Targeting online advertising based on consumers’ browsing history is a contentious issue and for retailers there are both pros and cons to behavioural re-targeting

With a new type of online marketing being used by a growing number of retailers, shoppers could be forgiven for thinking that they are being watched.

Retailers have long been personalising their shoppers’ web experiences by collecting data about their customers. Behavioural re-targeting goes a step further, allowing retailers to target customers with online ads related to their recent browsing on completely unrelated sites - such as their favourite online newspaper.

Because of its infancy many customers don’t yet realise they are being targeted, assuming instead it’s a spooky coincidence that the ads - which can be general display ads for the retailer, product category or actual products they have recently browsed - have popped up on their screens.

The technique works by cookies storing data on the customer’s browsing habits that then allows relevant advertising to be served up on another site that is part of the behavioural targeting specialist’s network (see box).

The technique seems to be working well, especially for smaller brands. “Many online shoppers browse various websites before making a purchasing decision. They may not bookmark all the websites they visit and especially for fledgling retail brands this is an issue. Re-targeting allows them to ‘remind’ the shopper of products they looked at on their store,” says Leon Bailey-Green, director of consultancy The Online Fashion Agency.

The launch of a behavioural re-targeting solution from Mythings UK at Fragrance Direct delivered a 100% uplift in retail conversions in the first week. At fashion retailer Republic the uplift was 242%. Mythings UK claims that re-targeted traffic accounts for 15% of a retailer’s total turnover online.

Go Outdoors has been using behavioural re-targeting since May. “Rather than preaching a single message to the masses, we can tailor and deliver onsite and offsite content that our customers find more interesting, in turn providing a more cost-effective way of driving relevant traffic to our website,” says Go Outdoors head of ecommerce development Andy Eades.

“We have found re-targeting campaigns to be one of the most effective ways of driving converting traffic back and visitors are three times more likely to convert from our re-targeting campaigns over our traditional campaigns,” Eades adds.

Retailers working with behavioural re-targeting specialist Criteo pay on a cost-per-click measure, meaning it works similarly to search engine optimisation. “It’s been really effective. The customer sees the ad that is relevant to them but we only pay if they click on the ad,” says a Halfords spokesman.

Criteo UK managing director Michael Steckler says the approach drives results because it is so personalised. “We will see a four to six times improvement in click-through rates against standard re-targeting campaigns,” says Steckler. “It’s more relevant to them so it stands out.”

Starcom MediaVest Group head of emerging platforms Oliver Newton says retailers can gain insight from it too. “It improves the efficiency of campaigns because it helps identify the type of customer who is likely to convert,” he says.

Privacy pitfalls

However, there are concerns. Avail Intelligence co-founder and chief executive Pontus Kristiansson says: “When a consumer thinks it becomes really relevant then it becomes a little scary so it is important to inform consumers how it works and to ensure customers understand that personally identifiable information is not being used.”

The behavioural re-targeting specialists claim that information buttons on the ads explain how the process works and include an opt out option. “The button tells you why you have seen that banner, how we have collected the information and also allows you to opt out,” explains Steckler.

Halfords says customer reaction has been positive so far. “User information is entirely anonymous and our privacy policy states you can opt out from the advertising. We’ve had hardly any complaints and if anything customers find it quite useful,” says the spokesman.

Criteo and Mythings UK say the opt out numbers are almost negligible. “We haven’t had any complaints directly and are monitoring blogs and other channels,” says Mythings UK managing director David Kiashek. “If there was a problem the retailer would be the first to let us know because the last thing they want is to harm their brand,” he says.

However, Bailey-Green argues that a more proactive approach should be taken: “There’s an argument whether the providers of these services should be acting before the revolt - telling users they do not capture personal information and educating them on switching off the adverts,” he says.

Retailers and advertisers argue that consumers have long been used to a more personalised experience while shopping on the web and that generic advertising - whether on TV or outdoors - still targets relevant customers in the most relevant place. But taken to its extreme, re-targeting customers with products they have previously browsed while they are doing something completely different to shopping online is - whether retailers admit it or not - akin to a sales assistant following them home and knocking on the door asking them to take another look.

And others question whether retailers are paying for customers that would have returned anyway. “I’ve spoken to a number of companies about it and they say you get a lot of traffic being driven to your site but the conundrum is determining if that customer was going to visit your site again anyway,” says Peerius chief executive Roger Brown.

There is also the danger that retailers end up continuously re-targeting a customer who has already bought that product at another retailer or through another channel. To avoid this many behavioural re-targeting companies are introducing frequency counters to ensure customers are not bombarded.

Branding risk

It’s a delicate balancing act and although retailers such as Marks & Spencer have already used behavioural re-targeting, others are playing a waiting game because they know there is much to lose if they get it wrong.

“If retailers don’t get it right their branding will go to pot because customers will say: ‘Don’t go to that shop because it will hound you in cyberspace’. You have to be mindful of how you target people and good frequency counters are imperative,” says Brown.

John Lewis is considering the technology but is wary of getting it wrong. “It will always be smaller retailers that take advantage of this first because there is a brand risk,” says John Lewis customer acquisition and retention manager Emma McLaughlin. “We are looking at it and talking to the behavioural re-targeting players but are looking at different options,” she says.

“Used well it can help the customer but if we found that behavioural re-targeting was experiencing something of a backlash then we would address that,” McLaughlin adds.

Many argue that done correctly it will help customers and they will appreciate behavioural re-targeting rather than resent it. “If you do really good targeting then you are showing the right product to the right consumer at the time in the right way,” says Kristiansson.

Martin Newman, director of multi-channel retail specialist Practicology, believes further personalisation is to come. “Behavioural re-targeting is likely to become more granular and personalised and, as it converts at two to three times the rate of a generic run of network ads, its usage is likely to increase with a higher percentage of retailers adopting it over time,” he concludes.

Re-Targeting how it works

Retailers pages are tagged with javascript tags that look at the browsing behaviour of customers on the site and the correlation of products browsed. That information is then cached in the servers of the behavioural targeting specialist and correlated to an anonymous cookie for that customer.

If that customer leaves the site without the visit being converted into a sale but reappears on another site - such as a social media or newspaper site - where the behavioural targeting specialist has bought media space (for example Criteo and Thesun.com) then the site recognises the cookie, puts a call in to the behavioural re-targeting companies ad server to bid against other players for the ad space.

If successful, a template ad (often a rotating carousel of products browsed) relevant to products or the retailer the consumer recently browsed is displayed. When the customer clicks on the ad they are directed back to the retailer’s website.