Modern consumers have grown accustomed to shopping online for almost everything, whether it's a pair of shoes or a European family vacation. Online shoppers flip open their computers and are a mere click away from committing to a purchase. However, internet consumers typically refrain from committing right away -- their attention is pulled elsewhere by any of the innumerable online distractions. The final result of all this is the online shoppers forget about the products they were interested in only moments earlier.
Marketers are becoming increasingly concerned about the ramifications of this type of casual shopping and the distractions that draw potential shoppers away from their purchase. Here's a fact: More than 95 percent of visitors who browse a site leave before making a purchase. This means retailers' investments in search and SEO resources, intended to bring potential customers to their ecommerce sites, are wasted. What's worse, a customer might turn to a competitor's website to purchase a similar product, not because the initial product was inferior, but because the options are abundant and locating additional information is easy.
The "lost prospect" problem certainly isn't unique to the ecommerce landscape of 2010. In fact, the act of re-capturing prospects dates back to the beginning of online retail. However, the sophistication, efficiencies, and scale of retargeting have come a long way.
The early days of retargeting
Corralling wayward customers has been an ongoing concern for all retailers with an online presence. In its infancy, the mechanics of retargeting -- also called remarketing -- were fairly basic: A user would visit a site, leave, and then would be exposed to a generic branded display ad from the abandoned site. This "basic static retargeting" proves effective and becomes the methodology practiced by most vendors that offer retargeting. However, this process yielded only slightly more successful results than existing branding campaigns. To better address the intentions of the online consumer, marketers developed even more sophisticated strategies to continue a company's conversation with lost visitors and to increase the chance to drive them back to the retailer's site to complete the purchase.
The birth of segmented retargeting
Segmented retargeting enabled advertisers to engage consumers with increasingly relevant ads by creating a number of display banner executions for unique segments of online shoppers. For example, if a shopper browsed the kitchenware section of a website, that consumer would be shown a banner with kitchen items. Likewise, a shopper who abandons a full "shopping cart" can be retargeted with a banner that offers a purchase discount. The increased relevancy of segmented retargeting improved consumer engagement with the banner, but there were still major strides necessary to take display banner personalization to the next level.
Retargeting gets personal
Today, online advertisers are offered a third phase of display retargeting: dynamic personalized retargeting. With technological advances, the most sophisticated retargeting vendors are able to offer unprecedented levels of product personalization in the display ads they serve. Instead of static, generically branded ads or segmented ads, retailers can now create a unique ad for the exact shoe or shirt or gadget that the consumer initially sought. These ads are dynamically produced in real-time and sometimes feature up to 10 products in a single banner, offering the consumer a "mini-boutique" within the ad. They are creative, personalized, and highly relevant.
A recent study by Criteo found that retargeted customers are 70 percent more likely to complete a sale than their non-retargeted counterparts. And by incorporating additional product recommendations, those same retargeted visitors spend, on average, 50 percent more than non-retargeted consumers.
These numbers are encouraging for advertisers. Conversion rates increase, and enhanced sophistication enables retargeting providers to assume more up-front risk by buying inventory on a cost-per-thousand basis and selling it on a cost-per-click (CPC) basis. Under this model, advertisers only pay when an ad leads to a verifiable click, redirecting an individual directly to a product purchase page to complete the original sale.
It's important to note that these advances fully take into consideration consumers' privacy. Personalized retargeting providers don't care about your age, income, race, sex, or even off-site browsing history. They also don't share any of this data with third parties. Providers simply record the specific product browsing data in order to create ads that are most relevant to each unique shopper. Still uncomfortable? The best providers are transparent about their privacy policies and offer clear, simple instructions for opting out of future retargeting, if a consumer so prefers.
Ultimately, online consumers are shown ads for relevant products, and retailers experience tremendous ROI on their ad spends.
What to expect in the future
Efficiency and scale are the keys to the rapid growth of personalized retargeting solutions among top e-retailers. Retailers are increasingly implementing retargeting campaigns to complement customer acquisition tactics, such as search and SEO, to experience verifiable, tangible returns on their ad spends. Since sophisticated retargeting solutions charge a retailer only for the verified clicks that drive potential customers back to the site, there is no more guesswork. No more paying for vague "impressions" or "view through." Retailers have the flexibility to determine their CPC bids (similar to the paid search model) for the price they're willing to pay for clicks, and they only pay when a customer clicks.
Banner advertising -- and retargeting specifically -- is no longer simply the static ads offered during years past. As retargeting solutions scale and become more technologically sophisticated, retailers increasingly view this tactic as an indispensible part of their marketing budget. By any metric, be it click-through rate, post-click uplift, or incremental revenue, retargeting campaigns outpace their static display counterparts and are competing head-to-head with popular search tactics. The tremendous ROI delivered by retargeting solutions means one thing for retailers: Embrace retargeting as an integral component of your marketing strategy -- the competition is already enjoying the momentum.