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Research: Consumers and Advertisers Agree That Retargeting Needs Fixing

Retargeting Needs Fixing
Two new Nanigans surveys shed light on how today’s retail advertisers and consumers perceive ad retargeting, and neither are singing its praises. In short, both feel that retargeting in its current form is broken and needs to change.

According to the data — which Nanigans collected based on responses from 1,000 consumers and over 100 top U.S. retail and ecommerce advertising executives — 83% of marketers believe retargeting ads have taken credit for sales that would have occurred without the ads in the first place, and 57% of consumers feel that retargeting ads have had no influence on their decision to purchase something online.

This underscores what both parties have independently suspected for some time — that retargeting campaigns aren’t optimized correctly, and as a result, are largely ineffective in influencing buying decisions.

Related post: Marketers Are Sacrificing Serious Revenue by Doing Retargeting Wrong

“Our research proves that the current retargeting experience is a frustrating one for consumers, and a wasteful and damaging one for retailers,” said Ric Calvillo, co-founder and CEO of Nanigans.

“Retailers are spending billions of dollars every year on digital advertising that is having no effect on top line revenue. Ultimately, any digital ad spend should be driving incremental growth, and it’s up to CMOs to improve their retargeting strategies to ensure they don’t leave money on the table. It’s shocking that 43% of retail marketers have never run a lift test on their digital advertising, when it’s the gold standard for measuring ad effectiveness. Marketers who don’t optimize for incremental growth are not only wasting budget, but also negatively impacting the customer experience by showing irrelevant ads in excess.”

The advertisers surveyed, which included some of the largest retailers in the U.S., spent an average of $16.7 million on performance media in 2017. Despite nearly 75% of retail marketers reporting that they don’t currently have a way to measure if sales attributed to retargeting would have occurred organically, spending is still bullish. In fact, 53% of retail marketers said they plan to increase digital ad spend over the next 12 months, with an average expected year-over-year increase of 24%.

“Ultimately, any digital ad spend should be driving incremental growth, and it’s up to CMOs to improve their retargeting strategies to ensure they don’t leave money on the table.”

RIC CALVILLO, Co-Founder & CEO, Nanigans

Marketing departments that don’t adapt will likely continue to lose money from their retargeting strategy, and consumers can expect more irrelevant ads while browsing.

One-third of consumers said retailers need to improve the experience by realizing when shoppers are no longer interested in a product and adjusting retargeting campaigns accordingly. This recommendation is likely due to the fact that 88% of survey respondents report seeing retargeted ads for products they’ve already purchased.

Fortunately, it’s possible for brands to combat both complaints by taking their retargeting campaigns in-house. In a DSP report from last November, Advertiser Perceptions reported 32% of brands run programmatic in-house, which aligns with another survey conducted by NewBase in March 2018. Nanigans’ new survey data indicates that this trend will accelerate among retail marketers as 25% of advertisers plan to shift their management strategy in-house over the next 12 months.

    Additional survey findings include:

  • 77% of consumers feel like they see too many retargeting ads from the same retailers
  • 55% of retail marketers cite “measuring the true business impact of advertising” as their biggest challenge
  • 45% of retail marketers list return on ad spend (ROAS) as their primary metric for measuring advertising effectiveness, and 14% said they use six or more KPIs to measure campaign effectiveness

Click below to walk through an interactive presentation of our survey data:

The Reality of Retargeting 2018

The Reality of Retargeting

See the differences—and similarities—in the perception of retargeting on both sides of the ad.

Dive into the Data