Nanigans, releasing a survey showing that retargeting is ‘broken,’ pitches its solution

Nanigans offers software for running performance-based ads, where the advertiser is promoting a call to action like downloading a coupon or filling out a form. The ads are employed to acquire new customers, and sometimes to retarget them after they’ve left a retailer’s site.

Today, the Boston-based company is releasing a survey that finds retargeting isn’t working as well as it should.

“The Reality of Retargeting” study digested responses from more than a thousand US-based consumers selected through Google’s consumer survey tool and more than a hundred US-based retail and ecommerce ad execs. The consumers made an online purchase in the last six months and previously noticed retargeted ads, while the advertisers work at ecommerce firms or retailers and have the title of director or above.

And, according to the report, “Everyone agrees retargeting is broken.”

It found that an overwhelming majority of the surveyed marketers think retargeting ads — the kind that follow you around the web with a product ad after you looked at or searched for that item — are a waste of budget because the sales would have happened anyway. Eighty-three percent of those surveyed felt this way and thought that retargeting ads have no influence on the purchasing decision.

It’s not a whole lot better on the side of the consumers who are being pursued by these ads. Thirty-three percent of the consumer respondents said retailers should understand when there is no interest and dial back the number of ads. Eighty-eight percent say they’ve seen retargeting ads for products they’ve already bought, while 77 percent say they see too many retargeting ads from the same retailers.

CEO Ric Calvillo said in a statement that this research indicates “the current retargeting experience is a frustrating one for consumers.”

One of the main issues for consumers, of course, is frequency. A potential buyer might accept a single following ad about blue sneakers when she’s visited that product page, but, by the fourth ad, it becomes annoying.

A report criticizing retargeting might seem odd for a company like Nanigans, which engages in the practice. VP of Marketing Ryan Kelly told me his company has been retargeting on the open web for the last two quarters and on Facebook for several years.

But, although the report doesn’t explicitly say this, Nanigans’ pitch is that it’s not retargeting per se that is the problem, but badly executed retargeting.

‘Annoyed with retargeting’

First, Kelly said, the attribution shouldn’t be the last click before purchase, because that encourages spending for more and more ads. Instead, he said, marketers should measure their success by incrementality — that is, how much new revenue the retargeting ad spend generates.

By valuing lift over last-click attribution, he argues, marketers will better gear the frequency and kind of retargeted ads to their results. Kelly cited a Nanigans case study where fashion retailer Rue La La realized an increase of 6.5 times more revenue for the same amount of ad spend after it switched to incremental revenue optimization.

Second, Kelly contends that a predictive, behavior-based model can better predict if a user is likely to buy, based on initial activity on the retailer’s site, such as time on page, adds to shopping cart, signups and so on.

He said that this model — which Nanigans utilizes on the open web — can pinpoint “with 90 percent accuracy” if a user is likely to make a purchase and is likely to be influenced by one or more follow-up ads.

If so inclined, Kelly said, the customer might appreciate a reminder ad or a discount coupon and thus would be less annoyed by being trailed with an ad — although Nanigans’ survey doesn’t offer any data to support that idea.

“Consumers are annoyed with retargeting in its current state,” he told me in an email, “because they aren’t being targeted appropriately and [are] served irrelevant ads in excess. Why has nobody else done something about this yet? Because all the legacy/incumbent players within the ecosystem have massive amounts of revenue to protect.”

In addition to advertisers’ and consumers’ dissatisfaction, marketers employing retargeting now have to deal with the consequences of the upcoming General Data Protection Regulation (GDPR), which requires consent before a user can be followed with an ad. Kelly said that Nanigans will be globally compliant with GDPR, although the consent mechanism will be handled by the retailers and others who employ Nanigans’ software.