Just because we can doesn’t mean we should, right?

Retargeting empowers marketers to track lost sheep, those who have been to our sites but left without purchasing, and target them with ads designed to bring them back into our flock of customers.

But that retargeting line you’re walking is finer than you likely know.

In fact, the difference between stalking and solving a problem for your site’s visitors with your next retargeting effort is so slight it can actually cost you more than it ever earns if not executed appropriately.

Retargeting has been touted as a no-brainer that results in massive ROI.

But could retargeting actually be killing your business?

It may be doing just that so it makes sense then to rethink retargeting and ask; am I using the tactic as a powerful performance marketing tool that solves a problem or as an invasive means of stalking potential customers across devices?

The answer hinges on how you retarget.

The Retargeting Boom

The allure of retargeting is certainly not lost on enterprise marketers who understand just 2-4% of the people visiting their websites will actually wind up purchasing something.

The opportunity to target and convert visitors after they’ve left is an attractive yet relatively new proposition, especially at scale.

So just how prevalent is retargeting?

Marin Software surveyed 233 enterprise marketers recently and discovered nearly nine in ten marketers say they’re using retargeting to re-engage users who did not make a purchase during their initial web site visit.

Image via Marin Software

Additionally, more than half of those who are not currently retargeting say they plan to do so in the future.

The popularity of retargeting is spreading to nearly every corner of the cloud.

Besides the ability to retarget site visitors on Facebook and Twitter, marketers are also engaging in CRM and email retargeting.

You can even serve retargeted search or display advertisements to users who are conducting relevant web searches.

In fact, search retargeting, according to additional research by Marin, is the most widely used channel to retarget site visitors and allows marketers to use search intent to better segment audiences.

Image via: Marin Software

But just how good has all this retargeting been to marketers?

The ROI of Retargeting

No doubt you’re familiar with the legendary triple digit lifts for which retargeting is often credited.

For instance, apparel maker, and Shopify customer, Chubbies recently executed a retargeting campaign focused, in part, on site visitors who had abandoned shopping carts without making a purchase.

These users were later served ads showcasing the product a user had initially shown interest in as well as recommendations for related products.

The results?

A substantial increase in sales and a simultaneous decrease in customer acquisition costs.

Image via: AdRoll

In fact, AdRoll, which partnered with Chubbies and says it can retarget users across 500 ad exchanges, says its customers earn $10 for every dollar spent on retargeting.

Results like these are similar regardless of niche;

Online tire seller Tirendo credits remarketing with a 161% increase in conversions

Loews Hotels credits remarketing with a 10% increase in revenue

Custom printer Storkie Express credits remarketing with a 203% increase in conversions

So what’s not to love about retargeting?

The Dark Side of Retargeting

Maybe retargeting isn’t such a no-brainer after all.

In fact, well-known media buyers are actively dissuading marketers from chasing conversions they believe would likely happen without retargeting.

Essence Digital, the self-proclaimed largest ad buyer of digital media, estimated in 2013 that between 20-75% of retargeting budgets are wasted and might be better spent generating what the company terms truly new business.

Note: We’ve requested additional and updated detail from Essence as the estimate provided is anecdotal and a few years old..

So what constitutes an appropriate ecommerce retargeting budget?

And how can you be sure you’re allocating it effectively?

Retargeting spend, according to AdRoll, should be derived from the audience size you’re targeting:

Image via: AdRoll

Even skeptical media buyers acknowledge retargeting, when executed appropriately, can yield financial rewards for performance-focused marketers.

However, too much of a good thing can cost you dearly.

Research from Inskinmedia indicates that while consumers consider ads interesting initially, the more they see an ad online the more likely they are to become irritated or even angry at the marketer responsible for the ad.

Frequency is key.

Consumers viewing an ad five times often become annoyed while consumers viewing an ad ten times become downright mad.

Image via: Inskin Media

Visitors who perceive your advertising as intrusive or irrelevant aren’t passive with their disdain.

Instead, they tend to punish advertisers with the power of the purse.

Image via: Inskin Media

Even worse, users who feel as if they are being stalked online are increasingly going off the grid and actively hiding from marketers.

Two-hundred million people, according to Mozilla, have downloaded AdBlocker Plus to thwart the efforts of remarketers.

Remember, successful retargeting relies on the cookie, which users are increasingly deleting or blocking for privacy reasons.

The result is an audience that becomes unreachable with traditional cookie-based retargeting methods.

In fact, industry estimates suggest your reach has been cut in half in some cases.

Impressive as the ROI numbers are for retargeting, it’s important to understand remarketers are only re-engaging a small, though admittedly important, slice of the overall pie.

To Retarget or Not?

You’re likely asking yourself if retargeting at scale is right for you.

A better question might be whether it’s right for your potential customers?

It certainly can be but only if done judiciously, intelligently, and with restraint.

