Retargeting is showing online ads to people who have already visited a shop's website or app, for the products they looked at, after they have left for other sites. It is also called remarketing. It is the reason that a pair of shoes you looked at may appear in an ad on a news site the next day. Retargeting is one of the most common uses of a demand-side platform (DSP), the advertiser's software that bids for ad space in automatic auctions.
Most visitors to an online shop leave without buying. Retargeting is a second attempt. It works because a person who has already looked at a product is far more likely to buy it than a stranger is.
Take, for example, a shopper in Jaipur who looks at a ₹3,499 pair of running shoes on a footwear brand's website. She does not buy them. While she browses, a small piece of code on the brand's site, called a tag, records the product she viewed and an identifier for her browser. The brand's customer data platform (CDP) adds her to a list: "viewed running shoes, did not buy, in the last 7 days". The list is sent to the DSP.
The next morning, she opens a news site. The site's ad slot is offered in an auction, and the offer carries the same browser identifier. The DSP finds it on the list. For a stranger, the DSP normally bids about ₹60 CPM, meaning ₹60 per thousand showings. For her, it bids ₹180 CPM, because she is much more likely to buy. It wins. The ad shows the same shoes, with a line offering ₹300 off. She returns to the site and buys them for ₹3,199. The brand's site then tells the DSP about the purchase. The DSP removes her from the list, so she stops seeing ads for shoes that she already owns.
Good retargeting has limits. A frequency cap sets how many times one person may see the ad, for example three times a day. Without a cap, the same ad appears again and again, and people find it annoying.
Retargeting has long depended on third-party cookies, small files that a browser stores for a company other than the site being visited. Some browsers now block them by default. On phones, apps use an advertising identifier instead, which the user can reset or switch off. So retargeting now relies more on first-party data, such as the email addresses or phone numbers of a brand's logged-in customers. These must be used with the customer's consent, under data protection law.