The Overhyped Myth of Remarketing and Inflated Numbers

I generally write best when I'm pissed off about something. Like most of you, I've heard crazy numbers thrown around from remarketers and retargeting platforms with claims of over 50% conversions, 20% click through rates and all sorts of magic numbers that give me an excited tingling in my pants like the red blooded American capitalist that I am.

That said, it's finally been over 100 days of my first attempt at remarketing. How do I feel so far?  High and dry and like I've been the one that's been fucked instead. Time to peek at the numbers.

Here's the snapshot from my Perfect Audience remarketing campaign that started on May 31st through Sep 22nd. Just over 80k impressions, leading to 96 clicks (0.118% CTR) with just shy on average CPC of $1.00.

Oh yeah.. and one conversion. One. 

What you see on the dashboard however, is that Perfect Audience lists 7 conversions. As all good marketers know, fooling your audience is always the best way of doing business. In this case, Perfect Audience is counting viewed impressions as a conversion. What this means is that the following has happened:

1. Customer came onto my ecommerce website
2. Customer left without checking out
3. Customer saw an ad for my remarketing campaign
4. Customer did not click on my ad
5. Customer eventually found their way back to the website
6. Customer checked out

By default, Perfect Audience regards this as a conversion. While there's certainly a certain value in seeing an ad impression, I certainly don't regard it as a 1:1 conversion score. Google Adwords uses the term “assist” when an impression is featured that eventually leads to a conversion and isn't clicked on directly. In fact, the idea that Perfect Audience makes an assist count as a default conversion is misleading at best and downright sketchy at worst.

Let's look at the conversion data here:

As you can see here, the data is more granular and there is a breakdown between click conversion and view conversion. The data shows here that there is one click-conversion for a total of $114.95 and 6 more view through conversions for a total of $615.76.

Assigning an arbitrary weight of 20% to a view through conversion, that would put the view through revenues at about $123, giving a total of $238 in additional sales due to remarketing. The cost to acquire those sales is $95.29 or 40%. That means for every $1 in remarketing revenues, I'm paying $0.40 to get the sale. In business parlance, I believe the technical term for this is this fucking sucks.

For those of you that read my previous article on avoiding PPC pitfalls, I clearly make the point that my business (and most ecommerce businesses) needs to be operating at healthy margins of spending less than $0.15 for each $1 in sale in order to justify PPC. My remarketing campaign thus far means that it is performing worse than my traditional PPC marketing, which is all sorts of shenanigans.

For what it's worth, here are the steps I have taken thus far for my remarketing campaign:

• Exclude visitors that have turned into sales
• Exclude visitors that only visited my blog pages, which are a high bounce, low conversion segment
• Target Facebook using dynamic product ads
• Target web audience/Google adsense networking using Perfect Audience

So I've taken the basic steps to try not and put ads in front of people that won't be receptive. At the same time, I haven't gone over the top in creating dozens of ad formats in various which ways, because I wanted to test the general concept of remarketing and see if it was an avenue worth pursuing.

Based on the data thus far, the answer is a resounding no. The question that is important to ask though is why is it a no?  Some theories that I could attempt to drum up include:

• CuttingBoard.com has a ~50% funnel abandonment rate, which is already low as far as ecommerce goes
• I already use abandoned cart emails, so there's not a lot of lift from a remarketing campaign
• Lost customers are solely price driven
• Lost customers were just window shopping to begin with
• My remarketing ads suck (but unlikely with dynamic ads, as it shows what they added to cart)
• No discounting used with remarketing ads
• Lost customers are savvy, when they leave, they already made a choice not to shop with me
• Remarketing sucks and isn't that effective
• I need to be on another remarketing platform
• All of the above

One of the early lessons that I've learned in ecommerce is that one shouldn't sweat the small things. If I dipped my toes into remarketing and immediately saw $1 for every $0.10 spent, you can bet your milkshake that I would be dissecting each remarketing campaign trying to squeeze the bags of cash out of them. On the other hand, if I'm obviously losing money with my initial dataset, I'm not going to fight upstream and figure out how to mine gold from cow dung. I've got many, many ways of improving my traffic, conversions or marketing in the double digits that focusing on this segment will be left for a distant future when I'm bored or am far better educated.

So as a takeaway, I don't want to completely discount remarketing- I'm sure it works for some people and industries. For ChoppingBlocks.com, I'll likely use remarketing because the average order is over $500 and remarketing is priced on a CPM (cost per thousand) impression basis, making the rate of return quite lucrative the higher the average order goes up. For those with low average orders, I would say that remarketing would be highly ill-advised, unless you kept your remarketing lists very tight (only those who added to cart or were on the site more than 3 minutes).

On remarketing platforms, I should add that I do know of Ad Roll. I personally have a huge distaste for them because they call me more than those spam robots that pretend to be from Google places. I would easily place Adroll as placing 20-30 calls with me in the last 12 months and from a marketing and business standpoint, that means they are willing to put up with a massive CPA (cost per acquisition) cost, which means their profit margin per customer must be sick.

When you consider two and two, these remarketing companies are making money somewhere, so if they can afford to dump willy nilly into acquiring customers, it makes me wonder exactly who is making the money, because it's certainly not me in this case!

Now your turn: if you've had remarketing experience, we would love to hear how things went for you. Did you have a positive return on ad spend?  Did you create your own custom banners?  We would love to hear how you succeeded or failed as well!