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Study: Retailers feel the fallout from flawed retargeting ad strategies

Poorly optimized retargeted ad campaigns are missing the mark, and costing retailers sales.

While 83% of marketers believe retargeting ads have taken credit for sales that would have occurred without the ads in the first place, 57% of consumers feel that retargeting ads have had no influence on their decision to purchase something online, according to new research from Nanigans.

According to data, advertisers spent an average of $16.7 million on performance media in 2017. Yet, retargeting campaigns aren’t being optimized correctly, and remain largely ineffective in influencing purchase decisions in their current form.

Forty-five percent 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 key performance indicators (KPIs) to measure campaign effectiveness. However, 55% of marketers still say that “measuring the true business impact of advertising” is their biggest challenge.

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 remains bullish. In fact, 53% of retail marketers said they plan to increase digital ad spend over the next 12 months, with an average expected increase of 24%.

Marketing departments that fail to adapt means retailers will likely continue to lose money from their retargeting strategy. This will also lead to more irrelevant ads during consumers’ browsing session, which leads to frustration, the study reported.

“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.”

To improve the ad experience, 33% of consumers demanded that retailers realize when shoppers are no longer interested in a product, and adjust retargeting campaigns accordingly. For example, 88% of consumers report seeing retargeted ads for products they’ve already purchased, and 77% reported they see too many retargeting ads from the same retailers. Fortunately, it’s achievable for brands to combat both complaints by taking more control over their retargeting campaigns by taking them in-house.

“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,” Calvillo said. “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.”

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