retargeting benchmark report - q1 2013

ContentPart 1: Topic OverviewPart 2: Reasons to ImplementPart 3: Value DriversPart 4: ChallengesPart 5: Performance MetricsPart 6: Success StoryPart 7: Vendor Landscape

SidebarsSurvey StatsBenchmark KPIsCore TechnologiesGleanster NumbersVendor Quick Reference Guide

Entire content © 2013 Gleanster, LLC. All rights reserved. Unauthorized use or reproduction is prohibited.

Note: This document is intended for individual use. Electronic distribution via email or by posting on a personal website is in violation of the terms of use.

Q1 2013

Gleansight

Retargeting has emerged as an effective way to improve results from Web marketing. Originally limited to serving Web banner ads to people who had previously visited a company’s Web site, it has now been expanded to include messages based on search terms, content viewed elsewhere on the web, and other online/offline behaviors. What these activities all share is insight into a person’s intent, which forms the basis for targeted advertising. Intent-based personalization and targeting is more effective than targeting based on demographics or the location an ad displays, older and still more common approaches. The trade-off is that intent is harder to identify, so audiences for retargeting messages are much smaller than those available using less refined methods. As a result, marketers must use a mix of methods to generate enough response.

Growth of retargeting faces other obstacles as well. One is the “creepiness” factor: some marketers fear that customers will be annoyed by messages based on information they did not intentionally provide. This concern is probably overrated and can largely be overcome by sending ads that do not explicitly reference customer-specific

information. Government requirements for “do not track” options could reduce retargeting’s effectiveness but their final form, if any, remains to be seen. A more concrete obstacle is revenue attribution methods that understate the impact of retargeted messages: by definition, retargeted ads are served after the first interaction with a potential buyer, and

Retargeting

http://www.gleanster.com


Gleansight: Retargeting 2



many act as intermediate reminders that precede an actual purchase. Thus, both first- and last-touch attribution fail to capture retargeting’s full contribution. A final barrier is many marketers’ unfamiliarity with retargeting techniques, which prevents them from even testing them.

Despite these issues, retargeting has been proven to offer higher response

and lower cost-per-click than traditional Web advertising. Initial success in e-commerce, retail, education, and travel marketing has been duplicated in other industries selling to both consumers and businesses. Those results ensure that marketers will continue to explore and adopt it at an increasing rate. This study will help you to understand the opportunity and use retargeting to its full advantage.





Retargeting systems perform three basic functions: behavior capture, targeting, and ad serving. Behavior capture includes tagging individuals by dropping cookies on their computer and associating these cookies with specific events or interests. Targeting determines which messages will be sent to which individuals. In addition to interests, targeting may take into account the price an advertiser is willing to pay for the message and how much other advertisers would pay for the same opportunity. Ad serving includes identifying tagged individuals when they appear on a Web site, selecting a message, and delivering the message to the Web site for display. Retargeting vendors may build their own network of Web sites to display messages, buy inventory from external ad networks, or do both. Vendors also differ in how much of the program set-up, administration, and optimization marketers do for themselves. Options range from full self-service, as in Google Ad Network “Remarketing” (Google’s term for retargeting), to fully outsourced.

Retargeting methods fall into two broad categories.

1. Site-based retargeting uses data gathered on a company’s own Web

site, such as pages viewed and products purchased. Anonymous visitors are tracked via cookies until they identify themselves by logging in or making an actual purchase. Site-based retargeting can capture very detailed information about each visitor, which in turn allows for precisely targeted messages. In some cases, the site-based ad is dynamically adjusted based on specific products the visitor has

previously considered or purchased. This is sometimes called product retargeting. Other types of company-based retargeting may use cookies dropped by an email message, social media content, or promotion landing

pages. These are fundamentally similar to site-based retargeting in starting with a direct interaction between the visitor and the company.

2. Search-based retargeting works uses data from search engine queries as the basis for targeting. Because search-based retargeting does not require direct interaction with a company’s content, it can reach a much larger audience than site-based retargeting. Search-based retargeting can also connect with prospects earlier in the buying cycle, including people who are not yet aware of the advertiser.

