Advertising: How do retargeting advertisements work

We’ve all been there – you visited an online store and viewed a really nice jacket or pair of boots, then you quickly shut the browser after you found out the price. When you open your Facebook page or another internet tab, you find those items have followed you in the form of ads. This is known as retargeting.

Unlike traditional online advertising, such as banner ads, retargeting ads are made for people who have already visited an online store.  Retargeting aims to turn online window shoppers into buyers, as only two per cent of people actually buy the item on their first visit to an online store. This means that 98 per cent need to be marketed to revisit the site to purchase the product.

How retargeting works

Retargeting allows retailers to specifically target customers who have visited their online store or are on their list of contacts. The store’s retargeting provider will then create ads and place them on other sites you visit, in the hopes that you’ll return to their site.

There are two types of retargeting: pixel-based and list-based.

Pixel-based

Pixel-based is the most common retargeting method you’ll come across. When you visit a site, an inconspicuous and unnoticeable piece of code or JavaScript (also known as pixels) will drop an anonymous cookie. These bits of code won’t affect your site performance but every time you visit the site, your browser will be “cookied”. After you leave the site, these cookies will then follow you and make the retargeting platforms aware of when to serve specific ads to you.

This method has many advantages. Firstly, pixel-based retargeting is timely, since you are targeted as soon as you leave the site. It can also be specified to one page and to the behaviour of consumers. However, a disadvantage would be that there is a lower number of people involved, as it is entirely based on who and how many people visit your site.

List-based

If the site has a contact list of existing customers, it can use this for specific types of retargeting advertisements. This is known as the list-based method. When a company uploads its list of customer email addresses to a retargeting platform, the platform will only send ads to those customers who have been identified. These ads will usually show up on customer’s social media accounts such as Twitter, Instagram and Facebook.

Even though it’s a less popular form of retargeting, list-based has many advantages. It allows the site to specifically customise ads based on who is on a company’s contact list. The disadvantage would be that if customer enters a different email address to what their social media account uses, then they won’t see the ad. List-based retargeting is also less automatic and timely, because the people behind the the site need to constantly update the list and maintain it.

Why is retargeting so effective?

Retargeting allows online stores to show off their products and brands, by targeting customers to revisit their store to purchase their product. Every time a retargeted ad appears on your web browser, the online store becomes more recognisable to you and so gains recurring exposure.