There seems to be a common belief among digital marketeers that remarketing is a no-brainer because it delivers conversions at a low cost. Being our critical selves we question to what extent remarketing really delivers incremental revenue.
Client case study
We regularly get confronted with the remarketing ROI question when we perform digital marketing audits for our customers. They typically show us reports that their agencies send to them or which they get from Google Analytics, such as the one below where Display refers entirely to remarketing activity via the Criteo advertising platform.
In this example we notice first of all that remarketing seems to generate 320K revenue. The cost for generating the traffic that generated this revenue was just over 25K. I can hear you think “that’s a nice return on investment”. Did you also notice that remarketing actually generated the lowest conversion rate of all channels?
Going beyond last-click attribution
Last-click attribution is besides the truth as you may know. It actually overemphasises the value of all digital marketing channels at the expense of your direct traffic. When we take a different perspective on this by confronting two attribution models in Google Analytics with each other we come to an interesting find:
- Last non-direct click, the default attribution model in Google Analytics, reports remarketing revenue with a value of 273K.*
- Last interaction, which attributes conversions to the last interaction even when that is direct, reports remarketing revenue with a value of 18,5K.
Remarketing now only generated 18,5K revenue. The advertising spend on this channel of 25K actually exceeds its revenue!
Conversion path analysis reveals insights
I hear you think, “let’s kill it”. So did we. But our inquisitive nature forced us not to jump to conclusions. Our analysis continued by taking an in-depth look at all the different paths in which remarketing featured using the Top conversion paths report in GA. There were 2.084 paths that led to conversion in which remarketing featured. These 2.084 paths can be broken down as follows:
- Paths where Criteo remarketing was the first step in the path: 349 paths **
- Paths where Criteo remarketing was the last step in the path: 231 paths
- Paths where Criteo remarketing featured in the middle of the path: 1.544 paths
Clearly the vast majority of paths that generated remarketing revenue feature remarketing traffic in the middle of the path. The screenshots below are samples taken from these 1.544 paths.
What stands out is that many of these revenue-generating paths start with direct traffic or email interactions. Which begs the following question: Visitors who come to my site directly and even repeatedly do that, should I really be remarketing to them? These actually are my loyal customers who easily find their way to my site. They may even find these remarketing ads disturbing.
The same for my email visitors. The only reason they come via email is that I have their email address as a result of a previous purchase or visit. They also know us so should we really be remarketing to them?
The reason this even happens is because Criteo tracking tags do not make any distinction between your visitors. Criteo tracking tags are implemented on your homepage, your product overview pages, your product pages, your basket pages and your conversion page. Because this Criteo tracking is so omni-present on your site it is almost impossible not to be retargeted!
Action based on data-driven analysis
Let’s cut to the chase. Based on the above data-driven findings the assumption grew that an awful amount of remarketing effort was directed at very brand loyal customers who did not quite need this. They would come to the site anyway and buy.
And with the fact that in a last interaction model the cost for this activity (25K) was higher than its revenue (18,5K), it was decided to discontinue Criteo remarketing altogether. Did this actually lead to a 320K revenue drop thereafter? By no means!
The remarketing activity was discontinued in week 11 after which remarketing revenue is gradually reduced to zero. Total revenue remains completely stable.
Moral of the story
Because of the machine-gun remarketing approach that Criteo uses a lot of remarketing activity is directed at loyal customers who regularly revisit the site. Turning the remarketing activity off does not have an impact on revenue but saved 25K in marketing costs.
- * The two Google Analytics reports respectively quote 320K and 273K in remarketing revenue, albeit using the same attribution model. The difference is the attribution window. In the default model where 320K revenue is attributed to remarketing the standard 6 months window of GA is applied, where the second report was set to the maximum 90 days attribution window GA offers.
- ** Remarketing can in theory never be the first interaction in a path. After all it is RE-marketing, meaning there had to be a previous interaction via another channel. They exist in GA for a number of reasons of which device fragmentation and the limitation of the lookback window are the most important ones.