Survey StatsThe research findings featured in this Gleansight benchmark report are derived from the Q4 2012 Gleanster survey on Retargeting.

• Total survey responses: 234

• Qualified survey responses: 146

• Company size: <$1M (3%); $1 - 10M (17%); $10-100M (41%); $100M - $1B (25%); >$1B (14%)

• Geography: North America (95%); Europe (4%); Other (1%)

• Industries: Retail (18%); CPG (11%); Manufacturing (8%); Financial Services (5%); Travel & Hospitality (5%); Entertainment (4%); Other (49%)

• Job levels: C-level (17%); SVP/ VP (23%); Director (37%); Manager & Staff (23%)

Sample survey respondents:

EVP, StorkGifts

Manager, Microsoft

Owner, Leather Gloves Online

Director, Expedia

VP of Marketing, Blue Jeans Network

CMO, TireBuyer.com

EVP, Body Bath Shop

Manager, Bloomingdales

CMO, Paciolan

Director, Symantec

Part 1: Topic OverviewThis study defines retargeting as Web ads delivered outside a company’s own site and based on a customer or prospect’s previous behavior. This excludes practices such as emails reminding customers of abandoned shopping carts and product recommendations made within a Web site based on previous purchases, which are also sometimes labeled as retargeting. The narrower focus allows a deeper examination of the chosen topic.

Retargeting systems perform three basic functions: behavior capture, targeting, and ad serving.”

“





Benchmark KPIs Gleanster uses 2-3 key performance indicators (KPIs) to distinguish “Top Performers” from all other companies (“Everyone Else”) within a given data set, thereby establishing a basis for benchmarking best practices. By definition, Top Performers are comprised of the top quartile of qualified survey respondents (QSRs).

The KPIs used for distinguishing Top Performers focus on performance metrics that speak to year-over-year improvement in relevant, measurable areas. Not all KPIs are weighted equally.

The KPIs used for this Gleansight are:

• Year-over-year increase in revenue

• Average Click-Through Rate

• *Use of Retargeting

To learn more about Gleanster’s research methodology, please click here or email [email protected].

Both site- and search-based retargeting can be purchased either on the number of impressions (cost per thousand, or CPM) or the number of responses (cost per click, or CPC). The CPM model is best suited to brand marketers, who are more interested in repeated exposure than generating immediate action. Direct marketers, who carefully monitor their cost per sale, often prefer

the CPC model. Some retargeting plans also offer a cost per action model, where advertisers pay only for specified conversion events such as providing contact information or making a purchase. Even when marketers pay on CPM or CPC, they often evaluate their retargeting programs in terms of cost per action.


http://www.gleanster.com/about-us/research-methodology

mailto:research%40gleanster.com?subject=Research%20Metholology%20Question




Because retargeting systems can store very detailed information about each visitor, they may also permit messaging that is precisely tailored to each individual. This improves both advertising effectiveness and the over-all brand experience.

Increase Revenue. Retargeting expands the audience for your ads and helps convert a higher percentage of visitors to customers. Both factors create more revenue. In addition, because retargeting will probably replace other, less effective ad targeting methods, it should result in higher return on ad budgets, either allowing a smaller spend to create the same revenue or the same spend to yield a revenue increase.

Increased new customer acquisition. Both site- and search-based retargeting

can help to acquire new customers. Site-based retargeting uses cookies to tag anonymous visitors and then recontact them as they visit other sites. Search-based retargeting can reach prospects whose behavior seems appropriate even though they have never visited the company’s own Web site. Both applications allow the company to reach and capture more new customers than they would with traditional Web advertising.

