Online retargeting strategies


Already looking for a summer holiday? When you are searching for a nice all-inclusive resort in Greece for eight days, good chance that when you are on Facebook the next day ads will appear with offers for holidays. This is an example of so-called dynamic retargeting. Based on your browser history, the advertisement will appear when you are surfing on the internet. Next to that, the specific website also remembers your history and can offer personal recommendations.

It is interesting for companies to find out what kind of online advertisement strategy is most effective and will trigger the highest conversion rate. And from the customer point of view, what does the customer want to see and what kind of information does he or she need? Because retargeting is a relatively “new topic” not much is known about what information re-targeting should actually contain and in what form. The researchers of the paper “When does retargeting work? Information specificity in online advertising” were eager to find out. In their research, they focussed on whether a generic brand advertisement or specific product advertisement works best in dynamic retargeting.

The paper is based on a field experiment conducted by an online travel firm. The consumers that visited the website of the online travel firm and that looked at specific hotels, were randomly targeted with either a generic retargeting advertisement or a specific retargeting advertisement on external websites that were in the network of the company, see figure 1. The experiment ran for 21 days and data was collected for 77937 individual profiles. The measurement of success was whether a consumer purchased a holiday through the website during the field experiment.

2017-03-04
Figure 1

The results show that overall retargeting will lead to higher conversion rates. More specifically, using generic adds will create more purchases than specific adds. The study indicates that this depends on whether the consumer is broadly interested in holidays and is still in the orienting phase or that they are already looking for specific characteristics like country, pool, rooms etcetera. (Lambrecht et al, 2013)

The main strength of this paper is that methodology, the field experiment, caused high validity and generalizability of the results. An actual advertising was tested on existing customers. Furthermore, the researchers also performed several robustness checks that provided further evidence of the found results.

An important implication for companies is to use this result in targeting different customers. Customers that are already specifically interested should be retargeted with specific ads and customers that are still in the first phase of orienting should receive generic ads. This outcome can be linked to the customer journey of the consumer.  Companies could, for example, look at research about the customer journey to determine their retargeting strategy. When the consumer is using a laptop, for example, it will be closer to purchase than when using a mobile device. (De Haan, 2015) This implication is of practical use for online companies in deciding upon their most effective advertising retargeting strategy.

Bibliography

De Haan, Evert, P. K. Kannan, Peter C. Verhoef, & Thorsten Wiesel (2015). The Role of Mobile Devices in the Online Customer Journey. MSI working paper series, forthcoming.

Lambrecht, Anja, and Catherine Tucker. “When does retargeting work? Information specificity in online advertising.” Journal of Marketing Research 50.5 (2013): 561-576.

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