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Why retargeting is fundamentally broken

Why retargeting is fundamentally broken Dax Hamman

Site retargeting is the most common use of real-time media today, and many marketers consider it the most effective tactic in their media plans. In many cases it's their savior in balancing out the crappy ROI of other parts of their plans. Yet the way it is measured is fundamentally broken, causing marketers to make bad planning decisions, waste valuable marketing dollars, and miss investment opportunities elsewhere that would bring much more benefit.

There are two main problems -- de-duplication of conversions and hidden costs behind those conversions. Oh, and a third -- a lack of motivation.

How to properly measure site retargeting

De-duplication and last touch make you dumb

De-duplication occurs in ad serving technologies like Google's DoubleClick, and what is soon to be Facebook's Atlas. Such tools help us all manage our display programs, and many marketers wouldn't be seen dead without one, even if it were last season's. Each tactic on the media plan is loaded into the system, and the conversion pixel installed on the site measures how many conversions each of those tactics generates. Excellent.

Excellent until someone smart realized they could remove the problem of too many conversions being generated, a problem that occurs when more than one tactic has contributed to the conversion occurring, and therefore artificially inflates the total number. And an arbitrary method was determined: "let's give the credit to the tactic that generated the last touch." Whoever you are that had this Eureka moment, I hate you!

Can we not see as a community of professionals how asinine such an approach is? Do we not recognize that all that advertising we see in magazines, on TV or hear on the radio is influencing our decisions? And yet under the digital model of last touch, all of that value and influence is simply ignored. In the traditional world, it would be like a retail store giving all the credit for a sale to the staffer who greeted you at the door -- they are meant to do that, they are meant to make you feel good and happy, they are even meant to go fetch your size out of the back sometimes, but they did not get you there, make you want that suit in the first place, or place it on someone you admire to make you want it too.

Site retargeting is the staffer at the door. It is meant to bring you in, it is meant to guide you a little during the consideration phase. And if it does those things right, it is meant to have the last touch for many of your conversions. And even though your ad server gives it the credit for the conversion, it did not primarily cause to the sale.

If you are willingly reliant on or are promoting the use of last touch, you do not understand marketing. Last touch is hiding the real data, and without real data, how do you expect to make the right decisions?

Don't hide from the truth, come into the light

And whilst you continue to ignore all those other touch points, you are also failing to take their cost into account. That site retargeting program on your media plan -- the one you think is giving you a 15 to 1 return -- well, it's not.

Site retargeting is only meant to speak to existing visitors, and so every individual you retarget came to the site first because of something else. And yet we ignore that cost in our calculations.

Have you considered that in an ideal world we wouldn't need site retargeting? That if we could give each individual the right experience each time that they wouldn't leave before doing what we wanted them to do? That we could speak to them at the exact moment they need our influence as they consider what we offer?

Site retargeting is there to plug the leaks from our marketing funnels, and stick a Band-Aid on what is broken. Accepting that we can't build such perfect marketing programs, site retargeting therefore has its place. But are you beginning to see that its role is different than you thought?

The new, and yet still imperfect, approach

A fully functional, perfectly working, mind reading, no leaks attribution model would be fantastic. Problem solved -- except no such thing exists. Nor does anything close for most organizations, and if you are the media agency without any control over the site, you haven't got a hope in hell of getting anywhere near it.

So operating within the possible parameters, I have helped migrate several brands to a new way of thinking -- one that solves 75 percent of these problems.

Take site retargeting out of your ad server

Now, before you panic about what extra management this might cause, what I mean specifically is to remove it from the same ad server account that your other buys are a part of. In short, your objective is to stop site retargeting from de-duplicating your other media tactics.

Then, once it is isolated, treat it for what it is -- a cost to fix the broken.

Site retargeting is fundamentally different from everything else. It does not acquire any customers; it speaks to those that are already close to being one, or generates reminders in the minds of the existing ones. Sure, incremental ROI can be measured from its presence, but its true ROI should address the question of what it took to generate the first visit.

The result will be a more transparent marketing program. Those brands I have seen go through this had plans that looked very different within 90 days, and their overall business ROI increased.

Winner, winner, agency chicken dinner

What's more, if you are smart about it as the agency, you can move low margin media dollars into high margin services. Chances are, you are getting 5 to 18 percent of the media spend paid to you as a management fee, on which you don't make a great margin -- depending on the size and demands of your client.

Yet you should fully embrace this idea and explain to your client that whilst the current theoretical ROI from the media plan will look like it's initially decreasing, you are in fact moving wasted dollars into smarter areas of investment. Some of those areas of investment could be more creative testing, and better landing pages. As a result, your agency will make much higher margin on those services.

You look good to your client, and to your CFO.

Oh yeah, that small point about not being motivated

It simply isn't in most people's interests to bother with all this, not on the media side anyway. If you are a media planner and can show an increasing ROI from your media plans by moving more and more dollars into retargeting from prospecting, you look like a hero on the weekly calls. And if your client doesn't understand this, why should you rock the boat? And if you are an in-house marketer, the same story probably works.

Except digital is no longer a mystery to most CMOs and CFOs. They read iMedia too, or at least they speak to people who do. And they are starting to ask the questions that will drive these sorts of changes.

So where does it leave us?

Retargeting is an effective tool in an inefficient world. But understand what it really is, find a smarter way to measure it, and break your reliance for it. Some of your retargeting dollars are best spent on prospecting for new customers and visitors, not stalking your existing ones. Remember your marketing principles and do something clever, something different, something fun. Most importantly, do it before your boss or client realizes it first.

Dax Hamman is the chief revenue officer of Chango.

On Twitter? Follow iMedia Connection at @iMediaTweet.

"One line that splits into two arrows" image via Shutterstock.


to leave comments.

Commenter: yaniv levi

2013, April 09


General comment - DoubleClick (DDMM) has attribution models that helps clients with de-duplication and provide data beyond last attribution. also, re-targeting is applied as yet another tactic and by looking at different attribution models you can make smarter decisions.

I don't understand the relation between your marketing plans and site re-targeting you describe here. site re-targeting just created another part of the lower funnel we did not have before re-targeting was around - a highly targeted segment to approach.

It is not the store service, but the one chasing you after you leave the store empty handed, so I agree with Eric here. I do think that marketers are over doing it and it starts getting out of proportion - you reach a point that re-targeting is all you see on the web which generates a poor experience for the end user.


Commenter: Dax Hamman

2013, April 08

Hi Eric - I actually agree with you completely. Retargeting simply means that someone has done something, and you are going to do something back in return. That may be people who abandoned, but may be many other things.

All the use cases you give are valid. The problem in my eyes is many haven't got there yet in their understanding, and that's a required first step before we go deeper. Yes, it's not always about what's broken, but so many treat it that way and ignore opportunities like search retargeting (which is 100% prospecting), email retargeting etc..

I see clients using this for 'branding' already. I also have brokered deals where clients swap pixels and retarget audiences that are complimentary to each other. So many possibilities.

Commenter: Eric Wittlake

2013, April 08

Dax, good points on measuring retargeting. The same approach works well with branded search for pretty much all the same reasons.

However, I think marketers should be careful assuming that retargeting success necessarily reflects a shortcoming of their website; retargeting is useful way beyond the abandoned shopping cart.

Do you have a new offering? A sale? New content? A big award? Use retargeting to get announcements in front of your audience through an additional channel. Like email or social, retargeting gives you a way to develop your own audience and a channel to reach them through.

I would love to hear about other ways you see people using retargeting, beyond just bottom of the funnel DR.