Increased marketing ROI. Retargeting improves marketing ROI by identifying highly responsive audiences, sending those audiences precisely targeted messages, and allowing use of lower cost ad impressions. The result is both higher response and lower investment. Converting these benefits into an actual ROI calculation requires a way

Part 2: Reasons to ImplementRetargeting was originally used to recontact potential customers who had visited a Web site but not made a purchase. This provided a direct boost to sales at a lower acquisition cost than other, less focused advertising. The emergence of search retargeting has extended the reach to include prospects in earlier stages of the purchase cycle, since ads can be based on general search terms and be sent to people who have yet visited the advertiser’s own site. Since the ads can be served on any Web site within the retargeting vendor’s network, the inventory of available impressions is higher and the cost per contact is potentially reduced. The net result, again, is more cost effective advertising as marketers reach a targeted audience for less.

* According to Top Performers, based on 146 Qualified Survey Responses to the Q4 2012 survey on Retargeting.**According to Everyone Else shown only when a notable disparity occurs relative to Top Performers* According to Top Performers, based on 135 Qualified Survey Responses to the Q3 2011 Gleanster survey

95%90%86%MostCompellingReasons toImplement*

Increase marketing ROI Increase new customeracquisition

Increase revenue

29%**

** According to Everyone Else, shown only when a notable disparity occurs relative to Top Performers

43%**





to relate responses to actual business value. This can be difficult if analytical techniques fail to credit retargeting messages with a contribution towards subsequent purchases through different channels.

Raise brand awareness. The ability of remarketing campaigns to reach customers outside of the marketer’s own Web site allows broader distribution of brand awareness messages. Search-based retargeting in particular can expand awareness by concentrating messages on individuals who have not previously engaged with the company. Techniques such as sequential messages streams and individual-level frequency caps can further increase the effectiveness of brand promotions.

Increase cross-selling and up-selling revenue. Retargeting can be used to contact existing, identified customers as well as anonymous prospects. Once a customer has identified herself by filling out a form or making a purchase, their identity can be linked to the previously-anonymous cookie. Selection rules can then look up information about past purchases and use this to offer related products or upgrades. The system can constantly check for updated information, so it does not send offers that are no longer relevant.

Reactivate recent customers. TRetargeting can send messages to recent customers based both on actual purchases and on purchases they did

not make. Messages can highlight a specific product, make a generic reactivation offer, or simply remind the consumer of the brand. Reactivation messages may be based on behavior information gathered from transactions, emails, social networks, or other sources, in addition to messages based on Web site activity.

Lower marketing costs. The primary cost savings from remarketing come from more effective advertising, which allows marketers to get the same results for less money. Marketers may also save money through lower content creation costs, if they can create fewer or simpler ads, and through time savings from replacing more elaborate acquisition campaigns with simple-to-run remarketing campaigns. Actual changes in labor will depend on the degree of automation within the remarketing system, which services they perform for themselves or outsource, and the effort they put into analytics.

Micro-target audiences with personalized messaging. The retargeting system can capture detailed profiles of on-site behavior, and then use these to target off-site messages. This allows much more precise targeting than the generic demographic or contextual data that would otherwise be used to guide Web advertising. The degree of personalization within the ads themselves must sometimes be limited to avoid making customers feel that their privacy has been invaded.

* According to Top Performers, based on 135 Qualified Survey Responses to the Q3 2011 Gleanster survey

33%24%19% Compelling

Reasons to Implement*

Reactivate recent

customersIncrease cross-selling and

up-selling revenueRaise brand awareness

57%**

** According to Everyone Else, shown only when a notable disparity occurs relative to Top Performers* According to Top Performers, based on 146 Qualified Survey Responses to the Q4 2012 survey on Retargeting.**According to Everyone Else shown only when a notable disparity occurs relative to Top Performers





Extend a more personalized brand experience. Because retargeting is based on individual behaviors, it inherently allows a more personalized experience than traditional advertising. In addition, some retargeting systems can deliver a sequence of messages to each individual, allowing very tight control over which messages they receive. The systems do this by keep track of which messages have already been delivered to each person. Messages can also vary based on visitors’ response to past messages, other behaviors, and the current Web site or Web page contents.

Speed of implementation. Deployment of retargeting is relatively straightforward. Marketers must add a snippet of tracking code to the company Web site, either in shared footer or on individual pages. There might be some additional integration to capture and classify specific details, but this should not be a major project. They must also provide ads or dynamic ad templates and develop rules to match these ads to visitor segments. Even some of these steps may be automated in certain systems. Set-up should be a matter of hours or days, although preliminary research and decision-making may extend this considerably.


