Ad retargeting is used to follow users as they move from site to site.

Here’s how targeting advertising works – but use it sparingly & strategically or it could turn off users

Target audience: Businesses, brands, digital marketers, advertising agencies, SEO specialists, entrepreneurs, educators, journalists, Web publishers.

Let me confess up front: I’ve long been attracted to the idea of useful advertising — the promise that interruption marketing will fade into its well-deserved irrelevance and that marketers will be able to serve us ads and offers based on products and services we actually want or need.

Trouble is, the practice rarely lives up to the ideal, chiefly because retargeting, as it’s called, is hard to do well.

You know what I’m referring to, right? In your forays around the Web, you’ve no doubt noticed that you’re being served up advertising based on the pages you were visiting earlier. Take The Atlantic’s Alexis Madrigal, who discovered that 105 advertising-related companies tracked his online behavior over a 36-hour period. Lots of people are squeamish about the very idea of targeted ads, and for these folks, filling out this opt-out form should put the kabosh on most of these ads.

I fall into the second camp: I think retargeting has its place, especially for small businesses and entrepreneurs trying to break through the clutter of 2,000 marketing messages that bombard us every day. If you run a small business or startup and have a new product, service, book or online class that readers or followers might find valuable, retargeting has its place in your marketing arsenal, as long as it’s done with discretion and is accompanied by other tactics in getting the word out.

Below I’ll offer tips and best practices for your business if you’re considering targeted advertising.

How ad retargeting works — is it right for you?

Here’s a look at how retargeting works and how it could be useful for your small business.

At its simplest, retargeting allows businesses to target ads to people who visited their site but didn’t purchase anything. Because the targeting is meant to be precise and the ad message can be customized, advertisers frequently see significant higher click-through-rates and purchases from retargeted ads.

Your business could:

• Bring people back who abandoned the shopping cart process
• Deliver a discount coupon or inform previous visitors of a sale
• Simply remind viewers of your product at a later date when they might be ready to purchase

A number of vendors provide retargeting products: Google, AdRoll, Retargeter, Fetchback, Clicksor and Rocketfuel, to name just a few. Some have slightly different offerings, but they all basically work the same way.

Retargeting starts with a bit of tracking code that your vendor provides and that you install on pages of your site. This tracking code drops a cookie into a visitor’s web browser and that cookie tracks what pages are viewed on your site. (If this sounds old school, it is: Browser cookies have been around for 19 years.)

Once your visitors travel to other sites on the Web, they’ll almost certainly encounter advertising slots on some of these pages. This is where you can retarget an ad to them and try to bring them back to your site. Those ad slots will do a quick check to see if there is a retargeting cookie present in the browser, and if there is, it will trigger a split-second real-time auction to determine what ad is served.

You’ll want to establish a budget at the outset and set a limit for your campaign. Generally these campaigns start at a few hundred dollars for a small business and can scale up from there. If your bid is the highest, you win the auction and your ad is served. The targeting companies keep track of ad inventory so you don’t have to figure out where your ad will appear. You generally pay on a cost-per-click basis, the same as you would for Google AdWords ads.

How one small business uses targeting to increase enrollments

Porter Gale, a friend who’s the author of the upcoming book Your Network Is Your Net Worth and the former vice president of marketing for Virgin America, wanted to get the word out about her new three-day online class Building Your Brand (day two is today).

So she agreed to a modest retargeting campaign steered by Rick Silvestrini, general manager of creativeLIVE, which hosts live online workshops, including Porter’s. Silvestrini runs targeted advertising campaigns to drive sign-ups for several of his instructors’ classes. “Targeted ads have driven about 15 percent of our enrollments from paid with a lower CPA (cost per acquisition) than other channels,” he said.

As with Google AdWords ads, the cost per click can vary greatly depending on your bid parameters — after all, it’s auction pricing. With Google, there’s no minimum spend, and you can wind up spending little or a lot depending on how the ad performs. “Our clicks cost anywhere from 32 cents to $ 1.50 per click, depending on how well the creative performs,” Silvestrini said. “I’ll spend $300 to $2,000 per week on retargeting alone. That comes out to $50 to $800 per week per course.” The higher the spend, the more people who sign up for the courses.

A targeted ad that appears as an overlay on a YouTube video.

Facebook wading into relevant advertising in a big way

What about Facebook? With a billion users and about a quarter of the all display ads on the Internet, Facebook offers businesses a huge opportunity for retargeting, and the mechanics are basically the same. However, the advertising units inside Facebook are different sizes (those little text & picture ads on the right of your news feed) and there are not as many vendors to choose from; Perfect Audience and AdRoll seem to be the biggest.

Facebook also has another twist on retargeting called Custom Audiences, where you upload your email list and Facebook targets ads to Facebook members who are on your list.

Other social networks, like LinkedIn and Twitter, have their own techniques for ad targeting.

Tips for small businesses that want to try out targeted ads

Can small businesses do this on their own? That depends on how technically savvy you are and how much time you want to devote to mastering retargeting. The easiest retargeting to do on your own is Facebook Custom Audiences targeted to your email list. (I might have recommended Twitter for its ease of use, but the conversion rate was very low for a campaign I recently did for one of my sites.) For the rest, you’ll at least need to know how to install a bit of tracking code into your pages.

Regardless of who’ll be executing your targeted ad campaign, keep these best practices in mind:

• Have a planned-out strategy, don’t just send out a targeted ad blast. Who are you targeting precisely and what do you want them to do?
• Don’t do a mass carpet bombing. Start out with a short campaign and grow it from there.
• Make sure the service you use has an ad report tool. Try several variations of your ad and optimize your campaign to use the version that received the biggest response.
• Make sure your product or service offers value and is something that people will want.
• Make it personal and relevant — not like a late-night infomercial.
• Where possible, target friends of connections, which you can do in Facebook.
• Make sure your ad contains a clear call to action.

If this still sounds bit daunting, please reach out to us and we’ll help get you on your way.

Ad targeting, while years old, still has a long way to go. Clearly, some of these companies go too far in collecting users’ personal data without their consent (but that’s a column for another day). For another, there was no option to turn off the ads even though I registered for Porter’s workshop. I’m with The Register writer who bemoaned, “Come on, people: if you’re going to track my online behavior, at least use it to get me to buy something I want!”

What do you think of retargeting? Have you used it? Do you think it has its place?

Related articles

• How to run an effective Facebook campaign for $5 (Socialmedia.biz)

• How To Use The 15 Facebook Ad Targeting Options (Socialfresh)

• Online advertising isn’t creepy enough: Go ahead and terrify me… with a properly targeted ad (The Register)

• How To Block Targeted Ads From Following You Around (Business Insider)

• Doc Searls’ book The Intention Economy (Amazon)

• The Uncanny Valley of Internet Advertising (Slate)

• How to Opt Out of Facebook’s Creepy New Targeted Ads (Gizmodo)

• Targeted Ads: Finding a Balance Between Cool and Creepy (IT Business Edge)

• Online Display Advertising: Targeting and Obtrusiveness (Marketing Science, PDF)

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