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Online retailers are increasingly retargeting consumers on other websites when they have browsed on their own web properties but left without buying anything.
I've been asking three retargeting providers about how it works, why they think online retailers should adopt the tactic, and how they deal with consumers' concerns about privacy.
For an example of retargeting in action, head over to the Early Learning Centre or Office website, browse through a few items, then go to the Guardian. An ad to the right of the page (by Criteo) shows some of the items I looked at on the site:
What is the single most important reason why brands and advertisers should get into retargeting?
Struq CEO Sam Barnett: Retargeting is a way to convert the 98% of traffic that leaves your site without buying. We can drive the lowest cost of sale for advertisers using personalised retargeting.
We target only those users that are most likely to click and buy. In addition, the ads served through our platform are personalised, so they are truly relevant to the customer. This creates a positive perception of the brand; encouraging customer engagement and driving post click sales.
myThings UK MD David Kiashek: The single most important reason to get into retargeting is that it works.
Retargeting is an incredibly efficient method to generate incremental sales and minimize unrealized ROI. Despite large marketing investments, 98% of retailing website visitors leave the site without converting. Personalised retargeting enables retailers to recoup their marketing investment by reaching those users with uniquely tailored ads which convert.
A recent comScore study demonstrated that retargeting outperformed other online advertising vehicles, including contextual and audience targeting with over 1000% increase in website visitations and brand searches.
Criteo MD Micheal Steckler: Since January 2008, the average online conversion rate of retailers has been falling, from 6% in 2008, to 4.5% during 2009 and 3.6% to date in 2010 (IMRG Capgemini Index). The decline suggests that consumers’ online behaviour is changing from that of a linear transactional nature to browsing and researching products extensively before purchasing either online or on the high street.
The ramifications of this type of casual shopping and the distractions that draw potential shoppers away from their purchase are that advertiser investments are often not delivering the optimal return on ad spend or sales from existing site visitors.
Retargeting can be leveraged at virtually every phase of the consumer lifecycle, from building awareness to driving purchases and customer loyalty. The greatest benefit of retargeting however is its ability to convert browsers into buyers at the right time - during the purchase consideration phase.
What do you have to say about consumers who feel that privacy is being compromised by retargeting?
SB:Consumers can rest assured that their privacy is never compromised by Struq. All data used in the personalisation process is completely anonymous. Users who do not want to be retargeted with personalised ads can opt out at anytime from receiving ads served by our technology, through just a few simple clicks of the mouse.
Retargeting has received some bad press in recent times, with users feeling they were being stalked or spammed with ads from sites they had visited before. It is in our interest to only serve ads to those people who are most likely to buy. We monitor this process – anonymously – so that we stop serving ads to users who are clearly not in the market for the advertisers' products.
DK: Retargeting via myThings personalised retargeting solution is one of the more privacy-friendly online advertising options available. We do not store any user data whatsoever on our servers. Any data used by myThings is stored within the end-user’s cookie and does not involve any personally identifiable information. We can never associate a targeted user with an actual person. The only information we know is that an anonymous user has browsed product and category pages on a retailer website
Having said that, any user that so chooses is entitled to opt-out from our campaigns.
MS: Criteo takes privacy of web users very seriously and respects everyone’s right to privacy. We fundamentally believe every consumer should understand the following with regards to online advertising in general and retargeting in particular: why am I receiving this ad, what kind of information was used to tailor the ad to me, and if I want to, how can I stop receiving ads and others like it?
The data gathered is completely anonymous and is used for statistical purposes only, and there is no way for us to identify a specific internet user. No data is shared with advertisers or publishers and no third-party data is used for targeting purposes.
Do customers need to be 'educated' about how retargeting works?
SB:Yes, they do. Retargeting enables a relevant and useful consumer experience by bringing products and offers right to consumers’ desktops as they browse and compare before they buy.
However, there is some scare mongering in the media about privacy, so that issue is something we as an industry have to tackle together through educating consumers. By highlighting the benefit to their experience and informing them how they can be, and are, in control of how they want to be targeted.
DK: We firmly believe that customers need to be informed about online advertising in general and retargeting in particular, to be able to make an informed decision about their online advertising choices.
To this end, each of our banners features a disclosure icon that informs customers how the retargeting service works and how they may opt-out of the service.
MS: Most consumers are already familiar with and react positively to personalisation, whether it be sharing their location on a mobile device or interacting on a social network.
For most of us, the issue is simple. We want the right information at the right point in our decision making process. As more consumers have a personalised web experience (from content to social media) their expectation is that the advertising experience should complement this.
Which kinds of retargeted ad formats are most effective?
SB:The answer is: whatever works best for their users. All our ads are dynamically created on the fly based on users’ browsing behaviour, so we work to find the most relevant ad for that user. As we are able to customise infinite elements of the ad, we test and see what works in a real-time environment to get the highest response rates.
DK: Personalised retargeting is all about bringing precision to advertising and indeed, it is in our experience that the more granular the banner, the better it performs:
- Banners that feature product offerings outperform those that feature only category level offerings and generic messages (like those used in traditional retargeting).
- Ads that include specific pricing, promotions and sales usually provide a stronger call for action that results in greater conversion rates.
- Ads that show rich product content – prominent product images and brand names –appeal more to users resulting in greater conversion rates.
MS: Whilst we can serve basic and segmented retargeting, the real benefit for clients is in personalised retargeting. With the level of one-to-one communication that personalised retargeting allows, we typically see click through rates increase by up to 600% from standard display advertising and conversion rates are well above industry average.
The reason so many advertisers are comfortable with search marketing is because of the specificity enabled through bidding on exact words they wish to associate with their brand – rather than a very broad and competitive category such as a generic audience.