14%14%10%LessCompellingReasons toImplement*

Extend a more personalbrand experience

Micro-target audiences with personalized brand experience

Lower marketing costs






Part 3: Value DriversSuccess of a retargeting campaign depends on a few simple conditions: marketers must be able to tag members of the target audience and later reach them on other Web sites; the audience must care enough about the messages to respond; costs must be in line with results. But meeting those conditions may be complicated. The system needs to capture appropriate data and interpret it correctly. Segmentation and selection rules must accurately reflect audience interests. Advertising content must be effective and reach a large enough audience. Individuals must not be contacted too often or at the wrong times. Vendor technology and services must match the marketer’s needs.


93%89%57%MostImportantValueDrivers*

Set measurable objectives for each campaign

Continuous optimization of campaigns

Measure ROI for each campaign


54%**

* According to Top Performers, based on 146 Qualified Survey Responses to the Q4 2012 survey on Retargeting.**According to Everyone Else shown only when a notable disparity occurs relative to Top Performers

Testing is one key to reaching these goals. Other success factors include effective program design, execution, and result measurement. The retargeting campaign must be developed in the context of the company’s larger marketing strategy, both to ensure it has appropriate objectives and to allow meaningful assessment of its results.

Measure ROI for each campaign. Measuring ROI in general depends on capturing accurate costs and revenues, and in particular on having an attribution methodology that accurately measures the incremental impact of each program on over-all results. Campaign ROI requires further refinement, looking at individual campaigns within the retargeting program. This is essential for optimal results, since campaign performance can vary widely. Without campaign-level analysis, unprofitable

campaigns will run undetected or, even worse, the entire retargeting program could be cancelled because the average return is inadequate.

Continuous optimization of campaigns. Each retargeting campaign has many individual components, including audience definition, selection rules, ad locations, marketing messages, frequency limits, and cost targets. Each of these needs to be monitored and adjusted as the campaign proceeds. Without this optimization, there is little chance of retargeting reaching anything near its full potential.

Set measurable objectives for each campaign. Retargeting campaigns may be designed to build brand awareness, attract new customers, generate incremental revenue, or meet other targets. Marketers need to define these





goals explicitly in a way that they can be measured. The metric will not always be financial, since some goals have only a loose relationship with actual revenue.

Unique creative. The amount of content required for retargeting depends on the number of segments. If many versions are needed, marketers must have a cost-effective way to create the materials. This may be done manually, with standard templates that are adapted for each version, or with dynamic content generators. Content may include display ads, landing pages, special offers, coupons, and other materials. Top Performers indicate the tone of content used in retargeting campaigns can have a material impact on the success of campaigns. In fact, Top Performers frequently referenced a need to adjust the creative engaging and borderline humorous messaging tends to drive the best click-through performance..

Robustness of features in the tool. Retargeting systems vary greatly in scope and complexity. Some are designed for self-service while others are used primarily by the vendor’s own staff. Some provide just basic campaign set-up while others add automated optimization, dynamic content, self-tuning predictive models, precise audience selection, semantic analysis, message sequences, and other capabilities. Marketers need to assess their own requirements and find

a system that meets them. They may choose to start with one type of system and then move to another as their needs evolve.

Integrate data and activities across multiple systems. Retargeting messages should be adjusted in response to customer actions, such as purchasing a product they had previously considered. These actions may take place in different systems, whose data must be combined in an integrated customer view. This integration takes place outside the retargeting system, but the results must be stored in a location that is immediately accessible. Failure to make these adjustments may significantly damage the customer’s relationship with the company, reversing many benefits gained from retargeting.

Coordinate offers across channels. TAlthough retargeting messages are directly tailored to specific individuals, those same people will also receive untargeted company messages through other channels. The two sets of messages need not be identical, but nor should they conflict. To avoid this, marketers must ensure that retargeting messages are based on the same brand platform as all other company messages. This takes special attention with system-generated dynamic messages, which may be assembled from components without being individually reviewed.


