The retargeting myth

Attention is being retargeted to...retargeting. Last week, Facebook announced Facebook Exchange, a new real-time bidding platform that will replace the marketplace ads on the site with inventory that will be both more profitable for Facebook and presumably more targeted to the interests of its users. Facebook will be able to target ads to users based not only on their social graphs, but also on their recent browsing history.

Over recent years, we've witnessed the rapid growth of demand-side platforms (DSPs) in digital advertising, and as a result a sharp increase in the amount of tracking that's going on out there on the web. A Krux Digital survey released this week claims the average visit to a web page (not a website, a single web page) triggers a staggering 56 instances of data collection.

The retargeting myth

In a recent Wall Street Journal article, Krux estimated that real-time bidding exchanges contribute to 40 percent of online data collection. Moreover, this type of real-time bidding has shot from virtually zero three years ago to an estimated 18 percent of online advertising marketing, according to a Forrester analyst quoted in the story.

There are plenty of reasons why advertisers and publishers alike have embraced the trend. RTB makes media spend more efficient while eliminating waste. It enables rapid optimization and creative testing, quickly provides deeper analytics and insights, and makes retargeting more effective and scalable. All this results -- in theory at least -- in better-performing ad campaigns.

Otherwise put, DSPs are closer by a mile than standard CPM-based display units to the "digital nirvana" so many advertisers aspire to: the right message to the right person at the right time. A consumer browses hotels in Baltimore for an upcoming trip and is retargeted with deals and offers that pertain to her trip while she's still got the planning of it in mind.

That's the promise, anyway. The reality often differs considerably. Everyone knows someone who is still being retargeted with ads for that sofa they bought six months ago. Or that time I visited a local bakery's site to check the address so I could nip downtown and buy a cake for a party. Months later, I was still being retargeted with "order online and we'll ship it to you" ads from one of the very few businesses I'd never buy from on the internet, because it's a bakery, and because it's local.

Beyond privacy concerns

When forms of digital advertising involving increased cookie collection, personal data, and targeting are in the news as they have been this week, the phrase "privacy concerns" appears frequently in headlines. Yes, privacy is always a concern, and it pays to be vigilant (and all that).

I'd argue that much of what's raised as a "privacy" problem are the obvious Big Brother aspects of retargeting that are so apparent to users when they become obtrusive and inappropriate -- when this type of targeting is used as a blunt instrument rather than a tool of near surgical precision. Getting retargeted with ads for swim fins because you once accidently clicked on a pair in 2009, is far from a best practice and is not how this type of advertising is intended to work, yet it too often does. The results: irritated consumers who dump cookies and tune out or ridicule online advertising.

Turnkey, self-serve solutions come with a measure of responsibility on the part of both the advertiser and the DSP, otherwise the process becomes akin to driving without a license. It's not helping anyone -- not the consumer, the publisher, the advertiser, nor the industry in general -- when hyper-targeted ads return to haunt the user again and again. Media buying agencies understand things like frequency caps. Too many small advertisers -- the bakeries and the mom 'n' pop ecommerce sites -- mean well but alarm rather than entice their audiences.

This begs the question: Should buying online advertising be so frictionless and easy when targeted and quasi-personalized ads have the potential to do as much harm as good? And if it's to remain as turnkey as it has become (which is most likely the case), whose responsibility is it to ensure that the advertisers are educated enough to use their tools wisely?

Rebecca Lieb is a research analyst covering digital advertising, marketing, and media at the Altimeter Group.

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Comments

Chris Reilly
Chris Reilly June 22, 2012 at 9:50 PM

"This begs the question: Should buying online advertising be so frictionless and easy when targeted and quasi-personalized ads have the potential to do as much harm as good?"

I think so, but the consumer needs to be empowered to give feedback. The best we can do at the moment is survey our client's customers to see if they are getting irritated by the retargeting. It seems a bit kludgy considering all of the other data we can get back : ) Why not a simple up or down vote inside the creative?

Caroline Watts
Caroline Watts June 21, 2012 at 3:56 PM

Hi Rebecca,

You make an excellent point regarding the importance of managing a retargeting campaign.

I think the answer to your final question is a resounding yes--buying online advertising absolutely should be frictionless and easy. To some extent, it's the responsibility of the retargeting provider to either offer account management or access to education, but it's also the responsibility of the advertiser to select a provider who will manage their campaign, or to educate themselves. There is significant material on best practices, and if an advertiser wants to run her own campaign, the onus is her to learn those best practices.


I also wanted to add a point of clarity to one of your initial statements, because I'm afraid it could be confusing:

"Facebook will be able to target ads to users based not only on their social graphs, but also on their recent browsing history."

Facebook will now allow advertisers to target EITHER by interest, demographics and Facebook activity OR by recent browsing history. In an effort to protect user privacy, advertisers will not be able to add Facebook's data to further segment retargeting campaigns.

In the interest of full disclosure, I work for a retargeting provider, called ReTargeter.

Caroline

Peter Johnston
Peter Johnston June 21, 2012 at 2:54 PM

What is poorly understood is that buyers are often in a buying window for only a very short time, even for major purchases.
They may be researching for a meeting - once that meeting is gone it may be a dead project or someone else's to take further.
They're often online to make a decision and once they've made it they don't want to know you until it comes time for a replacement.

The problem is that this experience is still being designed by marketers who are used to one-way communication - so they think only of pushing another ad at people. But what if you put up a poll - which product did you buy and why? You'd learn a lot about why the others outdid you.

The clue is in the word targeting. Customers are seen as something to hunt, not to interact with and understand. Marketing thinking needs to change to understand the difference.