December 29, 2008, 12:00 AM

Profitable customers

(Page 2 of 2)

Retargeting is a form of behavioral marketing, where you target advertisements to a person based on what she has done in the past. Behavioral marketing is about marketing to the who, not the where. Retargeting gives marketers the ability to reach only prospects who have visited their sites in the past. When someone visits your site and leaves, he will begin to see your site’s banner ads as he surfs the web and visits sites like MSNBC, Facebook or Yahoo. This is the equivalent to a shop owner walking outside his door after someone has left and asking that customer not to forget about a special the retailer is offering, or asking the customer to come back on another day. This form of online marketing has actually been around for quite some time, but is just now coming into its own. Why the delay? Arguably because the market hasn’t been ready to focus on anything other than the next customer.

Effective ads

Retargeting is one of the only forms of online marketing that can work for any size advertiser. The others would include paid search and affiliate marketing. Since you are only displaying your advertisements to people who have visited your site, you are not spending a ton of money to get placement on hundreds of thousands of web sites. Most marketers agree that money is not well spent when you put your ad in front of an uninterested consumer. With retargeting, only interested prospects see your ads; so the probability of that ad having an effect on them is much higher.

In addition to results you can experience, retargeting has the benefit of creating an illusion that you have a much larger marketing budget than you may actually have. When smaller companies are competing against larger companies, it can be difficult to get in front of prospects at the same rate and frequency as larger companies do. Because you are targeting your advertising, and marketing to the who and not the where, you are spending less money to get better results. That customer will see your display ads all over the Internet. There’s nothing wrong with hearing, “You guys must be huge, we see you everywhere.”

Previously we reviewed data from Google Analytics. That data was taken from a company that started using retargeting. Now that you know the tools they were using to increase return conversions, let’s take a look at the data again. The difference between February/March and April/May was the deployment of those retargeting campaigns.

New conversion rates rose from 0.69% in February and March to 0.87% in April & May.
While it is difficult to show causality, the correlation between starting retargeting campaigns and the increase in new prospect conversions is strong. This could be driven by the fact that a prospect could be converting off a new computer that does not contain the same tracking cookies. This would count as a new prospect conversion. In almost all cases, we see an increase in new conversion rates for marketers who institute retargeting campaigns.

The average return conversion rate is 2.4% in February and March.
This shows us how valuable return conversions are as they convert at a rate of almost 3.5 times the rate of prospects who visit the site only once.

The return conversion rate increased from 2.4% to 3.42% from February and March to April and May.
This dramatic growth in conversion can be tied to the retargeting campaigns via detailed analytics.

This marketer spent less money driving new customers in April/May, and focused dollars on increasing return conversions. Doing so increased sales by 11%.

Focusing on return conversions is the next evolution in online marketing. I’ve mentioned making it part of your culture; and that is no small feat. If that is too large a challenge to take on right now, then the most important thing you can do is start tracking your return conversions. You can’t improve what you aren’t tracking. Start evaluating ways you can increase it. Any step towards harnessing the power of this metric is a good one.

Chad Little is the founder of FetchBack, a marketing firm specializing in retargeting customers through behavioral targeting. He can be reached at little@fetchback.com.

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