Retargeting: Guide to Programmatic Advertising For E-Commerce

Retargeting is a key component of programmatic advertising, particularly within the e-commerce sector. It is a strategy that involves showing ads to users who have previously interacted with your website or mobile app. This article will delve into the intricacies of retargeting in the context of programmatic advertising for e-commerce, providing a comprehensive understanding of the concept, its benefits, and how it can be effectively implemented.

Programmatic advertising has revolutionized the digital marketing landscape by automating the buying and selling of online ad space. It uses sophisticated algorithms to purchase ad impressions on websites, apps, and other digital platforms, targeting specific audiences based on various factors such as demographics, interests, and online behavior. In the e-commerce industry, programmatic advertising plays a crucial role in driving sales and enhancing customer engagement.

Understanding Retargeting

Retargeting, also known as remarketing, is a form of online advertising that helps businesses stay in front of bounced traffic after they leave their website. It works by keeping track of visitors and displaying relevant ads to them as they visit other sites online. This is done through the use of cookies, which are small pieces of data stored on a user's computer by their web browser.

When a user visits a website, a cookie is dropped on their browser. The cookie allows the advertiser to follow the user around the internet and show them ads related to the products or services they viewed on the original website. This helps to keep the advertiser's brand at the top of the user's mind and encourages them to return to the website and complete their purchase.

Types of Retargeting

There are two main types of retargeting: pixel-based and list-based. Pixel-based retargeting is the most common type and works by placing a small, invisible piece of code (called a pixel) on your website. This pixel drops an anonymous browser cookie when a new visitor comes to your site. Later, when your cookied visitors browse the web, the pixel lets your retargeting provider know when to serve ads.

List-based retargeting, on the other hand, works by using lists of email addresses that your business has collected. You can upload this list of contacts to a retargeting campaign (on a platform like Facebook), which will serve specific ads only to the people whose email addresses are on the list. This type of retargeting is particularly useful for segmented messaging and personalization.

Benefits of Retargeting

Retargeting offers several benefits to e-commerce businesses. Firstly, it increases brand exposure. The more people see your brand, the more familiar they become with it. This familiarity breeds trust, which can lead to increased sales. Retargeting also improves conversion rates. Users who are retargeted with display ads are more likely to convert by 70%.

Another benefit of retargeting is that it offers better ROI. Retargeting campaigns are highly targeted and personalized, which makes them more effective and efficient. They target users who have already shown interest in your products or services, which means they're more likely to convert. Finally, retargeting helps businesses stay connected with their audience. It allows them to engage with users who have already shown interest in their brand, keeping the brand at the top of their mind.

Retargeting and Customer Lifetime Value

Retargeting can also significantly increase a customer's lifetime value (CLV). CLV is a prediction of the net profit attributed to the entire future relationship with a customer. By retargeting customers, businesses can encourage repeat purchases, increasing the total amount of revenue they can expect to earn from a customer over the course of their relationship.

Moreover, retargeting can help businesses identify their most valuable customers. By analyzing the behavior of retargeted customers, businesses can gain insights into which customers are most likely to make repeat purchases, and which products or services they're most interested in. This information can be used to further optimize marketing strategies and increase profitability.

Implementing Retargeting in Programmatic Advertising

Implementing retargeting in programmatic advertising involves several steps. The first step is to define your audience. This involves identifying the users you want to target based on their behavior on your website or app. For example, you might want to target users who have viewed a particular product but did not make a purchase.

The next step is to create a retargeting pixel. This is a small piece of code that you place on your website or app. The pixel tracks the behavior of your users and allows you to serve them targeted ads. Once the pixel is in place, you can start creating your retargeting ads. These ads should be relevant to the behavior of your users and encourage them to return to your website or app and complete their purchase.

Choosing a Retargeting Platform

There are many retargeting platforms available, each with its own strengths and weaknesses. Some of the most popular platforms include Google AdWords, Facebook Ads, and AdRoll. When choosing a platform, it's important to consider factors such as the size of the platform's audience, the types of ads it supports, and the level of control it offers over ad targeting and placement.

It's also important to consider the cost of the platform. Some platforms charge a flat fee for their services, while others charge on a per-impression or per-click basis. Be sure to compare the costs and benefits of different platforms before making a decision.

Creating Effective Retargeting Ads

Creating effective retargeting ads is crucial for the success of your retargeting campaign. The ads should be relevant to the user's behavior on your website or app and should encourage them to return and complete their purchase. This can be achieved by featuring the products or services the user viewed, offering a special discount, or highlighting the benefits of your products or services.

It's also important to test and optimize your ads. This involves testing different versions of your ads to see which ones perform best, and then optimizing your ads based on the results. This can include adjusting the ad copy, images, call-to-action, and targeting parameters.

Challenges and Best Practices in Retargeting

While retargeting offers many benefits, it also presents some challenges. One of the main challenges is ad fatigue. This occurs when users see the same ad too many times and become less responsive to it. To avoid ad fatigue, it's important to regularly refresh your ad creative and to limit the frequency with which your ads are shown to a particular user.

Another challenge is privacy concerns. Users may feel uncomfortable with the idea of being tracked across the web, and this can lead to negative perceptions of your brand. To address this concern, it's important to be transparent about your use of cookies and to provide users with the option to opt out of retargeting.

Best Practices for Retargeting

There are several best practices for retargeting that can help you maximize your results. One of the most important is to segment your audience. This involves dividing your audience into different groups based on their behavior on your website or app. By targeting different segments with different ads, you can increase the relevance of your ads and improve your conversion rates.

Another best practice is to use frequency capping. This involves limiting the number of times a particular user sees your ad. Frequency capping can help prevent ad fatigue and keep your ads fresh and engaging. It's also important to use conversion tracking. This involves tracking the actions users take after seeing your ad, such as making a purchase or filling out a form. Conversion tracking can help you measure the effectiveness of your retargeting campaign and optimize your ads for better results.

Conclusion

Retargeting is a powerful tool in programmatic advertising for e-commerce. It allows businesses to stay in front of bounced traffic, increase brand exposure, improve conversion rates, and enhance customer lifetime value. However, it's important to implement retargeting effectively and follow best practices to maximize results and overcome challenges.

By understanding the concept of retargeting, its benefits, and how to implement it in programmatic advertising, e-commerce businesses can leverage this strategy to drive sales and enhance customer engagement. As the digital marketing landscape continues to evolve, retargeting will remain a key component of successful online advertising strategies.