What is Retargeting?

Today I came across a website called retargeting.com and learned about their idea. There seems to be other similar services like fetchback.com. So, what exactly does retaregeting.com do? Is it worth spending the $20 a month? I think so, if I understand their business model correctly.

On a forum, someone wondered if retargeting.com is a spyware or something because they ask their customers to put some code on the customers’ website. Someone else replied, saying that it’s actually used to track where the user is leaving from the customer’s website. Also, there was a suggestion that if one has access to their weblogs, they can analyze and do it themselves.

All the above are wrong. I think Retargeting.com has a good idea (not sure if they got this idea first or someone else as I remember seeing patent-pending on fetchback.com). And if this concept really takes off, companies like Google whose revenue is mainly based on advertising will get screwed badly if the results claimed by Retargeting.com are as good as it says.

So, let me explain how this works. Say someone has access to a lot of network traffic. They can choose to provide a service like Retargeting.com (it beats me why they would go for offering this service, as it’s quite cheap for the reason I will explain, as opposed to using the AdSense. Perhaps, they use both since ReTargeting is not context sensitive and so it gives additional revenue to the network owner, while it screws companies like Google).

Say a company C invests in Google’s AdWords and gets a visitor through the ad. Generally, either the user takes a profitable action justifying the cost of the ad or leaves the site costing the ad for the company without any revenue. When this visitor through ad-click comes to C’s website, because there is a piece of html code belonging to the retargeting company, they get to make a note of the user and the website visited through a cookie. Now, when the user goes to some other website X which is part of the network, then the ReTargeting logic knows about the user through the cookie and using this past-context, as opposed to the present-context that Google and other context-sensitive advertisering models operate, displays an ad about company C.

There are many reasons why a user doesn’t take an action on a website. In the earlier forum I mentioned, one user said the main reason for not taking the action is because, one has to go through almost completing the checkout process to figure out the shipping charges. That is the case with many websites, and that has to change. But even otherwise, there are many reasons why the user may leave including, wanting to gather more information, wanting to find out if there is a better price else where, any discounts/deals etc. It may so happen that the user doesn’t really find any better deal, but if the user does not remember the original website where he liked the offering, then that deal is lost. What percentage of this happens may depend on different factors like the popularity of the website, the offer on the website etc.

But bottom line is, there is definitely a scope for a visitor coming back to the earlier site, when a link to that site is shown on another site the user is viewing.

In the above forum thread, someone mentioned that after identifying which other website a user is visiting after visiting your website, retarget.com merely recommends you to advertise on the appropriate site. I don’t think that is correct. I think, retarget.com (and it’s parent company Specific Media, Inc) provides these additional ads on their network for a flat-rate of $20 a month). This model is slightly different from a flat-rate CPM because, the traditional CPM model doesn’t track your visitors and display ad to them. It displays ads to anyone and anywhere.

Retargeting is very important for another key reason. A lot of times, people click on the same ad multiple times within a small duration. This is because, people researching won’t remember the website, but know that they can get to it by doing the same search they did earlier and clicking on the ad they clicked earlier. Google has changed their policy of charging for multiple clicks of the same ad within a short duration (who knows their exact algorithm for this, like is it 1 minute, 30 seconds, 30min?). However, another behavior of these researchers is to try to use different keywords to refine, redefine, rectify their earlier searches. Still, each of these search keywords will be typically quite related and if you happened to bid for many of these variations and if the user clicked on your website once for one keyword and later one for another related keyword(s), then that would probably considered as a separate click. That would result in wasting a lot of ad dollars.

This is where companies like ReTargeting.com comes into picture! For any company spending atleast $40 a month on Google or others, I recommend they try out ReTargeting.com atleast for a few months and see if it works for them. They can choose to split their original $40 budget into $20 to the original ad-network and $20 to a retargeting service and compare if they are better off using the retargeting service or not. I would intuitively assume that the more your ad-spend, the more you would benefit from a retargeting service.

Goodluck with Internet Advertising. It’s not easy, it’s not science. May that art become less expensive!