Retargeting_Body.jpgby Jennifer Shaheen.

Retargeted ads—the custom-tailored Internet ads that start showing up as you cruise the Internet or social media after visiting a retailer’s website—are nothing new. Big brands, most notably Zappos and Levis, have been using retargeted ads for years now with great success. But is the time right for small business owners to try this marketing tactic?

Advantages of retargeted advertising

“When people shop online, they don’t visit a site and buy immediately. They shop around, compare price, and sometimes just get distracted,” says Adam Berke, president of Adroll, a retargeting firm. Retargeting allows advertisers to re-engage potential customers who’ve visited their website with precise ads across the web and Facebook. Berke adds that retargeting is unlike other display advertising that is typically based on interests, demographic or inferred behavioral trends. “Retargeting zeroes in on those already interested in your brand or products—those most likely to make a purchase—and gives them the extra nudge they need to seal the deal,” he says.

Using retargeted advertising to reach out to customers who have already visited your website can be a cost effective sales strategy. Ryan Derrow, CEO of Empower MediaMarketing, says “site retargeting can have a 10-times lower cost per acquisition than tactics targeting consumers that haven’t yet interacted with your site.”

Retargeting campaigns are not ideal for all small business, but if your small business website fits into the criteria of attracting at least 1,000 unique website visitors per month this may be a strategy to consider. The cost of retargeting varies by provider. Adroll puts their pricing at $1-$2.50 CPM. They have a Retargeting Evaluator tool on their site, where business owners can enter their website and, based on their existing website traffic, receive a recommended monthly marketing budget. Retargeter charges a flat $1,500 per month, which includes 30,000 unique visitors targeted, for up to 525,000 impressions. Additionally, this price covers analytical reports, and back end customer support services.

Segmentation is the key to success

“When you are running site retargeting, you should be segmenting your website according to logical consumer paths,” says Arjun Arora, CEO of Retargeter, a retargeting firm. “A user who comes to your homepage but doesn’t head to your products page is probably not as far along in the funnel as someone who spends a significant amount of time on your pricing page. Similarly, someone who visits your careers page is probably not in the market for your product.”

To maximize the impact of a retargeted advertising campaign, Arora recommends thinking through how your customer interacts with your website, and customizing your ads accordingly. “A homepage visitor can be served general branding messaging, while a pricing page visitor can be served ads with a limited-time discount or two-for-one special,” Arora adds. “You should always align your retargeting campaigns with where a user lies in the purchase funnel.”

Retargeting_PQ.jpgDisadvantages of retargeted advertising

While retargeted ads have proven to be an effective tool for some brands, not every small business owner is convinced that they’re a good idea.

Michael Bishay, owner of Doggie Chop, a purveyor of specialty raw dog food, says privacy concerns have kept him from using them. “They make me feel uncomfortable, like I'm being watched everywhere I go online,” he says. “If I don't like it, chances are my customers won't like it either. I don't want them to associate that uncomfortable feeling with my brand.”

Customer opinion regarding retargeted ads is mixed. Joseph Turrow, a professor with the Annenberg School of Communication at the University of Pennsylvania, says that a significant percentage of customers are reporting they find the ads unsettling. However, unsettling doesn’t mean useless.

“At first I found them unsettling; now I find them better than the generic ads online. With the targeted ads I'm usually seeing things I might actually want to purchase, as opposed to products and services that actually offend me. In fact, sometimes the ads remind me of something I want to remember to buy online,” says Jennifer Heise, a consumer from New Jersey. “What I hate is that the targeted ads tend to slow down the experience because instead of posting generic stuff they are checking my cookies and then loading ads.”

The code that is added to your website as part of a retargeting campaign is extremely minimal and will have no impact on your own site’s load speed. However, it’s important to understand that you have no control over the load speed or user experience on other websites your customer visits. This is one of the reasons it is difficult to predict how your customers will react to retargeted advertising. If you do choose to make retargeted ads part of your marketing mix, make sure to periodically test how the ads are working, both in terms of messaging effectiveness and overall conversions. If the ads are not performing well in either capacity, you’ll want to adjust your campaigns and talk to your provider about how to get the most from this tactic.

“You want to be dynamic,” Berke says. “You improve relevancy by ensuring the ad served to a potential customer is tailored to his or her browsing history on your site. It’s better to present previously viewed products and other related products than, say, presenting a logo and hoping for the best.” To contain costs, small business owners may want to prioritize creating ads for their most popular products or categories of products.