How Does Retargeting Work?

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Craig Smith  |  Founder & CEO

Retargeting involves marketing to customers who have already visited your website, but left without converting. It is a way to move customers deeper into the sales funnel who are not ready to buy while luring back buyers who tried to leave the sales funnel prematurely.

Considering the average conversion rate for most websites is around four percent (closer to two percent for eCommerce sites), your brand stands to benefit significantly from bringing even a fraction of that 96% of lost customers back. When done well, retargeting can show compelling ads to customers who are familiar with your brand and who were already considering making a purchase. 

Let’s look at how retargeting works and how this form of digital promotion can be used to effectively market your brand.  

How does Retargeting Work?

Simply put, you will be able to market to your site visitors after they leave through cookie tracking. With the Google Ads interface, you can follow visitors across the web and send them relevant ads through Google’s Display Network or through traditional ads. Similar campaigns can be set up on other platforms like Facebook or Instagram, where your site visitors will see ads for your brand when they bounce from your website.

To break it down further, here is how you set up a retargeting campaign and how your ads reach your past site visitors:

  • Google Ads will give you a snippet of code for your website. This code will collect the cookie ID of site visitors and add it to your retargeting list. 
  • You can also upload email marketing lists to increase your retargeting efforts.
  • Once Google Ads has the user’s cookie ID, it will sort them into various retargeting lists based on user behavior. For example, you can have a general retargeting campaign for any visitor who visits your homepage or you can have a specific retargeting list for users who click on certain product pages
  • The remarketing tag tells Google (or any other ad platform that you plan to use) what ads to promote.  
  • Marketers determine how long the ads will run based on the typical buyer journey (usually a few days or weeks). 
  • Marketers can either use traditional ads for remarketing or create compelling visual ads on the Google display network.   
  • The retargeting ads remind site visitors about your brand and encourage them to return to your website and make a purchase. 

For additional resources on how to set up your retargeting campaign, including step-by-step instructions for how to navigate the Google interface, start with this YouTube video created by Google Ads. Keep in mind that this video was before Google updated its Ads interface. AdEspresso created a new guide in 2019 for the updated format, with screenshots of each step. These two resources should help you get your retargeting campaigns up and running.

Why is Retargeting Effective?

Retargeting is an effective form of marketing because it reaches people who are already familiar with your products. Instead of constantly introducing your brand to new customers, you can market to people who already know what you offer. Some companies use retargeting to create a more compelling offer for buyers on the fence. If a customer bounced because they wanted to shop around, a coupon code or discount might bring them back to pull the trigger.

In order to make retargeting effective for your brand, you need to know why your site visitors bounce. While every customer is different, these are a few common reasons why people don’t convert:

  • Your customers want to comparison shop your prices and items to others in your industry. 
  • The products are expensive and your customers want to think about the purchase first. 
  • Your customers were distracted or were pulled away from your website by something else on the internet. 
  • The products are not a necessity and your customer bounced to save money. 

For example, think about a travel eCommerce site like Southwest. A customer might browse for flights, but want to keep shopping before they decide where to go. They bounce, but a few days later a compelling ad reminds them about their vacation plans, so they return to the Southwest site to finally book the trip. The retargeting ads kept them in the sales funnel and brought them deeper to the point where they could buy.

retargeting example

The Data Behind Retargeting

This information isn’t just based on theory, either. There is concrete data that proves customers respond well to retargeting and are likely to engage with your retargeted ads. Consider a few of these retargeting statistics for 2019: 

  • Customers who see retargeted display ads are 70% more likely to convert than new customers. 
  • The click-thru-rate of a retargeted ad is 10x higher than that of a traditional display ad.
  • Almost half (47%) of customers say they would sacrifice privacy to get a better deal.   

This data shows that your customers want to buy from you – they just need a little extra prodding sometimes to come back and complete the purchase.

What is the Difference Between Retargeting and Remarketing?

Throughout your research process, you may come across people and pages that refer to remarketing instead of retargeting. While remarketing and retargeting are similar, they have distinct differences:

  • Retargeting refers to reaching out to lost customers through paid ads – typically through Google Ads or other paid placements. 
  • Remarketing refers to reaching out to lost customers through email marketing or other campaigns. 

For example, if you send a follow-up email to a customer who didn’t convert, that is part of your remarketing campaign. If that customer sees an ad from the Google Display Network, they have been retargeted. 

These terms are used by most marketing professionals to differentiate between the two practices. However, you will see some overlap. Google, for example, has developed a remarketing toolkit even though it is referring to its retargeting ads.

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