The Retargeting Swindle

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ADOTAS – Advertisers are being swindled by providers offering retargeting. A staggeringly high percentage of retargeted users, after visiting an advertiser’s website, do not convert – up to 99%. Advertisers are not seeing the dramatic increase in ROI they expected, or were perhaps promised, from retargeting.

The question for advertisers: why retarget all your users? Why retarget those users that are unlikely to click and buy? Serving ads to users that are not in market for your products is both costly for you and annoying for the user.

One of the principal objectives for online advertisers has always been to serve a relevant ad to an in-market user who is at the point conversion. Companies offering retargeted ads professed to offer a path to this coveted scenario. They retarget users with ads after they have left an advertiser’s website to go elsewhere; the assumption being that all users who have been on an advertiser’s website must be in-market for that advertiser’s product or service.

Ideally, the user is brought back to the original website and converted. However, the reality is that a large proportion of retargeted users will not end up converting and money spent on serving ads to them is wasted.

What’s needed is a further level of precision when it comes to targeting users who have been on an advertiser’s site. Users who have the potential to convert need to be distinguished from those who will never convert regardless of how many ads you serve them.

Some providers, like my company Struq, are already doing this by predicting with 80% accuracy which users are worth targeting and those that aren’t using its WHO Engine, a complex algorithm that analyses click and conversion behaviour. Prior to the WHO Engine, even top fashion retail campaigns saw a 1.13% conversion rate on average meaning that around 99% of retargeted users were failing to convert. The WHO Engine was developed in response to what was clearly a serious problem.

Retargeting more intelligently minimises the waste inherent in the standard retargeting initiative by going one step further and identifying and targeting the profitable users within the retargeted pool. This advancement stresses how simple retargeting is no longer enough, things have moved on and advertisers thinking that standard retargeting is the best way to use their budget are being misled by their providers. Retargeting has proved itself as a valuable channel, but the way retargeting is done needs to be smarter.

The conclusion is that advertisers are wrong for thinking that they are still at the cutting edge by using standard retargeting and old-school retargeters are no longer justified in claiming that the service they offer is at the forefront of display advertising innovation. Retargeting is in need of further refinement and Struq’s technology and technology like it are not only at the vanguard of that advancement but are the new must-haves for advertisers with their finger on the pulse.

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