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Why Are So Many Retargeting Programs So Rudimentary?

Tom260“Why am I followed all over the Internet by the same ads?”
It’s the question I most often have to answer when someone outside the industry figures out that I work for a media agency.
We review how this all happened, covering in excruciating detail how companies use pixel tags to drop cookies on consumer machines when their users configure their ideal car or look up current mortgage rates. And we cover how those cookies are used to identify consumers when they later visit a site that serves up ads programmatically. But what we aren’t able to easily cover is why those retargeting programs don’t seem to get more sophisticated over time.
After all, we’ve all bought the shoes and then had the ad for the shoes we just bought follow us around the web for weeks after the purchase. Why weren’t we upsold on the matching belt? Why is that opportunity squandered? Moreover, once we’re marked as being somewhere in the consideration funnel for a particular product, why do we continue to see the same ad execution over and over? Don’t these marketers have any other ads to show?
There are a number of reasons why retargeting programs never progress beyond the usual “visit the site, get pummeled by follow-up ads for a month” level of sophistication. The first is scale.
If you’re a retailer smaller than Amazon or Zappos, it’s likely that the size of the cookie pool you’re able to build with your site visitors will be tiny. Moreover, that tiny pool tends to churn as it’s being built, with cookie-clearing, anti-virus software, cookie expiration and other factors contributing to that pool’s shrinkage over time. For many marketers who use retargeting, the cookie pool of site visitors stays small and never really scales into a massive program. For that reason, there’s precious little justification for introducing multiple ad types, sequential messaging or anything else considered intermediate-level. Simply put, there are other places to invest the creative and production dollars that will yield greater results.
At the same time, retargeting performs very well when compared to run-of-the-mill targeted display advertising. Conversion rates are so high, comparatively speaking, that retailers and other marketers look to grow the program rather than shrink it. However, there are the limitations on scale we discussed in the prior paragraph. The end effect? Cookie pool sizes tend to level off, and thus so do the potential reach figures for retargeting campaigns. Everybody wants more of a good thing, though, so cookie pools are left to grow organically and nobody messes with the parameters of a retargeting campaign, which is likely for most online retailers to be the best-converting tactic on the whole media plan. That includes varying creative, because the ads that do the best job of converting prior visitors are usually many more times effective at it than the next-best creative execution. This means most people are likely to see the same ad – again and again and again.
Retargeting campaigns don’t tend to get very sophisticated until a digital marketer has a wide range of products to sell at volume. Only when business scales up does it make sense to produce cross-selling assets (or engage a dynamic creative partner) to do simple things like keeping the people who just bought the product from immediately seeing another ad for it. Only when product is selling at comparatively high volumes does the pool of recent purchasers become sizeable enough to justify a wide scale cross-selling or up-selling opportunity.
So the simple retargeting campaign, for most small retailers, never gets very sophisticated. While marketers want those programs to get bigger, they’re limited by the marketer’s volume of site visitation, so the opportunity to do sophisticated things with the program is limited as well. Instead, for many retailers, it’s cheap and cost-effective to simply let prospects age out of the funnel or fall off the radar the next time they clear their cookies.
By way of example, my current desktop behavior involves shopping for two things: a new mattress and a replacement part for my pool filter. I shopped for the pool filter piece on Amazon, and the moment I buy the part, I expect Amazon to move onto the next big-ticket item I looked at on their site. This makes sense, since Amazon is a huge retailer with many things to sell me and a huge pool of customers that visit it regularly. However, I looked at the mattress on a retail site that sells only mattresses. So, due to the smaller size of their customer base and the lack of breadth of their product offering, I expect to see that ad for several months.
So that’s the answer to the question about ham-handed retargeting programs that pummel customers over and over with the same ads. They have economic and business factors that keep them unsophisticated and limited in scale.

Tom Hespos is the Founder and Chief Media Officer of Underscore Marketing, an integrated media agency focusing on health and healthy brands.  

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