Can Retargeting Boost Your Bottom Line?

There’s a good chance you might be missing out on a huge percentage of sales or leads.

The average e-commerce conversion rate is 2%, and conversion rates of lead generation websites aren’t much better. That means that 98% of website visitors don’t convert right away.

There are a plethora of reasons for this – some consumers are simply doing research, others are comparing different retailers’ prices, and even more simply get distracted either by something on their computer or by the real world distractions we all experience day to day. But what if there was a way you could find those visitors that left without converting, and offer them a second chance? What if you could target them specifically with ads that showcased the exact products they were browsing on your website? That’s where behavioral retargeting comes in.

What is Retargeting?

Behavioral retargeting, or simply retargeting, is the process of showing advertising (particularly display or text link advertising) to visitors based on their previous browsing behavior. In most cases, retargeting is used to show advertising more frequently to people who have visited a website before, but not converted into a customer or lead.

Let’s take an average niche e-commerce merchant for example … maybe a custom tailored apparel retailer such as Indochino. A visitor might search Google for custom tailored suits and visit Indochino.com. They browse through a few different pages, and maybe even add a suit or jacket to their shopping cart. But they get distracted by an email notification, instant message, or even a baby crying, and leave the website without completing their purchase.

But later that day, or even later that week, they are again browsing the web. They may be on a web page completely unrelated to men’s apparel, but they are shown display advertising from Indochino.com because they visited the website before. That is behavioral retargeting.

As it might seem, retargeting is an extremely powerful marketing tactic, because it only shows advertising to previously qualified candidates. They have already shown an interest in your product or service by browsing your website, adding an item to their shopping cart, or downloading a whitepaper (the trigger is up to you). They are far more likely to convert than unqualified visitors.

Utilizing retargeting can significantly drive up profit margins and lower per-customer acquisition costs by reclaiming lost visitors. AdRoll.com, Retargeter.com and Chango.com are three firms that specialize in retargeting, and Google Adwords also offers remarketing.

Is Google Crippling Remarketers?

Google recently made a change that could have a profound impact on the data website owners and marketers receive about their referrers. Previously, when a visitor conducted a Google search and clicked through to a website, information on the specific search phrase was also passed, which could then be analyzed by Google Analytics or other stats package.

Google announced recently they would no longer pass this referrer data by default for any logged-in users. While this only represents about 10% of global searches, I am curious to see what percentage of U.S. searches would be affected. One thing is sure, taking away this valuable information will hurt companies such as Chango and AdRoll, which rely on this data to target advertising to visitors based on their browsing history.

Give Retargeting a Try

Retargeting is an incredibly effective way to cash in on potentially lost sales, so give it a try. If you’re already using retargeting (sometimes called remarketing), let us know how it works for you in the comments below.

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  • http://www.mickg.co.nz MickG

    Hey Brandon … Nice article. Yeah I’m finding retargeting pretty effective in SEM campaigns. So much so – I’ve recently put together a Retargeting Cheat sheet to help others get started – over at … theHiddenAudience

  • http://hiddenaudience.com Alex

    All excellent points.

    I’ve found that the key with retargeting is creating excellent creative that really speak to your audience. Doing this will significantly increase your clickthrough rates and significantly reduce your cost per click.

    If you have a large site (more than 50K monthly uniques), I’d highly suggest creating multiple audience lists by putting unique retargeting tags in different sections of your site.

    You’d then have lists of people who have shown an interest in many different specific things, and you can speak to each of these interests in your creative.

    I also see retargeting as an extension of newsletter marketing. You can build a retargeting list just like you would build a newsletter list.

    If you’re not building lists now, you’re cutting yourself short three months from now when you have a really great offer and only a small list to show it to.

  • http://johntabita.com/ John Tabita

    Interesting article, Brandon. I recently read that, through retargeting, Value City Furniture decreased their cost per acquisition from $168 to $29, and increased their conversion rate by more than 700 percent … in just one month’s time. I love it when hard facts can back up a marketing method’s effectiveness.

    Regarding Google’s decision, do you think it has anything to do with the fact that the FTC here in the States is looking at implementing a Do Not Track legislation similar to the DNC?

    • http://www.brandoneley.com Brandon Eley

      Wow. I’d love to see that case study! Those numbers are powerful. I can’t wait to get some case studies of my own (and hope it does the same to MY conversion rates).

      You’re probably on to something regarding the FTC. I personally think it’s sad. I don’t honestly care if Google uses my data anonymously to serve me ads that are related to my browsing history. I think it makes for a better online experience, because the advertising I am forced to see might actually be for something I want or need.

      If Google can curb dangerous legislation by implementing these changes, then I guess it’s a necessary evil. Personally I think there should be the option to not be tracked, possibly in browsers, but it shouldn’t be the default. I think if people understood what was really tracked and how it was used, the vast majority wouldn’t really care. The way the government and some people (see other comments) spin it, advertisers and search companies are sitting over your shoulder watching you browse.

  • _ michael

    This technique may be effective, but it is also the marketing equivalent of stalking. You don’t seem to be aware that retargeting is violating privacy laws e.g. in Europe. It may make your company a target of lawsuits if you operate internationally.

    And that’s a good thing.

    • http://www.brandoneley.com Brandon Eley

      I don’t see it that way, Michael. As a marketer and an owner of an e-commerce company, I want to get my brand out in front of potential customers, especially those that are most interested in my products or services. I don’t want to “stalk” them… I dont’ want any private information. Retargeting allows me to show them ads, anonymously to me, in hopes they come back to my website.

      And everyone has the capabilities to disable cookies on their browser and prevent this type of marketing themselves, so I’m not sure why governments need to get involved and regulate it. At some point, shouldn’t the onus be on the website visitor to configure their browser correctly if they don’t want cookies stored?

      Thank you for your point about violating privacy laws though. Being from the U.S., I don’t always think about how things work in Europe or elsewhere. That is definitely something to consider if you do business, internationally.

  • http://www.simpli.fi Mandy

    Hi Brandon,

    Thank you for tapping into and explaining retargeting. You provided the #1 reason for trying it — boosting the bottom line (as many of our case studies here at Simpli.fi can attest). You might be interested in a post by Frost, our CEO, in which he shares 5 reasons brand marketers should try: http://selnd.com/qpZnFI

    One of our differentiators is the speed in which we update and tweak our platform to best suit media planners and marketers. With multiple layers of targeting, and features like instant recency, options are endless for boosting that bottom line. If anyone would like to learn more about our features, feel free to watch our videos: http://bit.ly/vzwo4r

    Thanks again, Brandon!

    Cheers,
    Mandy

  • http://www.retargeter.com/ Samir

    Awesome writeup, Brandon.

    We’ve been working hard at ReTargeter to help small businesses learn more about retargeting, and the general holes in their overall marketing strategy. I highly recommend checking out http://www.retargeter.com/blog for lots of insight into all aspects of online advertising and marketing.

    – Samir

  • http://www.retargeter.com Hafez

    Alex, great points; precision segmentation is very instrumental to running a successful retargeting campaign. The end goal is always to deliver the most relevant ads possible, so taking the time to understand your audience and tailoring your creatives to them is definitely worth the time investment.