Retargeting Ads Have Weak Appeal With Consumers

May 15, 2018

Retargeting is considered to be one of the most effective tactics for driving search and social advertising performance. But shoppers have different ideas about the value of retargeting, according to a new study from Nanigans.

To arrive at its conclusions, Nanigans surveyed 1,000 US consumers who had made a purchase online from a retailer in the previous 6 months. All respondents were aware of retargeting ads and had noticed them before.

Among this group, a majority (57%) said they believe that retargeting ads had no influence on their decision to buy something online. In fact, those who believe that retargeting ads did have an influence were almost as apt to say that the ads had a negative (10%) than positive (12%) impact on their decision to buy.

The negative impact on their decision to purchase something may be a result of retargeting ads hurting the shopping experience. Fully 88% of respondents, for example, said that they at least sometimes see retargeting ads for products they’ve already purchased. Furthermore, upwards of three-quarters say they often see too many retargeting ads from the same retailer.

Considering that improved brand awareness has been cited as the top goal for retargeting, retailers may be at risk of suffering from the wrong type of awareness…

The rife dissatisfaction with retargeting also means that consumers don’t see many ways to improve it. While one-third of respondents said that retailers could make retargeting ads better by better realizing when they’re not interested, even more respondents simply would rather that retailers stop using retargeting ads entirely (39%).

Performance Marketers Also See Changes Ahead

As part of its report Nanigans also commissioned a separate survey of 100 performance marketers at US e-commerce/online retail companies with responsibility for performance display advertising budgets of at least $5 million.

The results demonstrate that fully 53% of these marketers intend to increase their spending on digital performance advertising this year, with planned increases averaging out at a hefty 24%.

But these budget increases are coming despite questions about the role that retargeting plays in driving conversions and sales. Indeed, 83% of e-commerce performance marketers believe that some of the sales they’ve attributed to retargeting ad campaigns would have occurred organically anyhow without the advertising. Yet only about one-quarter (28%) have the capability to determine if that actually would be the case.

With that in mind, it’s not too surprising that top-cited digital advertising challenge by respondents is measuring the true business impact of advertising.

Incrementality – or lift testing – is argued by Nanigans to be “the gold standard” for measuring digital advertising effectiveness. This is defined as “a way to calculate the lift in ad performance by comparing differences in outcomes between a group of people shown advertising and a comparable control group that wasn’t shown the ad. This allows companies to know how much business they get when you spend money on advertising relative to how much business you get when you don’t spend money on advertising.”

For the time being, though, lift testing isn’t widespread among performance marketers: fully 43% have never run such a test on their digital advertising. And among those who have, the majority tested at most once per quarter.

As a result, just 11% said that their primary KPI metric for measuring digital advertising effectiveness is incremental revenue lift.

Perhaps that will change as e-commerce marketers refine their retargeting strategies to align better with consumer expectations…

The full study can be viewed here.

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