It may actually be possible to have the best of both worlds; to achieve the lofty return retargeting promises and avoid the pitfalls that could actually cost you trust, loyalty, and sales.

Before we lay out a framework you can use to do just that, some context and perspective are in order.

Earlier we told you that nearly 90-percent of enterprise marketers are using retargeting to increase conversions.

However, it’s important to look beneath that number and understand that retargeting is actually a relatively small portion of the overall digital marketing spend.

Image via: Marin Software

What’s clear is that while most marketers appear to be incorporating retargeting as a tactic, it is also one that is only being used experimentally.

It means there’s a lot of trial and error occurring.

PRO: Yes, it is possible to log triple digit increases in conversions with retargeting.

However, performance marketers with a longer term view will focus on sustaining their retargeting achievements long after the case study is written and presented at the next meeting with the boss.

CON: Yes, you can annoy, offend, and anger users with retargeting to the point they no longer want to buy from you and actively hide from you.

Again, marketers with a longer term view will sacrifice one-off triple digit ROI wins in return for a more enduring retargeting program that consistently converts end-of-funnel prospects.

Translation: Retargeting is like a football quarterback; it gets all the credit and all the blame regardless of who or what is actually responsible for converting.

So before we provide you five Retargeting Takeaways you can use to leverage all that retargeting has to offer while simultaneously mitigating downside risk, take a moment and consider these rarely asked questions that will prevent you from wrongly blaming or crediting retargeting;

How can I tell whether a user would have returned to my site and made a purchase without being retargeted?

How can I be sure I don’t pay for retargeting services not responsible for converting even those who are on my remarketing lists?

How do I connect the dots and determine remarketing is responsible for a conversion rather than my offline marketing efforts?

How can I figure out exactly why someone visited my site so I can optimize my retargeting creative?

How do I know exactly when, where, and how often to retarget users?

Remarketing Takeaway #1: Split Test & Succeed

The answers to these questions and the keys to succeeding with retargeting are included in the following five takeaways.

You may actually be hurting your ROI by retargeting.

So how can you tell if retargeting is earning you incremental sales?

Rather than assuming remarketing is responsible for all of the conversions produced during a campaign, be skeptical and consider conducting split tests before launching an open-ended or longer retargeting campaign.

Split testing your retargeting against a non-retargeted segment is the only way to really know to what degree, if at all, retargeting is responsible for converting.

For instance, retargeting firm Merchenta recently conducted a split test that revealed its retargeting effort drove incremental sales for Welsh jeweler Clogau Gold.

Not only did retargeting result in a giant lift in return visitors to the jeweler’s website, but this case study suggests retargeted users were two times more likely to convert.

Image via: Merchenta

Other remarketing providers report a 10-20% average incremental lift in conversions when remarketing is split tested against a control group though we were not immediately provided with case studies or additional detail as requested.

Why else is split testing so important?

Besides not wanting to spend money on conversions that would’ve happened anyway, Google is trying to increase its margins by touting the virtues of search remarketing.

The search giant is trying to persuade marketers to increase their search ad bids for specific segments of their remarketing lists.

All the more reason to know unequivocally that remarketing is responsible for conversion.

Remarketing Takeaway #2: Always Be Segmenting, Burning, & Suppressing

Retargeting done wrong can not only cost you money but it can also cause you a customer service nightmare.

For instance, guess who western wear retailer BootBarn does NOT want to see this ad:

Image via: BootBarn

You guessed correctly- the guy who just bought the boots at full price!

If the person who just purchased these cowboy boots were to be retargeted with an ad offering a discount on the exact pair of boots he just purchased, expect trouble or a discount demand that dents your margins.

This is why smart marketers routinely segment their remarketing lists.

Doing so prevents showing a product ad to someone who just bought the product on display or, worse yet, offering the product at a discount.

Easier said than done for retailers straddling the offline and online worlds, right?

It’s why onboarding the data you have siloed offline or elsewhere is crucial in terms of getting segmentation right.

Once you have your customer data in one place you’ll be better positioned to burn and suppress specific segments.

First, to avoid annoying your customers with ads for items they’ve already purchased you can add a burn pixel to the post-transaction page.

A burn pixel is nothing more than a piece of code that removes users from a particular remarketing list and prevents you or your remarketing partner from serving ads related to the purchased product..

You can still retarget these customers.

But instead of annoying them you can now serve them different ads that offer upsell or cross sell opportunities , which can increase conversion rates 3-5%, instead of products they’ve already purchased.

Finally, consider suppressing or excluding a certain list from a retargeting campaign just as remarketing firm Perfect Audience allows users to do with a click of a button.

Image via: Perfect Audience

Don’t forget, 69% of web browsers are uncomfortable with you tracking where they’ve been online. Personally, I fall into this category, but only when I’m blatantly being advertised to.

Segment, burn, and suppress appropriately so it doesn’t look like you’re “marketing.”

