Personalized retargeting is a display advertising technique used by online advertisers to recapture consumers who visit a retailer’s site and leave without making a purchase. It functions as a complement to search, SEO and other marketing campaign tactics.
Personalized retargeting, like other forms of retargeting, uses basic information, pulled from cookies that are placed on a user’s web browser, to serve display advertisements. The products that appear in each user’s display ad are unique to each user and reflect products that the user previously viewed on a retailer’s website.
The mechanics of basic retargeting go back about 10 years, with personalized retargeting emerging recently as a more sophisticated technique to present consumers with targeted, relevant ads based on their previous onsite browsing history. Personalized retargeted ads differ from earlier forms of retargeting in that instead of static, branded creative ads, personalized ads are produced in real-time, reflect the browsing history of each individual user and can feature multiple ads in a single banner.
Personalized retargeting providers employ a variety of pricing models to charge advertisers for the ads viewed by consumers. Three prominent models include:
- CPM (cost per thousand)
- CPC (cost per click)
- CPA (cost per action)
Cost per impression (CPM) is a common metric used in the online advertising industry to charge advertisers for inventory based on a set price per thousand page impressions. An impression is defined as any time a banner ad loads on an individual’s web browser.
Pay per click (PPC) charges advertisers for every verifiable click that leads consumers back to a retailer’s website. Unlike the CPM model, which charges advertisers a flat rate, advertisers working under the PPC model are only charged when a person clicks on an ad.
Cost per action (CPA) is a pricing model in which advertisers are charged based on pre-arranged action (a purchase, a view through, etc.), although a completed sale is the most common action used under the CPA model.
In the United States, several organizations, including the Federal Trade Commission, Congress and the media, have expressed privacy concerns around the practice of retargeting; however, responsible personalized retargeting providers don’t collect personally identifiable information (PII) on consumers. Providers are blind to a user’s age, sex and other personal information. Instead, providers rely upon data gathered from cookies that are placed on a consumer’s browser by the websites they visit. This information is not shared among publishers, other advertisers or third parties and cannot be linked to a specific user. The United States hasn’t legislated many laws around the practice, and instead relies upon the industry and its overarching organizations, such as the Interactive Advertising Bureau, Network Advertising Initiative and TRUSTe to self-regulate. In October 2010, the IAB announced its Advertising Option Icon, which partner sites will place near banner advertisements that collect non-PII user data.
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