The Power of Retargeting
Even if you’re not familiar with how retargeting ads work, you’ve almost certainly encountered them. These are the ads that seem to follow you around the internet (and are often responsible for spoiling Christmas surprises). An example would be someone who visits a website that sells fingerless gloves and then later comes across an ad for fingerless gloves on a different site.
Retargeting is one of the most powerful advertising tools out there. It’s like making a follow-up phone call to say, “Hey, remember this product you thought was great but weren’t ready to buy? It’s still here, and you know what, it’s now 20% off.” Although product-based ads are more common, retargeting is also an excellent tactic for SaaS and purely service-based businesses.
So how do retargeting ads work? Most retargeting ads work by using a pixel. By attaching this pixel to your website or landing page, you can automatically retarget (or “cookie”🍪) the browser of anyone who visits that page. Businesses can also retarget customers using a list of client contact information that they’ve collected internally, but this is less common and limits the amount of people they can reach.
Here’s a more technical explanation of how pixel-based retargeting works by Hubspot.com:
“Pixel-based retargeting is a way to re-display your material to any anonymous site visitor… When someone comes to your website, an unobtrusive piece of JavaScript (often referred to as a pixel) is placed on their browser — making their browser ‘cookie-d.’ When they leave your site to surf the web, that cookie notifies retargeting platforms to serve specific ads based on the specific pages they visited on your website.”
Now that we’ve covered what retargeting ads are and how they work, let’s talk about the giant elephant in the marketing industry… the cookieless future and falling match rates.
The Cookieless Future
Retargeting ads are great. They’re almost universally more effective than prospecting ads and almost always drive more conversions. We know that most web users won’t convert on a first site visit and that bringing potential customers back on site is critical.
Unfortunately… we can’t keep using this tactic forever.
What does this mean for advertisers? It means that those cookies are landing on fewer and fewer computers as we go along. In other words, the “match rate” is falling.
Falling Match Rates
“Match rate” refers to the percentage of people visiting your website who can be anonymously tagged with data and retargeted. Basically, it’s the portion of your site visitors who end up with that little cookie on their browser.
Here’s a more in depth explanation by Adelphic:
“Match rates refer to the percentage of users from an audience segment that a demand-side platform (DSP) is able to recognize. Match rates have long been important, because they allow advertisers to understand the size of their addressable audiences – in theory, when matching apples to apples, the higher the match rate of a specific audience segment, the larger the number of consumers who can be reached with digital advertising – in other words, the more DSP addressability for that audience segment.”
Five years ago, that would have been absolutely laughable for any platform.
Rising Costs
Low match rates mean that only a small percentage of people who visit your site can actually be retargeted. Knowing this, businesses will simply have to bring more people to their site in order to build a substantial retargeting audience. That means the cost of prospecting — attracting new visitors — will inevitably go up.
With the rising cost of prospecting, it’s more important than ever to make the very best use of your marketing dollars. You need to KNOW who your best prospects are, how to target them, and how they like to be spoken to. Hunches aren’t good enough when match rates are falling. You need to have A/B tested audience segments, A/B tested ad creative, A/B tested messages, and A/B tested ad delivery options.
While a spray-and-pray approach to prospecting may have worked in the past, your prospecting in the cookieless future needs to be tightly targeted using data-honed messages if there’s any hope of creating an affordable retargeting audience.
Now What?
Cookies are disappearing and match rates continue to fall industry-wide, but believe it or not, the news isn’t all dismal.
As we approach a cookieless future, the whole marketing industry is adjusting. Many advertisers are placing a much higher priority on gathering first-party data, which is data that users willingly provide themselves. (One way to do this is through exit-intent popups, or popups that appear as a visitor is leaving your site to ask for their contact info.)
The good news is DSPs like Google are making first-party data targeting tools available to more advertisers than before. The big players — Amazon, Facebook, Google, and pretty much every major DSP — are working on new technologies that can provide better targeting without needing to place a cookie into browsers.
