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What is Retargeting and Can it Work for You?

by aschmidt

One of the digital marketing world’s favorite buzzwords right now is “retargeting.” Maybe you’ve smiled and nodded through conversations about this advertising method without really knowing exactly how retargeting works or what retargeting can do for you. Let’s fix that.

You may have heard that retargeting is a method to capture more sales and help companies maximize their marketing dollars. You may have also heard that numerous studies have shown that the average online shopper will make a purchase only 2% of the time on their first visit to a particular site. Retargeting (also referred to as remarketing) helps marketers reach the other 98% of visitors that do not convert on the first visit.

Sounds good. But how exactly does retargeting work? Basically, the only thing you need to do is to place a small piece of Javascript code in the footer of your website. This code acts as a virtual “attendance roster”, keeping track of all the new visitors to your website by depositing an anonymous, unobtrusive cookie in their browser. At this point, the visitor has been officially “cookied”, which means that their online behavior will then be tracked as they browse around the Web. When they’re visiting other sites, the cookie communicates with an ad server (furnished by your retargeting provider) so that certain ads related to your website will be displayed on the other sites that they visit. When these retargeted ads are displayed, it acts as a “reminder” to your potential customers about your products or services. This typically results in higher conversions, as your ads are only being served to people who have already visited your site.

Retargeting: A Common Example

Let’s say that you visit XYZ Shoe Company’s website and look at a few different pairs of shoes, but leave the site without purchasing anything. All of a sudden, no matter what other websites you visit, you see ads for XYZ Shoe Company displayed on those sites as well. This is a simplified summary of the technology behind retargeting; it enables your company to “follow” your former visitors around the Web in order to keep your website fresh in their minds.

Retargeting is in many ways similar to the principle of the follow-up in the traditional sales world. Successful salespeople understand that the sale is hardly ever closed on the first visit; it takes consistent follow-up and follow-through in order to convert that prospect into a paying customer. Many times a person will initially visit your site just to gather information, and once they have spent enough time doing their homework (e.g., reading online reviews, comparison shopping on other sites, etc.), they will then decide to make a purchase. Retargeting works so well because it focuses on people who have already shown interest in your brand and have just recently interacted with your website.

What Types of Companies Use Retargeting?

Retargeting is widely used by e-commerce companies as a means to recapture bounced visitors and prevent incomplete online purchases. While retargeting for e-commerce business is definitely a hand-in-glove fit, other online entities have also experienced success using retargeting technology. For example, B2B companies often utilize retargeting as an extension of their lead nurturing strategy for those prospects that require a little more “incubation” in the conversion funnel. Educational institutions, particularly colleges and universities, include retargeting in their recruiting strategy in order to increase enrollment rates. Various event promotion services use retargeting as a way to boost ticket sales.

When Does Retargeting Work Best?

Retargeting works best when it is just one element of a comprehensive outbound and inbound marketing strategy. While retargeting can work wonders in terms of increasing your conversion rates, it does very little to drive initial traffic to your website. Utilizing various traffic generation methods such as targeted display advertising, pay-per-click ads and content marketing can take care of the front-end task of getting visitors to your site. Once they have landed on your homepage, retargeting can then be implemented in order to lower shopping cart abandonment rates and increase overall conversions. 

Can Retargeting Work for You?

Any business that has not yet converted 100% of their visitors can benefit from retargeting to some degree. It is important to remember, however, that retargeting requires constant fine-tuning and close monitoring in order to maximize its many benefits. You have to be mindful of several key factors such as:

  • The visual appeal of your banner ads
  • Proper segmentation (i.e., creating landing pages with banner creatives that are specific to those pages)
  • Retargeting customers that have already made a purchase (a big no-no)
  • Frequency caps (i.e., not showing too many ads to the same person in a given period of time)

The above factors depict some of the main areas to pay attention to when setting up a retargeting campaign. In light of the potential pitfalls that can occur, your campaigns must be meticulously executed in order for you to get the most out of your retargeting efforts. When used as a component of a comprehensive digital marketing strategy, retargeting can be one of the most powerful tools in your arsenal when it comes to increasing conversions.

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