkages are lowering the credit and value that is placed on these top-of-funnel activities and over-crediting the extent to which the lower funnel retargeting influences the conversion.
2. Assuming All Of Your Retargeting Conversions Are, In Fact, Incremental
To retarget a prospect or customer, that prospect must have visited the brand’s website. Often, the prospect has visited a product page or filled their shopping cart with an item with an intent to purchase. Some of these prospects return and convert after being shown a retargeted ad.
The question must be asked, “Would that person have converted if they hadn’t seen the retargeting impression?” To determine this, conduct an A/B test where a pool of retargeting candidates are shown retargeting impressions and a pool of retargeting candidates are not shown retargeting impressions. The difference in conversion percentage would provide the conversions that were, in fact, incremental.
In our experience running these tests, 20-30% incremental is very strong and 10-20% incremental is the average amount across advertisers.
3. Assuming That The Retargeting Impression Was Viewed Without Using A Viewability Metric
Many retargeters are not using a viewability vendor to discover whether the user has actually seen the impression (or not) and still giving credit to that impression with considerable weight whether viewable or not. We already know from a recent study with Integral Ad Science that 49 percent of ads served on ad exchanges are never viewed. Even more for the case that viewability be considered when using retargeting and gaining a balanced view of attributing conversions to retargeting.
Display advertising contributes to both filling the top of the funnel (prospecting) as well as helping to convert at the bottom of the funnel (retargeting).
These two activities are usually allocated from the same budget, and it is important to use the proper methodology to calculate what split between retargeting and prospecting will provide the best results for your overall marketing mix. Most importantly, use your display data and insights to refine the spending mix, but avoid these pitfalls in the process.
What other “traps” have you experienced in your display campaigns?
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