Increase Retargeting Profitability and Scale with This Simple Tactic
Retargeting is a prominent tool for most eCommerce brands because it increases website conversion rates. It is especially valuable for brands whose products require consideration (not an impulse purchase on the spot) from potential buyers. We perform many ecommerce retargeting audits and this post shares one of the biggest areas of inefficiency we come across in those audits, which is in how placements (the websites/apps where retargeting ads are displayed) are managed. Inefficient placement management doesn’t just lower ROI, it creates a ceiling on sales potential that simply shouldn’t be there. Below are examples of how to cut frivolous ad spend and increase conversion rates by using placements more deliberately.
Get Rid of Junk Inventory for Your Biggest Campaigns with Placement Exclusions
When setting up a display campaign in Google Ads, retargeting or otherwise, your ads with be automatically enabled to show on all Google Display Network placements. This can be counterproductive for your campaign due to many placements, specifically apps, driving extremely low conversion rates. These placements can be very unprofitable for retailers who do not monitor their performance closely. One of our best practices when building retargeting campaigns is to exclude all 141 app categories for our top spending campaigns and then build out a separate campaign holding an appropriate bid that targets app placements exclusively. This allows you to monitor and adjust app performance more granularly, such as for a specific app.
Here’s an example of a remarketing accounts performance before implementing the strategy defined above. Mobile apps received ads at the same bid as other placements, which is the default position unless an Analyst knows how to go in and fix it:
- Mobile apps were unprofitable
- Other placements were highly profitable
- Once we lowered the spend on mobile apps, we could increase the spend on other placements and still meet or exceed the client’s ROAS goal of $4.25
A look at performance after segmenting and significantly lowering bids on mobile apps:
- Sales increased by 34%, or $84k, all from the same investment!
- ROAS increased from $4.26 to $5.71, meaning we had even further room to push for growth should the client increase the budget
This is effective scaling!
We’ve been surprised at the number of campaigns we’ve reviewed that do not implement this technique and are severely constrained and underperforming because of it. But there are two good reasons this happens frequently. First, in the past year Google eliminated the ability for advertisers to simply opt-out of advertising on mobile apps (see at right), which means that the mobile apps are included as publisher inventory by default and receive the same bids as other placements that perform far better.
Advertisers can eliminate (or as we did in the example above, setup a mechanism to low bid) mobile apps manually, but the list of mobile apps is constantly added to by Google, so this requires ongoing management. This doesn’t always happen.
Secondly, we’ve been surprised to see some third-party retargeting vendors call out how important mobile apps are to have as part of the advertising strategy. Given that other placements substantially outperform mobile apps, this seems counterintuitive. One theory as to why retargeting vendors might push for more investment in mobile apps is that mobile apps drive inexpensive ad views (it’s cheap because it doesn’t convert!). If a retargeting vendor is taking credit for view-through conversions (meaning they count credit for the sale because someone viewed the ad, even if they didn’t click on it), then this is an easy way to “take credit” for sales that probably would have happened even if they didn’t see the ad. We generally don’t recommend allowing a retargeting vendor to take credit for view-through conversions, or at least not very much credit.
The impact of this simple placement strategy above can be very material to cutting wasted spend and growing productive spend, but it does require ongoing attention.
Want to make sure your retargeting ads are well optimized?
- Ask your vendor for a report of the top placements based upon sales volume (some provide, but some don’t ☹). Review it and see if your ads show where you might expect.
- Ask your vendor for a report of the placements sorted by spend. Review if they are spending a lot on unproductive apps or web pages (remember Google defaults you to spend here, so you need an active manager to fix this).
- Make sure your vendor doesn’t hide ROAS from the data provided – you want to be able to see if spend is unprofitable for you.
- Ask how much view-through credit they are taking – if reported view-through conversion sales are higher than click-conversion sales, you need to take action!
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