Articles

Retargeting: On The Rise

Posted by Jim Iott on Mar 31, 2016 12:00:00 AM

Changing consumer habits, evolving ad technologies, and growing advertising effectiveness are driving increased investment in programmatic advertising. Retargeting strategies are a big part of the overall increases in programmatic tactics. Beyond traditional site, search and online behavioral retargeting strategies, marketers are demonstrating increased interest in a growing repertoire of retargeting strategies which include social, mobile, video, TV, email, CRM and other offline channels. As retargeting strategies move into more online and offline channels, their applications are broadening throughout the buyer funnel and customer lifecycle, their efficacy is increasing, and their impact is becoming more attributable.

According to AdRoll’s 2016 State of the Industy Report (*1), 66% of marketers are expected to increase their spending on programmatic advertising. More than 33% of these marketers will spend at least half of their budgets on automated advertising – this is part of a growing trend over time with 22% of marketers spending a majority of their budgets on programmatic advertising in 2015, 14% of marketers in 2014, and 7% of marketers in 2013. Once the dominant form of programmatic advertising, online display advertising makes up more than half the budgets in only 40% of marketers in 2016.  Newer programmatic technologies are fueling more recent growth trends. Social ads are now the dominant form of programmatic advertising being purchased by 62% of marketers, followed by mobile (32%), TV (26%), and video (20%).

The Growing Rationale For Retargeting

Thanks to programmatic advertising, buyer intent information, mined from all that 1st party digital data, is quickly becoming marketers’ most valuable asset. Retargeting has become the most effective means for marketers to take advantage of buyer intent. Simply put, retargeting transforms intent into action.

From a simple snippet of code, aka retargeting pixel, placed on a website, essential, anonymous visitor data is gathered, such as visited pages, session duration, and user location. The retargeting pixel also drops an anonymous retargeting “cookie” in the visitors’ browsers, which leaves trail of crumbs as potential customers surf online, so you can subsequently retarget them with display ads across the web.  Retargeting helps to convert shoppers to buyers, by encouraging users to return to you site to make or complete a purchase, in the case of an abandoned shopping cart. By keeping your brand top-of-mind with consumers at the point they are ready to purchase, retargeting helps to drives sales and conversions. 

As retargeting technologies permeat a growing cross-channel universe, display ads and other messages can be potentially retargeted across hundreds of millions emails, households, smartphones, tablets, and addressable television sets.  In 2015, the percentage of ownership of cross-channel devices among U.S. adults was (*2):

  • 68% own a smart phone
  • 73% own a desktop or laptop
  • 45% owned a tablet
  • 30% of Households have addressable television.
Marketers rapid cross-channel migration into mobile, TV, video and other offline channels is a strong indicator of these channels' inherent ability to drive performance. As ownership of these devices and other evolving cross-channel technologies increases, the potential for more effective, measurable, and more ubiquitous customer engagement will increase.

Retargeting Is Driven By Results

There are probably several reasons why retargeting has become so popular. The first reason is that average website conversion rates are as little as 2%. That means the vast majority of users who visit a website for the first time leave without converting or doing whatever action is desired. 
  • According to one study, website visitors who are retargeted with display ads are 70% more likely to convert on your website.
  • CPG company Kimberly-Clark has seen 50 to 60% higher conversion rates among consumers who have been retargeted. 
  • Nearly three out of five U.S. online buyers said they notice ads for products they looked up on other sites.
Retargeting strategies have been shown to consistently boost industry averages for click-through-rates, which have been chronically low, hovering around .05%.
  • While current display ads generally get a 0.07% CTR (Click-Through-Rate), retargeted ads receive .7% CTR. (*3)
  • Retargeting advertisements have been known to boost response up to 400% (*4).
Despite ad blocking technologies and other signs of digital advertising disenchantment, studies show that consumers general accept and even like retargeted ads.
  • Thirty percent of consumers have a positive or very positive reaction to retargeted ads, vs. 11% who feel negatively about them. The greatest percentage, though—59%—had a neutral reaction. (Source)
  • Online consumers are open to receiving behaviorally retargeting ads. While the majority of consumers (60%) remain neutral about the topic of retargeting ads, 25% enjoy them because they remind them of what they were looking at previously (*3) 
  • Being drawn to products in advertisements is the most commonly noted reason consumers gave for clicking on a retargeted ad (37%). Consumers also said retargeted ads are a convenient way to visit a Web site users already intended to visit (28%) and for desiring more information on the product in the ad (21%). (*3)

Finally, there is a crowd effect at work, as well.  According to Winterberry, in 2015 display advertising saw a double-digit increase of 23.3%. “Programmatic grabbed 55% of all display across all formats and shows no signs of stopping. In 2016, Winterberry predicts that display, including desktop and mobile, will see the biggest growth, at 20.1%.  As more marketers move to retargeting, remaining laggards will feel increasingly compelled to get on board. 

 

Rising Certainty Regarding Attribution

As marketers adopt new and more complex approaches to remarketing and other programmatic advertising, associated cross-channel data is getting increasing fragmented. This is making the individual and holistic measurement of these tactics more complex, but at the same time, more attributable. Despite the greater complexities, marketers are generally getting more facile with attribution. This year 40% of marketers are using multi-touchpoint attribution models as compare with only 24% in 2015. Conversely, the number of marketers who report uncertainty regarding their approach attribution fell from 16% to just 7%. *1

As retargeting strategies evolve into more online and offline channels, their applicability, efficacy, and ability to attribute, should increase as well. With increases in cross-channel strategies, the ability for marketers to consolidate and overlay data, and subject this data to advanced segmentation and predictive analytics, will also add to the efficacy to retargeting strategies. The future for retargeting and other programmatic advertising looks promising, and appears to be part of a rising tide lifting many areas of marketing and customer engagement.

References:


*1. State Of The Industry, 2016; A Close Look at Retargeting, Programmatic Advertising, and Performance Marketing; AdRoll,2016; https://www.adroll.com/sites/default/files/resources/pdf/report/AdRoll-State-of-the-Industry-2016.pdf
*2.Technology Device Ownership: 2015; Pew Research; Anderson, Monica; October, 2015; http://www.pewinternet.org/2015/10/29/technology-device-ownership-2015/
*3. 15 Mind-Blowing Stats About Retargeting; Giselle Abramovich; CMO.com, November, 2013; http://www.cmo.com/articles/2013/11/20/15_Stats_Retargeting.html
*4. Retargeting: Is That Ad Following Me?; Herber, Ethan; CWS Blog, March, 2014; http://www.cws.net/blog/2014/03/retargeting-is-that-ad-following-me.html