43%29%29% Important

Value Drivers*

Integrate data and activities

across multiple systemsRobustness of

features in the toolCreate unique

creative

0%**


Types of Retargeting

Product targets users based on a specific product and/or displaying highly personalized recommendations at a product level.

Demographic targets users based on inferred information about demographic factors--including age, gender, and social class--and creates specific audience groups to facilitate ad targeting.

Geographic targets users by country or region.

Contextual (search retargeting) targets users based on digital content. Audience segments are created using a topic, keyword, URL, or other page parameters to customize offers for each user.

Behavioral (site retargeting) targets users based on specific actions including keywords, pages visited, or engagement with certain objects on the web page.

Site List targeting enables advertisers to specify the sites or sets of sites on which to serve advertisements.


http://raabguide.com/vest





14%14%11%LessImportant ValueDrivers*

Integration with: email, mobile, social

Establish minimum investmentthreshold to realize a return

Coordinate offers across channels


Integration with email, mobile, social. Retargeting programs can capture behaviors that originate in media other than a Web page. Pixels embedded in emails can drop cookies even before a user clicks through to the specified landing page. Mobile programs can capture responses and link them to known customer identities. Social retargeting may be based on shared messages that also drop cookies, or use the social network’s own identity-tracking mechanisms. Retargeting messages can be delivered within whatever media can be linked to the original customer identity: this may reside only within the original media or be available across several media.

Establish minimum investment threshold to realize a return. Many retargeting systems require a minimum number of impressions to function effectively. This quantity may not be available for a particular retargeting message if few people take the targeted action, or if those people are not found on other Web sites that can display the ads. Marketers also need a minimum volume to cover fixed costs for program

creative and set-up.

Reuse existing creative. One way to reduce program costs is to reuse existing creative, often with slight modifications for different products or offers. Making this work effectively requires that the creative itself be constructed in formats that allow easy modification. Sharing components across multiple programs also expands the benefit received from testing, since winning designs can be applied to several programs simultaneously. However, marketers should also validate that the winning design for one program is in fact the best design for others.

Establish a sufficient timeline to test benefits. Marketers will need to gain experience with retargeting before they know how best to use it. Initial tests may not be profitable but could lay the foundation for future success. Marketers should plan to fund several money-losing research projects before they can accurately assess the relative value of retargeting compared with other marketing programs.





Part 4: ChallengesAlthough retargeting has proven successful in many organizations, a new deployment still faces challenges. Marketers must first fund an adequate budget for initial set-up and tests. They must then educate themselves on how the programs work, define clear success measures, and find a suitable attribution technique They need to select a vendor and integrate with corporate systems. They need to design the initial programs, create appropriate content, overcome any regulatory or privacy issues, and ensure the audience is large enough to be worthwhile. Once they achieve initial success, they’ll need to justify shifting operational funds into retargeting from other programs.


77%71%48%MostChallengingAspects*

Consumer privacy concerns

Adequate attribution methodology

Managing potential brand fatigue

18%**


Overcoming these challenges requires a clear understanding of the process, adequate commitment to initial projects, clear planning, disciplined execution, and management support. Marketers should learn from others’ success and rely as necessary on external resources, including vendors and consultants, to help manage the process.

Managing potential brand fatigue. Repeated retargeting messages could easily annoy a prospect, and would have diminishing returns even if they didn’t. Retargeting systems prevent this by setting caps on how many times the same person sees the same message, how close in time the messages are presented, and how long after the initial event the person remains active. These rules are controlled by the marketer and can be adjusted based on

the situation: people stay in the market for some products much longer than others.

