Are retargeted ads better at driving sales or annoying shoppers?
A new study finds that retargeting ads to consumers can drive sales for retailers or it can tick them off. How retailers deliver those ads is the key to whether they get to ring up purchases or see the figurative backs of consumers online.
The study by a Temple University professor and academic colleagues from Nanjing University and the Waseda University Graduate School of Commerce found that, if retailers want to retarget ads to the roughly 70 percent of people who abandon carts online, the best time to do so is between one and three days after they passed on finishing their purchase. The worst time is inside of an hour after they “walked away.”
“The industry standard has been to strike when the iron is hot. Companies tend to believe that the earlier you can do retargeting, the better. So oftentimes, when a potential customer will close a website, one hour later, the company will send a message,” said Xueming Luo, the Charles Gilliland Chair professor of marketing, strategy and management information systems in the Fox School of Business at Temple. “But we’ve found that that’s not exactly the best strategy.”
Professor Luo and his research partners retargeted ads to 40,500 customers via email and app channels across different hourly blocks after shoppers abandoned their carts online. They also delivered retargeting ads to another 23,900 using text messages.
The researchers found that individuals targeted within 30 minutes to one hour after leaving a site were less likely to make a purchase. They were also most likely to feel annoyed over the experience.
Retargeted messages sent out one to three days after someone abandons a cart, however, lead to purchases, Prof. Luo said. He thinks giving that much time can rekindle interest on the part of the would-be purchaser, who still remembers what interested them about the item or items in their cart before they moved on.
Another study published by marketing professors at the Stanford Graduate School of Business last year found that retargeted ads on BuildDirect.com increased the likelihood that people would return to the site by nearly 15 percent.
The professors, Navdeep Sahni and Sridhar Narayanan, called the results “consequential … because a returning consumer gives the marketplace another chance to sell its products and also gain revenues by showing relevant ads on its own website.”
- New study details the optimal time for e-commerce retargeting ads – Fox School of Business at Temple University
- The Double-Edged Effects of E-Commerce Cart Retargeting: Does Retargeting Too Early Backfire? – Journal of Marketing/SSRN
- With ‘Retargeted’ Advertising Sooner Is Better Than Later – Stanford Graduate School of Business
DISCUSSION QUESTIONS: Do you think retargeted ads are more effective at driving sales or annoying shoppers? How can retailers properly measure which is having a stronger direct effect on their relationships and sales made by customers who abandon online carts?