Why I wrote this?

Ever been blasted by ads for hotels or car rentals after making a flight booking? When you DON’T need one!

When you open an app you see items in the same order and have to scroll down for new information?

Or, kept receiving reminders for products abandoned in your cart? Worse, for products already purchased?

Or, received the same ads to a point when you switch a video, radio, or social media channel?

Ever thought, “How can this improve?”. Well, so did I

Where can you retarget?

Videos (YouTube, Vimeo etc.)

Social Media (Facebook, Twitter etc.)

Apps (Games, Shopping, Chat, Online Radio etc.)

Affiliate networks (Websites, News media, Radio)

eCommerce platforms (eBay, Amazon, Staples etc.)

“Everyone retargets inventory to improve conversion”

However, not all retargeted inventory is made equal

The Use of Retargeting

It brings in new users!!

Far cheaper than fresh promotions and advertising campaigns

Increases conversions

Increases engagement (apps)

Unfortunately can be ineffective and expensive if handled unscientifically

The Best Business Model

Improve conversions

Cost ofRetargeting

(CoR)

Retarget for the lowest cost

The value of retargeted impressions

Depends on the quality of the target,

Is a power user (prolific browser, multiple tabs etc.)

Time on phone/tablet apps (longer the better)

Number of apps used (more the better)

Time on social media and number of platforms used

Time spent streaming media (video, radio, tv etc.)

Time spent on eCommerce

The higher the quality, the more it will cost to engage

However, the cost will vary based on

Target fatigue (time since the first impression was served)

Number of times user already converted/engaged

Topics

The Retargeting Loop

The Math behind price of retargeted inventory

An Example – Optimizing

Making this work for your business

Use Cases

Advantages

The Retargeting Loop

User engages with your

product/service

Converts/Or not

Marketer decides to

convert, up sell, cross sell, resell product/service

User engages with other

websites, apps

Marketer sends user relevant

product/service via impressions

(retargeting)

User clicks on the impression (Marketer pays for CPC, CPM,

or % of conversion)

The Math behind price of retargeted inventory

This is given by the formula:

Key variables:

K – The click through rate

p – The amount of time to send next batch of impressions

C – Past conversions

P – Cost of 1000 impressions

t – Time lapsed since target identified

An Example

Average Retargeted Click Through Rate K = 0.005

Number of impressions per batch per target (I) = 10 (Hence no. of targets = 1000/10)

Time interval, p to send next batch of impressions = 30 min

Past conversions C = 0

Price (P) of 1000 impressions in cents = 150

Time in minutes 0 30 60 80 100 120Price of retargeting inventory (cents) 150.00 64.62 27.24 15.18 8.40 4.63

Spreadsheet model

No. of targets = 1000/C2 (not used in formula)

The various fields

Multiplier

Denominator, decays at exponential rateRaised to the power of

Raised to the power of

Reducing the batch interval ‘p’ or increasing number of times user converts ‘C’ has a far

bigger effect than increasing click through ‘K’!

Optimize via Sensitivity to I, p, C, & K

• Increasing I, impressions per target or reducing p the interval will lower costs but also increase target fatigue (Hence reduce target quality)

• Any increase in past conversions, C, reduces costs• Increase in click through, K, increases quality of target & raises

costs• Strategy, “Increase I, reduce p, only if K increases”• Explore if you can increase impressions based on target quality

e.g. power users (could be an additional parameter in the formula)

Variation to formula to account for conversions

An alternate version to track conversions also (e.g. registrations etc.)

Where the indicator function is represented as,

The function acts as a flag and if a purchase or conversion has completed then price of impression is zero

This lets tracking burn rate and prevents retargeting already converted targets

Use cases

Replace Price ‘P’ at time 0, with priority at time 0, to decide order of items in an infinite scroll app

Increase app engagement by reordering a different set of items to scroll e.g. a deals or coupon app page

Determine when to send abandoned cart reminder notifications and what to remind

Reduce irrelevant impressions on any media (TV, radio, web, app)

Advantages

Reducing marketing costs for stale targets; in other words as age increases

Accounting for target fatigue (frequency, number of impressions)

Tracking target burn rate so marketing $$ aren’t wasted on converted targets

Take away – ‘p’ governs target fatigue

Batch interval ‘p’ has a far bigger impact than increasing number of impressions ‘I’ or

increasing click through ‘K’

END