Adequate attribution methodology. Accurately measuring the impact of individual marketing programs is always difficult. Retargeting faces specific challenges because its advertising messages may be seen without generating an explicit response. Marketers can best overcome this limit through formal split testing, which divides a pool of similar customers into two groups, sends retargeting messages to only one group, and compares their long-term performance. Fortunately, retargeting lends itself to this sort of testing more easily than many other marketing techniques. Additionally, new generations of retargeting platforms are starting to address this challenge by tracking

Other Key Features

Unique features in some Retargeting platforms include:

Frequency Caps. Frequency is the number of times a specific ad is displayed to a user in a given period of time. Frequency caps allow users to limit the number times a user sees a particular advertisement to help manage brand fatigue.

Split tests. Similar to website a/b testing and multi-variant testing, users can run multiple retargeting campaigns and determine the optimal message, frequency, and reach.

Recency optimization. Sometimes the flow of data across retargeting platforms and ad networks leads to delays in the timeliness of information used to trigger campaigns. For some keywords, there’s no point in triggering an impression if users rarely convert after a set period of time. The ability to manage and monitor recency of search criteria is unique to a handful of vendors.

Customer data uploads. Internal customer data can be loaded to a retargeting solution and used to target key prospects and customers without an initial website visit from these individuals. Customer data can also be used in conjunction with data management platforms to locate new audiences or optimize existing campaigns based on past success.





engagement all the way to the final sale. Some retargeting solution providers even offer pricing that is exclusively based on measurable lift in sales.

Consumer privacy concerns. Most consumers realize that their Web behaviors are tracked to some degree. But companies must still be sensitive to consumers’ personal attitudes and to general public opinion. Retargeting programs should collect the minimum data necessary, inform consumers of data collection practices, and provide opt-out where feasible. Advertising should display specific information sparingly: targeting can be based on recorded behaviors without that information in the resulting ad.

Adequate audience reach and data. A company may simply not have enough volume for the remarketing program it wants to test. In this case, it may be possible to design a broader program that will include more people, to run the program over a longer period, or to include more customer sources such as email and social messages. If the problem is too few advertising opportunities for the retargeting messages, a different retargeting vendor may have a larger advertising inventory, or there may be options to run ads on a broader range of Web sites.

Budget constraints. A new retargeting program needs an adequate budget to meet minimum volume requirements and to cover fixed costs for training,

set-up, and content creation. If adequate funds are not immediately available, marketers may be able to try alternative retargeting methods that require lower initial investment. Given the generally high success rate of retargeting, most departments should be able to find a way to fund at least a small initial test.

Generating appropriate content. Retargeting programs need compelling content to entice customers to return for another look, or even to just stand out in the general fog of online advertising. Marketers may find this hard to create, especially in the early stages when they have no previous experience with what works. Aggressive early testing can help fill this gap, along with advice from vendors, agencies, and consultants who can draw on experience elsewhere.

Accurately personalizing messages. Most retargeting programs rely heavily on cookies to track individual customers. Cookies are not a perfect mechanism, since they can be deleted and they identify a computer, which may be shared by several users. The cookies in turn may be linked with other data, such as the name provided with a purchase made on the computer. This linkage could also be wrong. The more specific the information used by a retargeting program, the more likely an error. Marketers can minimize this problem by avoiding unnecessary personalization.


48%42%42% Challenging

Aspects*

Generating appropriate content

Budget contraints Adequate audience reach and data

18%** 71%**






Note: While Gleanster strives to include all of the most relevant and noteworthy solution providers in the Vendor Landscape section, the list is by no means comprehensive in nature. Omissions may occur due to lack of sufficient market presence, as judged by the Gleanster research analyst team. Space constraints may necessitate some amount of paring of even those vendors that do have sufficient market presence. Simple oversights may also happen on occasion. To submit information about a solution provider, please complete the Solution Provider Information Form. To schedule a vendor briefing, please email [email protected]. Vendor descriptions are taken verbatim from company websites or from vendor-submitted profile information. Gleanster Skinny (GS) commentaries are based on vendor briefings, customer interviews and Gleansight research findings as well as on company press releases and various other information sources.

Integration with other marketing programs. Retargeting programs sometimes generate revenue by themselves, but they more often feed customers into existing programs for acquisition, upsell, and cross sell. These programs must capture information necessary to identify customers who were influenced by the retargeting program. Otherwise, even a successful retargeting program may not appear profitable.