Remarketing Takeaway #3: The Channel Check

How well did your last retargeting campaign perform across channels?

How about across devices?

Well, if you’re like 43% of all enterprise marketers you’re having a hard time giving credit where credit is due and identifying which remarketing channels are responsible for converting.

Image via: Marin Software

It means routine channel checks are in order to determine where you’re getting the biggest bang for your buck.

Besides requiring your remarketing partner to be more transparent regarding inventory, pricing, and ad viewability, you can proactively act to ensure each channel you remarket across performs optimally by doing two things.

First, your ad, no matter the channel, is twice as likely to be perceived positively if it is served on a relevant site that is trusted by users.

Image via: Inskin Media

Use this insight and take advantage of the “blacklisting” features some providers offer that allow you to keep your retargeted ads from running on sites where they are not performing well or that aren’t brand appropriate.

Lastly here, channel performance isn’t just about CTRs.

It’s also about making sure you fully understand the controls and settings available during your next remarketing campaign.

Remarketing firms often rely on the last-click model of attribution which assigns credit for a particular conversion based on the last click made prior to the conversion.

It means a user who clicks on your retargeted ad but ultimately converts organically will wind up being attributed to your remarketing effort.

You’re paying for a remarketing here that’s not truly responsible for the conversion in question.

Remarketing firms like Perfect Audience understand this and offer a variety of controls that empower marketers to build attribution models that meet their specific needs and prevent you from paying for conversions not attributable to remarketing.

Save yourself some money by getting to know your controls.

Remarketing Takeaway #4: Intent Matters

Why exactly did a user visit your site?

Determining intent is key when deciding whether to remarket to a specific user or segment.

Unless you can determine intent it’s hard to know where the prospect is in the funnel, how qualified the prospect is, or what the prospect’s ultimate value may be.

You’ll also be hard pressed to serve the right message at the right time without first knowing what a user’s intentions are.

Identify precisely why a user visited your site before remarketing to them or be prepared for the consequences.

Image via: Inskin Media

How might you determine intent?

You can gauge intent by looking closely at specific opt-ins, cart abandonments, and time spent on product-related pages.

But you might also consider gauging intent across channels by investigating search.

Overlaying search intent on top of your retargeting lists positions you to better segment users and create ads that convert at higher rates.

Remember the Chubbies example from earlier?

The apparel maker’s retargeting partner AdRoll says users who demonstrated intent such as shopping cart abandonments were remarketed to in ways that resulted in a 35x lift in ROI.

Image via: AdRoll

Additionally, check with your remarketing partner to see if they have a proprietary measure of intent like Chango.

Chango derives intent by taking into account what users do before, during, and after a site visit.

Chango calls the metric an IntentScore and uses it to target only users who seem intent on purchasing a particular product.

Chango tells me it uses IntentScore on all retargeting and acquisition campaigns and that:

Additionally, consider using survey tool Qualaroo to quickly collect customer feedback about specific buyer experiences.

Clearly, digging for intent can result in retargeting gold.

Remarketing Takeaway #5: Frequency

Always remember mom knows best about dessert and retargeting; too much of a good thing can make you sick.

Unless you want to be sick to your pocketbook, retargeting frequency is where you’ll want to show some restraint.

More simply isn‘t always better.

Remember, research indicates more than half of those surveyed feel the more often an advertisement is shown the more annoying it becomes.

So how about saving some of your money and not laying it on so thick.

Ideally, retargeted ads hit the sweet spot when shown 3-5 times.

Image via: Inskin Media

Notice also that when ads are served judiciously and on relevant sites- you the marketer are more likely to be perceived by the user as clever.

You’ve got a lot going for you here including Cialdini’s principle of liking and the theory of transference.

So what happens when marketers combine intent with frequency restraint?

Toy maker LEGO found out recently when it ran a Facebook retargeting campaign it says resulted in larger than expected order sizes.

Image via: Chango

Important here is that more than 80% of all converting consumers in this campaign saw a LEGO ad three times or less before converting.

You can automate the process and set frequency caps in AdWords and with retargeting partners like Triggit, which says doing so prevents user ad fatigue.

Conclusion

Retargeting, at least in the near term, is here to stay.

Research indicates more than half of enterprise marketers expect to increase their retargeting budgets across search, social , and display over the next twelve months.

Image via: Marin Software

It makes little sense then to gamble on retargeting.

Use the five retargeting takeaways to make data driven retargeting decisions:

Split test to ensure retargeting is responsible for conversions

Segment regularly to prevent serving inappropriate ads

Retarget only on relevant sites to optimize each channel

Retarget only after identifying user intent

Limit frequency so as not to annoy users

Retarget wisely or don’t waste your money.

About The Author

Nick Winkler is a contributor to the Shopify Plus blog. He helps individuals & organizations generate new leads, make more money, and ignite growth with story. Get more from Nick here.