What is Retargeting?
Retargeting explained clearly. Definition, real-world examples, and practical significance for marketers.
Retargeting is a digital advertising strategy that displays ads to users who have previously visited a website or engaged with a brand’s content but didn’t complete a desired action.
What is Retargeting?
Retargeting uses tracking pixels or cookies to identify visitors who leave a website without converting, then serves them targeted advertisements across other websites and platforms they visit. This technique capitalizes on the marketing principle that multiple touchpoints increase conversion likelihood, particularly valuable since only 2-3% of website visitors typically convert on their first visit.
The process begins when a user visits a website, triggering a small piece of code (pixel) that places an anonymous browser cookie. This cookie enables the retargeting platform to recognize the user across the web and display relevant ads based on their previous browsing behavior. Programmatic advertising platforms then bid on ad inventory in real-time to show these personalized messages.
Retargeting effectiveness can be measured using this basic formula:
Retargeting Conversion Rate = (Retargeting Conversions ÷ Retargeting Clicks) × 100
For example, if a campaign generates 500 clicks and 25 conversions, the conversion rate equals (25 ÷ 500) × 100 = 5%. Industry benchmarks show retargeting campaigns typically achieve conversion rates between 3-10%, significantly higher than standard display advertising rates of 0.5-1%.
Different retargeting types serve specific purposes. Site retargeting targets all website visitors, while behavioral targeting focuses on users who performed specific actions like viewing product pages or abandoning shopping carts. Search retargeting reaches users based on their search history, and social media retargeting uses platform-specific data to refine audience segments.
Retargeting in Practice
Amazon exemplifies sophisticated retargeting through its dynamic product ads that display specific items users viewed but didn’t purchase. The e-commerce giant reportedly achieves a 1,400% return on ad spend through retargeting campaigns that show personalized product recommendations across millions of websites. Amazon’s algorithm considers factors like viewing time, price comparisons, and similar product interactions to optimize ad relevance.
Spotify uses retargeting to convert free trial users into premium subscribers. The music streaming service targets users who engaged with premium features during free trials but didn’t upgrade, showing ads that highlight ad-free listening and offline downloads. This strategy contributed to Spotify’s premium subscriber growth from 180 million in 2020 to over 220 million by 2023.
Fashion retailer ASOS implements cart abandonment retargeting that shows specific abandoned products with time-sensitive discount offers. Their campaigns include social proof elements like “only 2 left in stock” messages and personalized recommendations based on browsing history. This approach helped ASOS achieve a 25% increase in recovered cart revenue, generating an additional $15 million annually from previously lost sales.
Travel booking platform Booking.com uses location-based retargeting to show hotel deals in destinations users previously searched. Their campaigns incorporate urgency tactics like “prices increased since your last visit” and social proof such as “12 people booked this hotel today.” This strategy generates a 15% higher click-through rate compared to generic travel ads and contributes to Booking.com’s 40% of traffic coming from repeat visitors.
Why Retargeting Matters for Marketers
Retargeting addresses the reality that most consumers require multiple brand exposures before making purchase decisions. Research indicates that 70% of online shopping carts are abandoned, representing significant revenue recovery opportunities through strategic retargeting campaigns.
The cost efficiency of retargeting makes it particularly valuable for marketers working with limited budgets. Since retargeted users have demonstrated interest in a brand or product, they typically cost 2-3 times less to convert than cold prospects acquired through traditional advertising channels. This efficiency stems from higher relevance scores and engagement rates that reduce cost-per-click in auction-based advertising systems.
Retargeting also provides valuable customer journey insights through detailed performance data. Marketers can analyze which products generate the most interest, identify optimal ad frequency to avoid fatigue, and understand the typical path to conversion. This data informs broader marketing strategies beyond retargeting campaigns, including website optimization, product positioning, and customer lifetime value calculations.
Related Terms
- Programmatic Advertising: Automated buying and selling of digital ad inventory that powers most retargeting campaigns
- Behavioral Targeting: Advertising strategy that uses user actions and preferences to deliver personalized messages
- Click-Through Rate: Percentage of ad impressions that result in clicks, a key retargeting performance metric
- Cost Per Click: Pricing model where advertisers pay for each click on their retargeted ads
- Customer Lifetime Value: Total revenue a customer generates over their relationship with a brand, influenced by retargeting effectiveness
- Conversion Rate Optimization: Process of improving website elements to increase the percentage of visitors who complete desired actions
FAQ
How long should retargeting campaigns run?
Retargeting campaigns typically run for 30-90 days after a user’s initial website visit, depending on the product’s purchase cycle. High-consideration purchases like cars or real estate may warrant longer campaigns, while impulse purchases work best with 7-30 day windows to maintain relevance without causing ad fatigue.
What’s the difference between retargeting and remarketing?
Retargeting specifically refers to serving display ads to previous website visitors across third-party websites, while remarketing encompasses all methods of re-engaging past customers, including email campaigns, direct mail, and phone calls. Google AdWords uses “remarketing” for their retargeting features, contributing to the terminology confusion.
How much should businesses budget for retargeting?
Most businesses allocate 10-20% of their total digital advertising budget to retargeting campaigns. E-commerce companies often dedicate higher percentages due to cart abandonment recovery opportunities, while B2B companies may invest less due to longer sales cycles and smaller audiences suitable for retargeting.
Can retargeting work without cookies?
Yes, cookieless retargeting methods include email-based customer matching, device fingerprinting, and first-party data collection through customer accounts. As browser privacy restrictions increase, these alternatives become more important, though they typically offer less precise targeting than cookie-based methods.