Retargeting is a form of online targeted advertising by which online advertising is targeted to consumers based on their previous Internet actions. Retargeting tags online users by including a pixel within the target webpage or email, which sets a cookie in the user’s browser. Once the cookie is set, the advertiser is able to show display ads to that user elsewhere on the internet via an ad exchange.
Retargeting ad campaigns usually run on lower cost media, such as display ads, which not only increases effectiveness by specifically targeting an interested audience, but also improves the overall ROI of the advertiser. A common use-case of retargeting is situations where a website visitor’s actions did not result in a sale or conversion.
Retargeting providers employ a variety of pricing models to charge advertisers for the ads viewed by consumers. Three prominent models include:
CPM (Cost per mille or cost per thousand)
CPC (cost per click)
CPA (cost per action)
Cost per impression (CPM) is a common metric used in the online advertising industry to charge advertisers for inventory based on a set price per thousand page impressions. An impression is defined as any time a banner ad loads on an individual’s web browser.
Pay per click (PPC) charges advertisers for every verifiable click that leads consumers back to a retailer’s website. Unlike the CPM model, which charges advertisers a flat rate, advertisers working under the PPC model are only charged when a person clicks on an ad.
Cost per action (CPA) is a pricing model in which advertisers are charged based on pre-arranged action (a purchase, a view through, etc.), although a completed sale is the most common action used under the CPA model.
Site retargeting is a display advertising technique used by marketers to display advertising to people who have previously visited their website. The marketer includes a pixel within their webpage which sets a cookie in the user’s browser. That cookie allows the marketer to target the website visitor with advertising elsewhere on the internet using retargeting.
A related technique used by retailers involves dynamic creative, which allows the marketer to customize the ad displayed to any site visitor, for example displaying a picture of a product the visitor was viewing earlier, but did not purchase.
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