If you’ve ever been surfing the web when you stumbled upon an ad for the exact product you were looking at on another site recently, chances are it wasn’t just a coincidence. Dynamic retargeting is finding its way into many companies’ marketing strategies – and for good reason. Let’s look at what makes this approach so successful.

Research from Monetate tells us that only 3% of visitors to an average e-commerce website actually make a purchase. In many cases, these non-converting visitors make it all the way into the purchasing funnel, but for one reason or another, decide not to buy. With retargeting, we can actually segment these visitors who backed out of a purchase and market to them later.

What is Retargeting?

The simplest form of retargeting is placing cookies on the browsers of visitors to your website. These cookies follow them on their shopping journey through your site and store this information to be used in targeted ads later. If they happen to land on any of your display network partners’ sites, you can serve them ads based on their past browsing history or engagement. The purpose of these ads is to entice them to come back to your website and make a purchase.

How Does Dynamic Retargeting Work?

Many companies will cookie anyone who visits their website and serve them generic, branded ads. By combining retargeting with your product feeds, you can take this a step further and create dynamic ads on the fly.  These ads can be used to better target customers based on the actions they perform on your site. There are several retargeting platforms out there (such as LiquidAds, developed by our partner, AdRoll) that are designed to track the products viewed on a site in order to serve ads specific to those products.

Dynamic retargeting also allows you to provide prospective customers with incentives that might increase the likelihood that they’ll return to your site and make a purchase. For example, if the customer abandoned their shopping cart on the last checkout page, maybe they had reservations about shipping costs. If this is the case, your dynamic ad could include a coupon for free shipping. This form of marketing works by essentially dropping an image of the product, your logo and the appropriate incentive into an ad tailored to each customer. In a way, dynamic marketing enables you to create customized ad campaigns for each site visitor.

Why is Retargeting Successful?

Retargeting – and specifically, dynamic retargeting – is so successful because it targets users who are already more likely to convert based on their past browsing behavior. Years ago, it wouldn’t have been surprising to receive a pop-up ad for travel services while browsing for baby clothes online. That’s because ads weren’t targeted to match consumer preferences. Though you still might see some random ads today, they are definitely becoming less and less common as e-commerce continues to evolve and retailers become smarter about how to market to their customers.

Don’t Go Overboard

While it’s easy to get excited about the prospect of increasing your conversions, it’s important that you set limits so you don’t go overboard. Remember, you don’t like being bombarded by ads while shopping online – and neither do your customers. Be sure to set specific parameters around how long those ads follow your customers after they’ve left your site, and don’t go beyond that. Also, don’t target customers who did make a purchase. That’s overkill, and you run the risk of irritating your customers to the point of no return. The main goal is to entice those site visitors who left empty-handed to come back and make a purchase.

Done right, dynamic retargeting can be a very effective marketing tool. You’re engaging customers who are already familiar with your brand rather than taking a chance on those who may have zero interest. If you do your homework and create campaigns that make sense, you could increase your conversion rate substantially.