Lack of staff knowledge. Although retargeting is not especially difficult, it does require learning a new process and systems. This takes time which marketers could easily spend on other, more pressing projects. Unless a staff member has already done retargeting in a previous job, someone in the marketing department will need to set aside time to learn about remarketing. Management will have to make this a priority or it probably won’t happen.

Regulatory constraints. Apart from special situations such as health-related data, personally identifiable information, and data about children, there are few legal rules that directly constrain retargeting. However, marketers must still be certain to explore the precise rules that do apply to their situation and to comply fully. They should also take care to understand exactly where and how collected data is stored within the retargeting system itself, since there may be hidden repositories with unexpected contents.

Justifying value compared to level of effort. Setting up and running a retargeting program takes a certain amount of staff time, even for highly automated systems. A small, time-intensive retargeting program may generate less value than spending the same time on another marketing project. This could be true even if the retargeting program had a higher ROI. Marketers who are concerned about the time investment can outsource more of their retargeting work to a vendor or agency, although this may raise the program’s out-of-pocket cost.

Adequate systems and technology. Most of work in retargeting is done by vendor systems, which are well proven to be adequate. However, these much interact with the company Web site and possibly with other corporate systems. Some companies may have problems setting up those connections or extracting usable data, especially if their systems are old or highly customized. There could also be problems with analytical systems to evaluate results. These problems don’t have easy solutions, but none are fatal to a successful retargeting program.


36%36%18%LessChallengingAspects*

Lack of staff knowledge

Integration with other marketing programs

Accurately personalizing messages






Part 5: Performance MetricsRetargeting programs can be measured like other Web advertising, using click rates, cost per click, cost per action, and site visits. But those measures are designed primarily for programs intended to drive Web traffic. Retargeting programs may other goals, such as increasing brand awareness, encouraging future site visits, or expanding lifetime value. Those goals require other measures that use information gathered outside of the retargeting transaction itself: brand attitudes are usually based on surveys, while lifetime site visits and purchases are tracked in Web analytics and accounting systems. This information must then be tied to retargeting program participants, ideally in the context of a controlled test that compares performance of participants to otherwise-similar non-participants. If controlled tests are not available, measures may need to employ attribution techniques that estimate the indirect influence of retargeting contacts. .

Marketers also need measures related to program execution, such as staff time, creative costs, and other non-media expenses. These help determine whether retargeting is the best use for limited staff resources. Because retargeting may raise privacy issues, marketers should also keep an eye on customer complaints and opt-outs.

Click-through conversions. This is the percentage of people who click on an ad who later complete a specified conversion action, such as filling out a form or making a purchase. It makes most sense when marketers pay per click, since it can be combined with the cost per click to calculate a cost per conversion. This, in turn, can be combined with the value per conversion to calculate a profit per click (value – cost) or Return on Investment (value / cost, or, more properly, profit / cost).

View-through conversions. This is the percentage of people who view an ad who later complete the conversion action. Unlike cost-through conversion, it captures conversions from people who do not click on the ad itself. This

identifies additional value created by the retargeting program, but may overstate the value since other marketing programs may have also contributed to the subsequent conversion. “Fractional attribution” techniques attempt to assign the correct share of the value to each program that touches a customer, although doing this accurately is very challenging.

Cost per conversion. This is a fundamental measure for most retargeting programs. It is most effective where the conversion action is a direct measure of the program goal, such as revenue in a revenue-generating program or new customer registration in an acquisition program. The measure makes less sense for programs with goals that cannot be measured by a conversion action, such as brand awareness.

ROI on marketing spend. Return on investment is properly calculated as a ratio of profit to expense, although it is often calculated as the revenue-to-expense ratio instead. Either way, the real challenge is the same as with other revenue figures: determining how much

What does that mean?Definitions and jargon for measuring the success of retargeting efforts.

CPA. Cost-Per-Acquisition is essentially performance based advertising. The solution provider assumes all the risk, and you only pay when someone actually completes a transaction.

