Ever since retargeting stormed the U.S. online marketing space, using just one retargeting provider was standard practice. But why is this? To be honest, it doesn’t really make sense. In Europe, for instance, running with multiple retargeters is standard. Thousands of companies do it, including the biggest and brightest. How can we explain the discrepancy in the U.S.? Let's explore.
Healthy competition: My main argument involves the concept of competition. Healthy competition is a great catalyst of innovation and always benefits the customer. It's basic economics.
If you are running with only one provider that’s getting more and more comfortable in its position over time, do you sincerely believe this company would run the extra mile for you? Competition, on the other hand, will force rivals to be at the top of their game.
When it comes to our own industry with a still prevalent last-click wins approach, the concept of competition between providers has its own benefits (especially for the advertiser). Let the boys play -- and the winner takes it all.
CPA: Encouraging competition between performance-driven CPA providers has worked well in affiliate marketing, so why not in display? Whether you prefer a standard CPA or true CPA model in which you pay only for post-click conversions, there's no risk in it for you. So why not test your providers head-to-head and "may the best man win"? It will force them to draw their top guns and resources to generate the best optimization, creative, account services and project management.
To avoid paying twice for the same conversion, make sure you are running with providers who can and are willing to de-dupe for no overlap.
CPA & CPC: Running with different pricing models can also work well. Running with several retargeters (especially CPA and CPC) will always deliver greater reach than with a single provider. This is obviously true when referring to non-automated media buying, but it is also true when buying media on automated exchanges.
In most cases, CPC and CPA companies will not target the same users, since each provider's optimization and segmentation algorithms are different because there outputs are different.
For example, a CPC company will target those likely to click, and therefore will use a "spray and pray" approach buying a huge amount of cheap impressions. A CPA company, on the other hand, will target those most likely to convert and can therefore manage its bids based on a user's actual economic value. A conversion-centered CPA company serves banners with a surgeon's scalpel, not a sledgehammer.
Raising bidding prices: It has been argued that if you run with multiple providers, each provider will be bidding for the same spots on the same websites, driving up media costs. First, as mentioned above, CPC and CPA providers do not usually target the same users.
If several retargeters do end up bidding for the same user on the automated exchanges, the price will increase but only temporarily. Every advertiser knows what is the maximal eCPC or eCPA it is willing to pay and this is usually determined pre-launch. When over-bidding occurs, providers will quickly reduce their bids to meet their client's as well as their own goals.
Overhead: True, working with a single provider is less of a hassle than working with several. That's why I believe the ideal number should be two -- or maximum three. This will enable healthy competition, while keeping overhead to a workable minimum.