Dangers of misguided tags in retargeting program
Putting aside the entire consumer privacy debate – if that's possible – there are more ‘insider baseball' dangers in display retargeting, chiefly that most brands are almost certainly bidding against themselves for inventory.
Consider one particularly large and well-regarded online retailer, indeed one that is infamous for its retargeting program. It has 62 different display tags/pixels running on its site. A dozen of those are for the same ad exchange; they are the tags that fire a bid on the exchange for a piece of display inventory when a cookied-user shows up on the network. Given that all those dozen tags are for the same exchange, this means our retailer is bidding against itself 12 times every time it tries to ‘buy' retargeted inventory.
The root of this rather significant problem – at least for the retailer – is tags. This retailer has 10 tags hard-coded into its pages serving 62 pixels, including the 12 offending exchange tags. With so many tags ‘native' on the site, crossed wires are certain to occur. It's partly a reflection of the pace of innovation in our sector; with every new tool to improve online ad effectiveness comes a new variable to add into an already complicated formula. Marketers never have a chance to assimilate one innovation before they are buying the next. Of course, with every new tool also comes a new tag – and implementation, page-speed and data reporting problems all of their own.
Solving the tag issue with a universal container-tag to house and manage them all, for example, also helps to solve the second biggest insider issue of display retargeting: thanks to ‘last click' they are likely to get much more credit than they deserve.
Given the complexity of our example retailer's tag profile, it's clear it has many ad channels operating simultaneously and evident that the performance of very few of these channels is being reported in the same way or place. That means our marketer is almost certainly paying on a last-click-wins basis. For any sale where retargeting claims ‘the last click,' the channel that initially drove the retargeted user to the advertiser's site gets no credit. That means this channel is likely to be unfairly down-weighted and the visitors that get ‘retargeted' will soon dry up. George Michie of RKG Group has written an excellent explanation of this effect in his post How Retargeting Can HURT Sales.
TagMan's own weighted attribution reports – where we show the ratio between the amount of revenue with which a particular channel is attributed and the amount with which it should actually be attributed – show that, for one of our clients, retargeting gets the credit for five times the revenue it has actually earned.
Remember that whenever any channel cannibalizes a sale, or even a share of the sale, for which other channels deserve credit, this not only harms the providers of genuine value, but also the marketer who in the end will be left with nothing to cannibalize.
Paul Cook is the CEO of TagMan, which offers tag management systems.