Definition: Retargeting is a cookie-based technology that displays custom advertisements to visitors who leave an online store without purchasing or performing another desired action. Expansive third-party ad networks enable ads to be displayed across the web, reminding customers of products they viewed or added to cart.

Why retargeting works

Retargeted ads don't just nudge people to a store; they usually display an image of the product a user viewed, making them the most highly-targeted form of advertisement available to web marketers. Retargeting is supported by user data about the way shoppers act: just 2 percent of shoppers convert on their first visit to an online store. And some 75 percent of people who abandon a shopping cart intend to return to the online store at a future time and make a purchase. Click through rates for retargeting ads are often significantly higher than industry averages.

Optimize ad spend

Retargeting can boost your online store's conversion rate, while providing cost-effective branding, reduced cost-per-impression and improved ROI for your advertising budget. That helps explain why more than 90 percent of marketers say that retargeting ads are now as effective as search ads when it comes to conversions. Click-through rates for retargeting can be three to 10 times higher than the industry average, because ads are served to users who have already demonstrated an interest in your store and your product offerings.

Advanced segmentation

Segmentation is the most powerful aspect of retargeting, allowing you to choose your audience and cater the messaging to them. Ad networks such as Google AdWords allow marketers to segment their audience by age, geographic area, and other demographic variables. Users can also be filtered based on their interaction with a store: number of sessions, how they initially arrived, whether or not they've converted in the past, and much more.

Remarketing vs. retargeting

Though they sound similar—and are sometimes used interchangeably—remarketing typically refers to email efforts that prompt customer action. These include promo emails sent to customers who abandoned their shopping carts or special discount emails timed for shopper birthdays. Retargeting refers specifically to digital ads on third-party sites that are served to past visitors of your online store. Marketers also deploy a tactic known as search retargeting that finds potential customers based on search queries they've made on other sites.

Learn more with our guide to re-engaging lost customers.

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