How Do People Feel About Retargeting?

So, you’re a regular online shopper browsing through the sales at your favorite store’s website, but you decide not to buy that new leather jacket just yet. Suddenly, you start seeing that same leather coat advertised everywhere you go online, as though the sale is following you around and wont let you go. Have you ever had this experience?

If so, you have been retargeted, a method of advertising that uses behavioral tactics to figure out which products are on a shopper’s mind, and then show ads for them on as many websites they visit as possible. To the consumer, it often feels like they are being stalked, tracked, and profiled by the advertiser, but are they really? Read on to learn how retargeting works, and how legislators, consumers, and advertisers are handling this controversial marketing tactic.

What Is Retargeting & How Does It Work?

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At first, it might seem impossible for the same website to show a relevant, targeted ad to each individual visitor, but the process is much simpler than it appears. Retargeting works like this — An advertiser pays a marketing firm for a retargeting package and receives a special line of code that they must put on their website somewhere. When a web surfer visits the advertiser’s page, this code places a cookie (or small data file) on their computer. Once the shopper leaves and visits a website that displays retargeted advertisements, the cookie communicates with the ad space and controls which ads display to that person.

Therefore, if you shop for a vacation at a travel agency website that gives you a cookie, you will likely see advertisements for those same vacation spots on several other websites you visit for weeks to come. However someone else who was just shopping for new clothes could visit the same websites and see ads for something completely different.

More Advertisers Getting Involved

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A recent Advertise.com/SEMPO survey found that 30% of marketers were now employing retargeting techniques. Furthermore, 46.3% believe that retargeting is “the most underutilized online marketing strategy,” implying that many more advertisers could be considering implementing these strategies in the near future. Today, some of the biggest names on the Internet are either using or displaying retargeted ads, including Art.com, Amazon, eBags, Facebook, and The Discovery Channel.

Arron Magnus, senior director for brand marketing at Zappos told The New York Times that “The overwhelming response [to our retargeting campaign] has been positive.” Looking at the performance reports, it isn’t hard to see why so many marketers are happy with their new efforts. Fetchback, a retargeting ad platform claims that 2010 Valentines Day advertisers received a 600% or higher return on investment. They also claim that, in general, retargeting can perform 74% better than a standard pay-per-click campaign.

Is This Consumer Stalking?

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Despite how it looks to the web surfer, retargeting campaigns not actually spy on anyone. In fact, absolutely no personally identifiable information is ever recorded or transferred to the advertiser. The cookie that is placed on a user’s computer does nothing more than trigger participating websites to show ads for the products a surfer has been looking at.

Put another way, the interaction is never like John A. Doe of Chattanooga, Tennessee has been looking at automotive and environmental websites, therefore show him hybrid car ads.” Instead, it looks more like “Computer X has cookie Y, therefore show ad Y.”

Consumer Outcry

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This has not, however, quelled the complaints and fears of consumers living in an increasingly transparent online world. To some, retargeting looks like outright stalking. The New York Times recently told the story of Julie Matlin, a woman shopping for shoes on Zappos.com and then began seeing those same shoes following her all around the Internet.

“For days or weeks, every site I went to seemed to be showing me ads for those shoes,” recalls Ms. Matlin. “It is a pretty clever marketing tool. But it’s a little creepy, especially if you don’t know what’s going on.” Ms. Matlin isn’t the only surfer with that “creepy” feeling — retargeting has been causing such Internet-wide privacy concerns that it has attracted the attention of the Federal Trade Commission (FTC).

The FTC & ‘Do Not Track’

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In response to the millions of online surfers experiencing the creepy feeling of being followed online, the FTC has proposed a bill that seeks to provide online shoppers with additional security against advertisers. The bill, known as “Do Not Track,” calls for the creation of a small piece of software that could anyone could use to prevent tracking and behaviorally-targeted advertising from taking place on their machine.

Jeff Chester, an executive director of the Washington based Center for Digital Democracy said believes that something along these lines must be done to restore security to the Internet. “[Retargeting] illustrates that there is a commercial surveillance system in place online that is sweeping in scope, he claims. “[Tracking] raises privacy and civil liberties issues, too.”

Opponents of Do Not Track

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Though it sounds like the perfect solution to assuage the concerns of nervous Internet shoppers, the FTC bill is certainly not without its opponents. In a recent article, CNN called Do Not Track a “Google killer,” suggesting that “if it were adopted, it could open a Pandora’s box of unintended consequences.”

Their contention, and the concerns of Internet marketers nationwide, is that the FTC makes no legal division between deceptive tracking and harmless targeting. Though they seem to acknowledge that tracking can be done in a safe and mutually beneficial way, their bill throws the good out with the bad by applying its policy too broadly, making tracking of any kind illegal.

“The FTC’s intent was go to after companies that use consumers’ data without them being aware of it, but a blanket statement won’t be effective,” says senior market research analyst at eMarketer Debbie Williamson. “It would bring e-commerce to a halt, and consumers aren’t going to like the results. There’s not much chance that these specific proposals would be enacted.”