When Retargeting Becomes Counterproductive

Retargeting or remarketing is an area of digital marketing that has shown explosive growth in the last few years, being offered by more and more online display ad networks. This service lets a business market to people who have visited its website using online tracking by placing a small text file or cookie in that person’s browser. The ad networks then place ads relating to the company or its products on unrelated sites the person visits. The concept is that these visitors have expressed active interest in a company’s products or services by visiting its website and therefore are strong leads. Many retargeting campaigns target all visitors, and can be implemented very soon after a person leaves the site. However, when retargeting becomes too broad and too extensive, it may well become counterproductive.

In October 2014, InSkin Media and RAPP Media released a report entitled “Familiarity, Frequency and Fine Lines” based on a survey of 1,600 people across ages. The report had some potential major findings on consumer reactions to retargeting in the areas of privacy of web activity, the frequency of ads, the sites where the retargeting ads are placed and when consumers are targeted.

PrivacyThe survey results indicate consumers put high value on the privacy of their online purchases and website visits. It showed 73% of those surveyed are uncomfortable with advertisers knowing their last online purchase and 69% of consumers are uncomfortable with advertisers knowing which websites they’ve visited. In comparison, 72% felt that way for their home address, 83% for their personal income and 81% for their mobile phone number.

Frequency of Retargeting Ads
The report also found that 53% of those surveyed found the online ads useful at first, but when ads are seen online multiple times, 55% felt put off in buying the products or services. In fact, ads seen up to five times were characterized as “annoying” or “intrusive,” and ads seen ten times prompted the response of “angry.”

Where the Retargeting Ad is Seen
ClickThe report found that the type of websites where the retargeting ads were placed had a significant impact on whether those surveyed viewed the ads positively or negatively. If the ad is placed on a site with brand recognition the consumer trusts, the respondents were 37% more likely to click on it. In addition, the consumers were 40% more likely to register a positive response to ads placed on websites related to the ad content, as in the report’s example of a hotel ad appearing on a holiday website; whereas those surveyed were eleven times more likely to be discouraged from a purchase than encouraged by ads placed on sites unrelated to the product or service.

Where the Customer is in the Sales Cycle
Sales CycleThe report also found significant differences depending at what point the customer is in the sales cycle. People who are at the stage of doing research on a product who see a relevant retargeting ad are four times more likely to be encouraged to purchase something than discouraged. However, the effect reverses after the customer has finished research, with 15% more likely to be discouraged than encouraged. The report found that retargeting ads seen after the purchase have an even greater negative effect on future purchases.

Paul Phillips, RAPP’s Head of Media Strategy says: “It’s not just about how many times the ad is seen, it’s when it’s seen. Retargeted ads served after the research phase could potentially do more harm than good.”

The conclusions of the report clearly indicate that broad based, saturation style retargeting campaigns directed towards all visitors to a website may do more harm than good, in fact hurting a brand in the eyes of the consumer. It’s also unclear if such a campaign is a good use of ad dollars given that it targets all people who have come to a website, looked at a product or service, and then left without purchasing, in effect abandoning the site.

SegmentationCompanies need to utilize more refined techniques such as frequency caps and segmentation or qualification of visitors. The segmentation would define the categories of visitors who would be shown the retargeting ads around the web based upon actions taken by them on the company’s website, such as amount of time spent, specific pages being visited, etc. in the same way sales acceleration software grades and scores prospects further along in the sales cycle. The report also indicates that companies should be alert and exercise some selectivity as to the types of sites where the ads will be displayed. A retargeting campaign utilizing these techniques may also prove to be more cost effective than one that just broadly retargets all visitors to a site.

Hugo Drayton, InSkin Media’s CEO concludes: “The industry got carried away with retargeting. It’s a powerful tool but it needs to be qualified by more thought and action to ensure it’s used effectively. As an industry we risk alienating a generation of consumers. Online advertising is hugely powerful and positive, as long as it is used intelligently.”

Consumers gain significant benefits from automated buying. Retargeting can be an efficient channel for sellers. However, if the overall use of retargeting becomes suffocating to consumers, they may turn to blocking cookies or opting out.

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