How is this happening? How could retargeting seem broken at a moment when the industry is growing rapidly? In many cases, the problems can be traced to a lack of transparency and a failure to understand what retargeting can and can’t do it. So, let’s clear things up and explore where retargeting went wrong.
Site retargeting’s problems begin with a lack of transparency on the part of vendors. Many marketers today simply don’t know what’s taking place behind the scenes of their campaigns. They don’t know where their ads are running, the frequency caps being used, or even the true cost of their media. Why does that matter if the ROI still looks good? Well, for starters, just because the ROI looks good, doesn’t mean it can’t look a whole lot better. Margins on retargeting campaigns are often as high as 70%+. In other words, as with any business, if you’re not on top of the fundamentals, there’s a very good chance you’re getting a bad deal.
But the problem for site retargeting at the moment runs even deeper than a lack of transparency. At the heart of the problem is a measurement technique known as “last touch,” which creates a terribly skewed picture of how a campaign is performing.
Originally, last touch was supposed to be the answer to retargeting’s problems, not the cause. Specifically, last touch was supposed to put an end to the duplication problem by only crediting the last tactic employed before a conversion. The problem, as should have be obvious from the start, is that choosing the last tactic out a long chain of tactics is entirely arbitrary. It would be like giving all of the credit for selling concert tickets to the guy in front of the ticket windows who tells you which line to stand in. Simply put, it’s a bad idea.
If you want a better sense of how your campaigns are performing, you could start by putting site retargeting on its own ad-server account. Once retargeting is isolated, the duplication problem goes away. And when you remember that site retargeting doesn’t bring in new customers but only targets existing visitors, it makes perfect sense to look at the results separately. Without prospecting, there would be no site retargeting, and without taking into account how the site visit was generated in the first place, you’ll never get a true ROI.
What happens if you don’t have a grasp of your true ROI? In short, you get situations like we have today, where marketers are pumping more money into retargeting campaigns without realizing that the money is being wasted. Think about it: site tetargeting only targets existing visitors. If you throw more money into a campaign, the number of visitors doesn’t change. That means your extra money is likely to go toward both serving more ads to the same people (making them feel as though they’re being stalked) and serving ads to the wrong people. And those are probably the best scenarios. The other possibility is that your extra dollars will do nothing more than make your vendor’s wallet thicker.
The good news? It’s not time for despair. All industries that expand rapidly have their growing pains. CMOs today are smart, and we can expect more and more of them to question how their retargeting dollars are being spent. In the meantime, let’s hope you don’t have nightmares about that shoe ad that’s following you around the Internet.