When Does Retargeting Work?

Have you ever been looking for new sneakers on several sneaker-websites and suddenly on the next visit on that website are the shoes you have been clicking on recommended for you? Or have you ever been looking for a new mobile phone and the next time you visit the website, exactly those mobile phones you have clicked on are showed on the front page of that website. Or even worse, exactly the shoes or mobile phones you have been looking for are shown in ads on several websites in banners for instance, on Facebook. What a coincidence!

Well, this is no coincidence. This is a form of personalized product recommendation based on your browsing history, they make use of persistent defaults, on that specific website, or so-called dynamic retargeting. Dynamic retargeting is clearly explained in the video below. This is happening more and more online, to attract consumers to your website and buy your product. In this article the online travel industry is used, more specifically an online travel firm is used for an field experiment. The research is about whether this way of marketing is effective or not, and if so, under what circumstances. The researchers examined the effect of dynamic retargeting ads versus the effect of generic retargeting ads.

Surprisingly, the generic retargeting ads are more effective than the dynamic retargeting ads. What are those generic retargeting ads? Those ads are just a random picture of a sunny beach with the name or logo of the travel firm. The similarity between generic and dynamic targeting ads is that the ads are coming from the travel firm, the difference is the fact that with dynamic retargeting ads the exactly travel destinations or hotels are shown in the ads. An example of dynamic retargeting is shown the following figure:


As mentioned above, in general the generic retargeting ads are more effective than the dynamic retargeting ads. However, in some cases are the dynamic retargeting ads more effective. When consumers narrowly construe their preferences, dynamic ads are more effective. This can be measured by a consumers’ visiting travel review sites, such as TripAdvisor, to search for more product-specific information to compare several products. According to Lambrecht & Tucker (2013), visiting travel review sites are a good indicator to measure whether a consumer is narrowly construed or not. If consumers do not have specified their preferences, they possess a broad idea of what they like. In this case dynamic retargeting ads are less effective than generic retargeting ads.

This study results in two major managerial insights. First, surprisingly generic ads are in general more effective than personalized ads. The second insight is the idea that dynamic retargeting ads can be more effective than generic ads, but only if the consumers have a narrow definition of their preferences.

However, whether the generic or dynamic targeting ads are effective or not, there is still a big problem for both ads. What about the increasing number of users of ad blockers? A lot of people are using such ad blocking tools to disappear those annoying ads. Even if those ads are working well, the ad blockers ruin this way of marketing for online companies.


Dynamic retargeting is clearly explained in this video:


Author: Jesse van Hofwegen, 375283jh


Source: Lambrecht, A., & Tucker, C. (2013). When Does Retargeting Work? Information Specificity in Online Advertising. Journal Of Marketing Research, 50(5), 561-576.

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