CPC. Cost-Per-Click is a common metric for pricing from vendors. You pay every time a user clicks one of your ads.

CPE. Cost-Per-Engagement means advertisers pay when a user engages with the ad, (such as a mouse rollover or playing a video). This emerged as a way of tracking physical engagement with a product recommendation beyond a mere impression.

CPM. Cost per 1,000 impressions (M is the roman numeral for 1,000). This is a common pricing model for retargeting vendors.

Click Through Rate (CTR). The percentage of users who saw an ad and actually clicked it.

Frequency. The rate a particular user is exposed to specific creative or campaign during a designated period of time.

Impression. The display of a single piece of creative to a web site user. An individual page can generate more than one impression if there is more than one ad space available on the page.





revenue to attribute to the marketing program.

Revenue from retargeting spend. This applies to all types of retargeting programs intended to generate direct revenue, as opposed to programs aimed at influencing brand attributes. The specific meaning will depend on how revenue is calculated: it might include only immediate purchases by new customers who enter through retargeting, or all purchases by all customers ever touched by retargeting, or something in between. When using this figure, marketers need to understand how it was generated and ensure it is suitable for the intended purpose.

Number of leads generated. This is a key measure for acquisition programs. There may be additional stages before a lead becomes a paying customer, but those occur after the lead has first been attracted by the retargeting program. Like all other response-

based measures, the number of leads generated only credits the retargeting program for actions captured through the program’s own content. Responses the program may have influenced, but did not capture directly, are lost. This measure also focuses strictly on new customers, so it does not give the retargeting program credit for any increase in activity it causes among existing customers.

Stage-to-stage conversion rates. Stage conversion rates measure the movement of prospects through the buying cycle, typically in a progression of attitudes such as awareness, interest, consideration, and action. Breaking the process into stages makes it easier to measure the impact of programs that are aimed at particular transitions, such as moving a prospect from being interested in a product to considering it a viable purchase option. Search retargeting programs often aim at the initial stages of this process, making prospects aware of a product


92%88%80%MostCommonMetrics*

Cost per conversion

View-through conversions

Click-through conversions


64%**64%**



78%73%66% Common

Metrics*

Precentage of targetaudience reached

Revenue from retargeting spend

ROI on marketing spend


57%** 57%**






or interested in exploring it. Site retargeting programs are more focused on driving customers to action. As with revenue, it can be hard to measure the impact of a particular marketing program on stage conversions.

Time spent on site. This is an engagement measure, used to determine how interested site visitors are in the company or its products. It provides insight into the quality of traffic a program generates, supplementing figures on the volume such as the number of clicks or visitors. Engagement may predict future behavior, such as purchases and lifetime value. and can thus help to estimate the long-term value of a retargeting program.

Percentage of target audience reached. This measures how many people who took the original target activity will later be reached through

retargeting messages. It helps marketers to understand the factors influencing program results. If the proportion is small, even a highly attractive program may not generate enough volume to be worth the effort.

Lifetime value of customers acquired through retargeting. Lifetime value includes the sum value of all past and future transactions. Since the future value is an estimate, the figure is always somewhat uncertain. It is used to set allowable acquisition costs and to compare the quality of customers from different sources. The usual challenges apply of identifying truly incremental results – in this case, finding which people would not have become customers without the retargeting program. This measure ignores any increase in lifetime value that retargeting may cause among current customers.

NUMBERS

65Percentage of Top Performers (compared to 13% of Everyone Else) using retargeting.

32Percentage of all respondents allocating >$50,000 to retargeting annually.

44Percentage of Top Performers engaging in retargeting for the stated purpose of “General Branding & Awareness”

26Percentage of B2C companies engaged in retargeting to personalize products after online shopping cart abandonments.

45Percentage of All Respondents indicating they have not engaged in retargeting because “it’s unclear how retargeting works”

16Percentage of Top Performers offering “special offerings and discounts” via retargeting.


30%28%23%LessCommonMetrics*

Cost per order Time spent on site Stage-to-stage conversion rates



retargeting benchmark report - q1 2013

Technology