Dax Hamman is Chief Strategy Officer at Chango.
Despite their prolific use of site retargeting, it turns out most marketers do not realize that their programs are broken. Poor transparency and understanding is resulting in inflated budgets, excessive margins, fake measurement techniques and irritated consumers. And while site retargeting makes sense as a high level concept—reengaging interested parties is logical—most marketers are not getting the high return on investment retargeting should offer.
Over time they have lost touch with the reality of the situation, and whilst the ROI must look great every week on their reports, site retargeting is not going to help find brand new individuals for their businesses. Every marketer should understand what is occurring and then find ways to reduce this particular budget and find smarter places to reallocate it.
It might look good
Since retargeting is the ‘best’ performing media tactic on a plan, the motivation is to push site retargeting budgets higher and higher, often at the expense of new customer acquisition programs. At the recent Digiday Retail Summit in California this week there was talk about ways to ‘squeeze’ more money into the retargeting budget. But given that your retargeting budget is dependent on how many visitors you have, squeezing more from the same is only possible by (a) serving ads to the wrong people (b) by serving too many ads to the right people or (c) by pushing up the margin the vendor makes, none of which make sense for the marketer.
A lack of transparency
Secondly, most marketers do not know basic information such as the cost of their media, the actual sites where their ads ran, or the real frequency caps being used, because they are intentionally being kept in the dark. I regularly hear it said that this isn’t really a problem because their goals are being met, but surely the real goal should be to achieve more and spend less.
This black box approach means that margins are commonly as high as 70%+, particularly at click-focused organizations that arbitrage cheap media. And it seems to be getting worse. I was stunned to hear last week from a marketer that even though his site retargeting vendor had now blended in FBX inventory, that their effective CPM had not declined. Given FBX is at least a third of other RTB inventory, their vendor is now making a third more margin from them.
Stop stalking me!
One of the biggest problems is serving too many impressions to any individual. If I haven’t bought your shoes after 50 impressions, another 1,000 won’t make any difference. Unrealistic frequency caps are a result of this attempt to unnaturally ‘squeeze’ a program, and it may surprise many, is as common for click-based programs as it is for their CPM counterparts. In both cases, the more ads that are scattered, the better the chance of a click to conversion. This doesn’t just impact your ROI, it also impacts the consumer experience, with many starting to complain about ‘being stalked’. Be honest and ask yourself if you have ever felt that way about a brand – is that what you want your customers to feel?
Setting the expectations
Having been asked to analyze 7 major retailer’s retargeting programs and provide feedback, I was not surprised to see that margins are too high, clicks are being faked and frequency caps are out of control. Some were paying over $4.50 CPM for site retargeting. In these cases a marketer’s budget could be reduced by 40% with a more reasonable CPM, and reduced even further by reducing the frequency cap to a more sensible number.
It is reasonable for any marketer to expect their partners to provide details of where their ads ran, what percentage of the budget was spent on FBX versus other exchanges and what frequency caps are in place. Once you have this data, the marketer can look for ways to cut out that waste.
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