What Are Retargeting Ads and Why Should Your Business Use Them?

What Are Retargeting Ads and Why Should Your Business Use Them?

what are retargeting ads and why you should use them
Posted on: Posted on Posted in: Categories Marketing Blog Tags , ,

Website visitors are fickle. There, I said it. The majority of people entering your website will very likely leave without taking the action you want them to take.

There are tons of factors that drive people away from your website, whether it’s an unappealing message, poor design, difficult-to-use navigation, a confusing checkout process, or unexpected fees and shipping costs.

Keeping visitors engaged with your brand after they leave your site is incredibly important.

[Enter stage left] – Retargeting ads.

advertisement

Retargeting is a key tactic for bringing visitors back to your site to complete their purchases or inquire about your services.

This post walks you through various forms of retargeting ads, why they’re useful for your business, and how much you should allocate to your retargeting ad campaigns.

What are retargeting ads?

Simply put, retargeting ads are those ads shown to a person after they visit your website, browse, and then leave.

As they navigate to other websites, like a news website, you can then show ads to draw them back into your site or generally increase brand awareness.

Being able to serve retargeting ads is accomplished by placing a pixel on your website.

A pixel is a small snippet of code that tags the visitor and captures their behavior, like which pages they visited, which products they viewed, whether they finished checking out, how much they spent, and more.

Facebook, Google, Bing, TikTok…all of these ad networks have retargeting pixels.

Before we dig into the effectiveness of retargeting ads, let’s talk about a few of the common types.

Display Retargeting Ads

Display retargeting ads are the typical static banner ads you see as you visit other websites or use mobile apps. Here’s an example you might see from us.

These ads are great for generally improving brand awareness and response rates during a promotional period. They’re also extremely affordable, meaning you can get tons of impressions for a fairly low ad spend.

Search Retargeting Ads

Search retargeting ads offer a great blend of paid search and display ads. These ads serve based on a person’s search queries. You might hear these often referred to as in-market audiences.

If someone visits Google and searches for “mobile phone cases,” Google places the searcher into a category of people in the market for phone cases. You can then serve display ads targeted at this category as they navigate around the web.

Search retargeting is an exceptional prospecting tactic, as the people “in-market” have shown intent and are likely a short step from making a purchase.

Even better, this tactic isn’t restricted to e-commerce businesses.

If you’re running a local spa, you can retarget people who have recently been searching for massages, skincare, and similar services.

Similarly for home renovations. If you’re a residential roofing, electrical, or plumbing company, you can retarget searchers who have recently been searching for things like bathroom remodel, kitchen remodel, roofers in xyz city, and so on.

Effective advertising is reaching people at the right time with the right message. Getting your business in front of these in-market audiences — people who are indicating they’re ready to buy — checks that box better than just about any other advertising tactic available.

Dynamic Remarketing Ads

Dynamic remarketing ads, or dynamic product ads, are a lot like display retargeting ads. The only caveat is they have more focused use for e-commerce businesses.

For example, if someone visits your e-commerce website and views products and leaves the site, you can later “remarket” to them with the specific products they viewed.

We’ve all been the target of these ads, as we browse shopping sites like Walmart or Wayfair and subsequently receive ads on other websites for the exact products we browsed.

The dynamic element simply refers to the fact that the products shown in the ad will change dynamically based on the individual user’s behavior. In other words, they’re personalized to the individual shopper, instead of being static.


Why is retargeting important?

All things considered, increasing familiarity with your brand and attracting more return visitors to your website will naturally improve sales.

Retargeting efforts provide an economical way to check these boxes. Most importantly, you’re creating a holistic marketing strategy.

Brand Reinforcement

Making multiple touchpoints with customers is key to being top-of-mind. There are tons of customers who are either:

a) In the market for your business, but not quite ready to buy.

b) Not yet in the market, but will be soon/eventually.

When either of these groups does enter that “ready to buy” stage, do you think they’ll choose the product they’ve only seen once and are unfamiliar with?

Or will they more likely choose the brand they’ve seen three, four, or five times?

Probably the latter.

And, to be clear, it’s not one-dimensional.

Those multiple impressions of your brand might come in the form of a customer hearing a radio ad, then visiting your website, then getting a retargeting ad on YouTube, then doing a Google search of your brand name, and then, finally, they buy.

