Retailers embrace ad retargeting.

Retargeting sees growing popularity with online retailers as they gain healthy returns of over 20:1

All Saints, Game, Karen Millen and New Look are among retail brands investing in ad retargeting, with the practice set to become a key driver in display advertising's resurgence in 2011.

Other brands running retargeting marketing activity include Boden, Etam, French Connection, Glasses Direct, John Lewis, MyWardrobe, Orange, Ted Baker and TheTrainline Company.

Retargeting serves 'reminder' ads to users after they've visited a retailer's site without making a purchase, in a bid to lure them back.

It's the fastest growing performance channel for New Look, according to the company's ecommerce performance marketing manager Rav Dhaliwal, who believes ad retargeting will play a central role in the retailer's international growth.

Fashion brand All Saints is also shifting budget towards retargeting activity after generating return

of #21 for every #1 it spent on retargeted ads throughout November and December last year.

Marti Crampshee, All Saints digital communications manager, said advancements in retargeting technology have meant a significant return on investment for the brand.

"The idea of personalised retargeting isn't new in terms of display ads, but this is the first time we've seen such fantastic ROI," he said. "The practice is now more technologically led. It was this that enabled us to target our display ads and messaging in the right way, at the right time, to the right people. As a result, we're looking at personalised retargeting becoming a key element in all of our digital activity."

New Look's Dhaliwal said retargeting was the company's first real foray into performance display advertising and was proving extremely effective.

"It's more engaging, easier to budget for and is a great source of acquisition for us," he said. "It'll be a big part of our global strategy."

He added that while retargeting has been successful for New Look, it might not be suitable for all retailers. "It works for us because our core audience is an internet-savvy consumer who's often engaged with social media. They're not so concerned when retargeted," he said. "It's important for brands to be compliant with regulations and tell users they're being retargeted, giving them a chance to opt out. We've found that most retargeted users return to the site to make a purchase within the first 24 hours. Frequency capping is important. The number of users interacting with your ad diminishes rapidly and they navigate away if there's overkill."

Retargeting company Struq said that ad retargeting had generated conversions of up to 640% for its top ten clients, while rival Criteo said it's working with more than 200 UK advertisers to offer retargeting.

Fitness and training supplements brand Maximuscle saw a significant increase in online conversions of 362% as a result of retargeting display ads alongside its paid and natural search marketing (nma 21 October 2010). Dhaliwal said that the growing sophistication of retargeting had helped advertisers get beyond the negative conceptions around performance-based display ads.

"In the past it's been a publisher's metric, and it's not been geared toward the commercial need of the advertisers. But with retargeting, it's more engaging," he said.

According to Criteo UK MD Michael Steckler, "A key driver of this has been the reassessment by brands that display can now deliver a performance-based marketing channel with the added benefit of branding. What has accelerated growth is that brands tend to check their competitors' websites and often get in touch because they're interested to know what it's about."

Retargeting's move into mainstream online marketing is because it has resolved the issue of how to incorporate user intent - the key concept of search - into display advertising, according to Sam Barnett, CEO of Struq.

"Ads are personalised and based on user intent," he said. "They're relevant and, as such, people click them and buy products and services. It's growing thanks to sophisticated advancements in technology. Whereas display used to be highly ineffective, it has now become more effective than search."

Performance across all categories, including fashion, retail and travel, has been strong, according to Steckler, but click-throughs for classifieds sites, such as Zoopla, have seen the highest rates.

Last October, a US-based ComScore study with ValueClick Media found retargeting generated the highest lift in search queries - up to 1,046%.

Global online media companies including Yahoo and Deutsche Telekom have shown interest in retargeting in the past six months. Yahoo bought retargeting specialist Dapper in October to bolster its SmartAds offering, while Deutsche Telekom's venture capital firm T-Venture invested #3.76m in retargeting firm MyThings.

Targeting timeline

April 2008 The IAB establishes a taskforce to set best practices for behavioural targeting

August 2010 A Sunday Times article creates hysteria over targeted advertising online

October 2010 ComScore US study with ValueClick suggests that retargeting gives the greatest lift in search

October 2010 Yahoo acquires US display advertising startup Dapper as it looks to bolster its Smart Ads offering and take on retargeting players such as Criteo and Struq

November 2010 Deutsche Telekom's venture capital firm T-Venture invests #3.76m in ad retargeting firm MyThings to support the company's expansion in Europe and the UK

NMA VIEWPOINT

A widespread acceptance of retargeting has been fuelled by both its effectiveness and its openness with consumers. While it's easy to eulogise about how effective retargeting is as a display performance channel when it comes to customer acquisition, the right frequency capping and recommendations are essential to getting the balance between a gentle reminder and being downright annoying. There's nothing worse than being served an ad for a product you've already bought but could now get cheaper.

Retargeting is also growing in acceptance, not just among marketers but consumers too, because the purchase intent is clearer than with behavioural targeting. Users can remember why they visited a site, but they don't necessarily know what sites belong to a behavioural targeting network. Gina Lovett

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