Ad Retargeting: It’s About Context, Relevance & Value

By , Published October 30, 2014

The exponential the increase in “big data” aggregation has paved the way for advanced online advertising technologies such as ad retargeting, which allows brands to micro-segment their audience in order to serve up contextually relevant ads in just the right place and at just the right time. Only now are businesses and marketers beginning to fully recognize the wide applicability of ad retargeting to virtually every stage of the buying cycle – from increasing brand awareness, to influencing purchase decision and optimizing sales conversion.

But how does ad retargeting work? According to ad retargeting vendor AdRoll, only 2% of shoppers convert on the first visit to an online store. Retargeting tracks the users who visit a company’s website and displays the brand’s retargeted ads to these users when they subsequently visit other sites online.

By doing so, ad retargeting connects users with the company’s message multiple times, not just once, increasing conversion rates. In fact, as Ratko Vidakovic aptly points out in a recent Marketing Land post, brands leveraging ad retargeting often enjoy higher click-through-rates (CTRs); it’s not uncommon to see CTRs in the range of 0.30-0.95% – which is 3-10 times higher than the industry average.

Because ad retargeting is an especially effective branding and conversion optimization tool, it is often employed as part of a larger integrated digital marketing strategy, working in concert with paid and organic search, content, social, and email marketing to help businesses raise brand awareness and increase sales conversion.

That all sounds good in theory, but what’s the reality? How well does ad retargeting really work? How do actual online consumers perceive the technology?

These are some of the questions addressed in a new survey report issued by ad tech company InSkin Media and media planning and buying agency RAPP media. The two companies commissioned ResearchNow to survey a panel of over 1,600 adults for the report, entitled, “Familiarity, Frequency and Fine Lines.”

What they found was a decidedly mixed reaction to ad retargeting among survey respondents, with context, relevance, and perceived value as the critical factors influencing whether users have a positive or negative opinion of retargeted ads.

According to the study, three areas in particular tend to shape online consumer perceptions of ad retargeting: excessive frequency of ad impressions, concerns about over-familiarity, and lack of appropriate context. For the sake of simplicity, I’ve re-dubbed these the annoyance, creepiness, and irrelevance factors. Let’s examine each in turn.

Annoyance Factor

Excessive frequency of ad impressions – A slight majority (53%) of the survey group had a positive opinion of online ads, finding them “interesting and useful.” However, the utility of online ads seems to quickly wane with frequency, with 55% of survey respondents going as far as saying they will put off buying products or services if they see the same ad online multiple times.

So how much is too much? At a frequency of 3 views, one third of respondents still use positive words to describe the retargeting experience, with 20% finding retargeting either “relevant” or “helpful.” At a frequency of  4-5 views, positive impressions drop by half, with 54% citing the ads as “annoying” or “intrusive.” At 10 views or more, ambivalence turns to outright negativity, with the number finding the ad merely “annoying” dropping by 25%, and the number stating the ad “makes me angry” increasing threefold.

Creepiness Factor

Concerns about over-familiarity – The report’s findings reflect the clear concern felt by online consumers of brands getting too close to and making use of their personal data without a sufficient value exchange.

The following stat is especially interesting: over two-thirds (69%) of consumers surveyed are uncomfortable with advertisers knowing which websites they’ve visited – an uncomfortableness rate that is only marginally lower than knowing their home address (72%) and current location (71%). If ever there was a statistic to reflect just how seamless the transition between the online and offline worlds is becoming to us consumers, this is the one. It also reflects how real the concept of online proximity has become to consumers, which makes it relevant to marketers – of equal relevance, perhaps, as physical proximity has been in the past.

Irrelevance Factor

Lack of appropriate context – The report also found that ads served in the wrong editorial environment or outside the consumer’s mindset can do more harm than good. Ads displayed on sites where the content was unrelated to the advertised product or service created higher negative sentiment. Even here, frequency was an important factor.

At 3 ad views, positive impression of the ad (defined as the sense of the campaign’s cleverness, relevance, helpfulness) dropped by one third, to 21%. At 4-5 views, the number of respondents getting angry doubled. At 10+, it more than doubled again, leaving approximately one third of all respondents in a clearly negative frame of mind. Here’s the big one: the report found that ads served on sites unrelated to the product or service being advertised are over 11 times more likely to discourage, rather than encourage, a purchase.

For brands, a big part of creating relevance is matching up ads with prospects at the appropriate stage of the buying cycle. The survey found that consumers are 4 times more likely to be encouraged rather than discouraged to buy something if they see a relevant ad during the research stage. On the flip side, an ad seen after their research is complete is 15% more likely to discourage rather than encourage a purchase; if seen after purchase, the ad is nearly 4 times more likely to discourage future purchases.

As Paul Phillips, RAPP’s Head of Media Strategy notes, “It’s not just about how many times the ad is seen, it’s when it’s seen. Retargeted ads served after the research phase could potentially do more harm than good.”

Not surprisingly, consumer perceptions about the quality and trustworthiness of the brand and its website were found to have a direct impact on consumer actions: survey respondents were 37% more likely to click on an ad if it was on a site they trust. Those viewing the same ads on more highly recognizable brand websites had more positive reactions than on lesser-known sites – a Land Rover ad on The Independent website was 71% more likely to be rated positively than on lesser-known site, Catster.

Context, Relevance, and Value

Context creates brand relevance, relevance builds brand value, and value fosters brand affinity. As is the case with marketing, so it is with online ad retargeting.

Given this, what are some ad retargeting best practices? First and foremost, watch your frequency. Try and follow the same principle you might when cocktailing at your buddy’s wedding: know how much is too much, and try not to cross the line. Be relevant without being creepy. Finally, stay focused on delivering a credible value exchange; part of doing this is making sure to align your retargeting efforts with the appropriate stage of your audience’s buying cycle.

In my humble opinion, too many brands tend to silo the paid and organic elements of their digital marketing campaigns, often to their detriment. Instead, they should be using paid tools like ad retargeting to support and augment organic (unpaid) elements like content creation, SEO, and social media in an effort to create truly integrated digital marketing strategies.

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