That’s what is meant when you hear “multichannel marketing.”

Yes, it sounds like a meaningless buzzword, but it really is the modern method behind effective marketing and business growth.

Retargeting ads are one component of a great multichannel marketing strategy.

First-time Inquiries and Purchases on Your Website

A huge percentage of the traffic to your website will be new visitors and new customers.

Like we mentioned earlier, new website visitors (new customers) are tough to please.

They’re shopping, cleaning the house, and tending to the kids all at once.

Maybe they’re in-between meetings and killing time.

They could be watching the newest Netflix series and messing around on their phones.

They’re distracted.

All the time.

They may spend 60 seconds on your site and barely remember anything except the name.

Retargeting ad campaigns then start serving. They see your name again while reading an article online. Or they catch your video on YouTube.

You start to build a relationship. They click one of your ads and browse your site again.

Even if they don’t buy or inquire then, you can see where this is going.

You now have even more behavioral data about them and can continue serving better and better ads that finally do entice them to buy.

Upsell or Cross-sell Opportunities

A final reason retargeting ads are important is the ability to upsell or cross-sell your products and services.

You can get very particular with retargeting. Say a customer buys a nice pair of dress shoes from your website. You can enter that customer into a segmented audience, then serve them ads for your shoe cleaning kit. Or maybe a new belt to go with the new shoes.

Similarly with services. If someone signs up for weekly lawn mowing on your website, you could then show them ads for mosquito lawn treatment.

Maybe that’s a terrible example, but you get the point 🙂

The ability to segment customers that you’re certain trust your brand and then show them ads for things you know they have a propensity to buy…

That’s a gold mine.


Does Retargeting Actually Work?

Short answer, yes.

At a basic level, again, exposing your brand to customers at a consistent, healthy frequency keeps you on their minds. So, when they do need your product, they have a better understanding of your brand than your competitor’s brand.

More analytically, particularly in e-commerce, we can trace retargeting ad effectiveness down to the dollar. Our e-commerce clients historically see a sizable chunk of revenue directly attributed to retargeting ads.

We can even see if retargeting ads “assisted” a sale. Meaning a customer engaged with our retargeting ad at some point in their buying process — even if it wasn’t the last touchpoint that closed the sale.

We’re confident retargeting ads work. And on the off-chance they don’t, we can also see that relatively quickly, so you’re not wasting budget.

How Effective Is Retargeting?

Retargeting ads have much higher clickthrough rates (CTR) and conversion rates than traditional display ads.

The average clickthrough rate for traditional display ads is 0.07%. The average clickthrough rate for retargeting display ads is 0.7%.

In that respect, retargeting campaigns perform 10 times better than regular display/banner ads. Additionally, they offer better opportunities to convert website visitors, because you’re increasing the percentage of return visitors.


How Much Should You Spend on Retargeting Ads?

How much of your advertising budget you should allocate to retargeting depends on the stage of your business.

If you’re just getting started and your website isn’t generating much traffic, your retargeting audience is small.

You’re in a prospecting and brand awareness phase, in that case.

So, you’re going to have to allocate more budget to search and display ad campaigns, in order to attract new traffic to your site and build your retargeting audience.

Now, if you already have sizable traffic coming to your website from organic search, social media marketing, PR, or otherwise, it won’t take long at all to build your audience and start serving retargeting campaigns.

If you have an existing audience, I’d recommend retargeting falls anywhere between 20-40% of your ad budget. If you’re spending more than that specifically on retargeting, you probably need to up your overall ad budget.

The good news is display and retargeting ads are generally inexpensive. Unless you’re using more complex methods, like IP targeting, you can get a significant number of impressions spending just $700-1,000 per month.

Interested in digital advertising and retargeting?

Intrigued yet? We love helping businesses with their branding and advertising strategies, so reach out with any and all questions.

Our marketing strategists are always open to a conversation and discussing what’s possible with your budget, no strings attached. Contact us.

advertisement

Jonathan Payne is a branding and advertising specialist, leading as the CMO and Director of Accounts at NerdBrand. Jonathan brings to the table nearly a decade of advertising and marketing experience helping establish digital brands for small businesses and national brands including Old Forester, Early Times, KORBEL, and University of Louisville.