Dynamic Personalization Key to Retailer's Retargeting Success -- Along With Cost Structure

Retargeting has been a favorite and basic model for retailers to leverage behavioral targeting for years. Following a user after he or she has visited your e-commerce site or abandoned a shopping cart has proven enormously effective for obvious reasons - the consumer's intent is unmistakable. In practice, however, the path to success in retargeting has often been less clear for some companies. "The big challenge was to find the right display model tied to the right cost structure," says Erick Barney, vice president of marketing for accessories shop Motorcycle Superstore.

The company had tried campaigns over the years with varying success, first with static banners that showed every user the same message and then with dynamically created messaging that personalized the ads with product affinity attached to users' site search. "With retargeting, I was sold on the concept," Barney recalls, especially when the creative became more personalized. As has become the case increasingly in recent years, retargeted consumers can now see in their ads items they had been searching for on earlier visits to a retailer like Motorcycle Superstore. The familiarity of the products helps raise the visibility of the ad itself, and those who click through are that much more interested and self-targeted even than the typical retargeted consumers.

"We saw conversions off of dynamic were more than two times the static banners. We were sold on the idea that personalized was substantially better," he says. But the math was not better. The typical CPM model was only increasing the costs of the ads. "The conversion was more than double but so was the cost per thousand," Barney found. "It never penciled out - the cost per thousand on top of conversion rate never made sense. It was really expensive."

After retreating from the retargeting approach for a while, the retailer came back after finding a CPC model that helped contain the costs. Working with vendor Criteo, Barney can calculate the level of impressions he wants to get and bid up against the available inventory. "We compete with others. If we ramp up our cost per click our impressions wind up going up. If we ramp up the price we could get 90% of the available impressions, but we run about 68% to 78% impression wins. I like that the CPC is adjustable." He says he can ramp up the CPC during heavy selling seasons like holidays.

In addition to controlling costs, the model lets him leverage dynamic creative, which in turn can also be used to manage costs. Once he knows what users are looking for specifically, he can also judge how much that conversion may be worth to the company and can adjust the spend. "We have different bidding strategies for different content," he says. "We have thinner margins in tires so we can calibrate our approach in the tire category differently from other categories."

When it comes to scale, Barney says that retargeting is a part of the larger strategy to increase the returns on the customer acquisitions piece of the marketing plan. "We simplified the process, which is to acquire new customers as efficiently as possible, but once you have them then do all you can to maximize lifetime value." He says that remarketing "fills a big void," in that it extends the investment made up front in getting that customer in the first place. "This is a slick way of reintroducing your brand. And it is pretty impressive to the untrained person who sees your brand at a major publishing site or somewhere else. It creates a perception that you have this powerful brand that is immersed in the Internet."

So far he is more than happy with ,the performance. "Based on our strategy of retargeting and our comfort level with impression wins we see a ten to one return, which is on par or better than most search channels." Criteo reports that it served over 10 million impressions on the campaign, with an average CTR of .76%. In all, Motorcycle Superstore is attributing over $400,000 in post-click sales to the retargeting effort.

But just as a retargeting campaign found in the right places can raise the visibility and prestige of a brand, so too can it get overdone. When it comes to adjusting the frequency of messaging a retargeted customer, Barney says it is as much art as science. "A lot of it has to do with the fact that internally we are web users who visit our sites and get delivered these ads. We get a feel for it." Typically the retargeting will top off at about four impressions per user per day, but this is also dependent on the number of times they browse and their intention to buy. The more products they browse, the higher their likely conversion and receptivity to more ads. But ultimately learning the difference between re-selling and pestering, between growing brand visibility and diminishing it by overkill, is a matter of feel. "In this age of analytics and optimization, what gets lost is good common sense, so we apply a bit of that," Barney says.

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1 comment about "Dynamic Personalization Key to Retailer's Retargeting Success -- Along With Cost Structure".
  1. Danny Hen from Personyze , June 15, 2011 at 8:15 a.m.

    The retargeting space is getting more and more costly and packed with vendors. The solution to the growth in retargeting costs should be in more accurate and deep targeting of the traffic. A typical vendor offering a retargeting solution will only look at a few metrics to calculate which visitor to include in the retargeting. With a platform such as Personyze.com a retargeting provider can take into consideration a much broader list of metrics such as geo location, traffic origin, behavior on site, time on site, social info and more and by doing so greatly improve its chance to get a positive ROI for the end customer. Smarter segmentation is the key here...