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How Do Facebook Retargeting Advertisements Work?

Published by James Parsons on 04/28/2014

Facebook has been rolling out a new form of advertising since the end of last year, taking advantage of the trends in retargeting advertisements. It’s a more robust and potentially lucrative form of advertising than the traditional FBX ad exchange previously offered by the social network. What is retargeting, how does it work and what is Facebook bringing to the table?

All About Retargeting

One thing many business owners quickly learn is that the vast majority of people visiting their site do not stay and convert into customers. This includes the people originally drawn in by your advertising. You spend so much money each month bringing in a huge number of visitors who see your products, decide to return later and forget about your site. Retargeting is the solution to this problem.

Retargeting is a service offered by many advertising networks around the Internet. The premise is simple. You install a bit of tracking software on your website. When a user visits, that software adds a tracking cookie or tag to their computer. From that moment, until the tracker expires, that user is flagged as someone who visited your website.

The advertising companies have contracts with many major websites, including Google and Facebook. When a tracked user visits one of these websites, the advertising they see is determined by the trackers on their computer. If they have your tracker, they may see your advertisement on the side of their Facebook bar or as part of Google sponsored search results.

The idea is that now these customers, who have forgotten your website, are reminded of the products they originally visited to see. This keeps your business fresh in their mind and gives them an immediate link back to your site. They click the ad, return to your site and decide to finally make a purchase. Old bounced traffic becomes new conversions with retargeted advertising.

Different companies offer different retargeting services. The difference between these companies is generally in how they operate. How much do you pay for your advertisement to appear? On what sites does your ad appear? How often does it appear, and where on the page? Each factor adjusts the value of an ad, and thus how much your business pays.

Facebook Retargeting

Facebook-RetargetingFacebook’s new retargeting program is distinct from the old FBX advertising exchange in a number of ways. It doesn’t include some of the existing platforms used through FBX, for example. Like basic retargeting, it works when businesses add tracking software to their websites. So what’s the difference?

Facebook is upping the ante by offering a integration with their custom audiences functionality. This functionality — which takes existing marketer data on customers such as phone numbers and email addresses, matches them with existing Facebook profiles and adds those profiles to advertising lists — is expanded for retargeting. Specifically, retargeting will allow marketers to integrate mobile data in addition to the usual databases of desktop browsing data.

Facebook is also expanding the “custom audiences” functionality to include more demographic information, such as gender, geographical location and marital status. These expansions allow more fine-tuned audience targeting on the behalf of marketers. Combine all of this with the massively large Facebook user pool and it’s easy to see why advertisers are jumping on the train.

Specific Benefits of Facebook Ad Retargeting

Facebook ad retargeting brings new functionality to the table, but it also eliminates the utility of the old FBX. Beyond that, it also slowly edges out existing advertisers doing their own retargeting through the FBX. It has to offer some advantages to businesses for them to convert to using the Facebook retargeting scheme.

  • Immediate analysis and ad displays. Most users, when shopping, tend to visit social media during or after the process. If they choose not to convert, Facebook retargeting can immediately display an ad that entices them to give your business a second shot. If they were on the edge, keeping your products in mind is a great way to tip the scales in your favor.
  • Accurate targeting. Blind advertising targets people who may have visited your site and left because they saw nothing they needed. It may also target people who decided they had good reasons to avoid a purchase. Facebook retargeting can easily determine when a person went through most of the conversion process and stopped at the last minute. It then entices them to come back and finish the process. Essentially, it’s highly targeted towards users already on the cusp of converting.
  • Facebook is ubiquitous. It’s a rare person these days that doesn’t have a Facebook account in somewhat active use. This means retargeting through Facebook is an instant access to millions of people actively using the platform. It can reach them through their desktop PCs, their laptops and even their mobile devices. Retargeting advertisements reach people no matter where they are, as long as they aren’t blocking ads entirely.

In general, retargeting is a much more effective way of displaying ads on busy platforms than basic advertising through the FBX.

The Drawbacks of Facebook Ad Retargeting

Drawbacks-of-Facebook-Ad-RetargetingFacebook ad retargeting isn’t a perfect system. It has a couple of drawbacks, particularly when compared with the old FBX.

  • Facebook ad retargeting lacks the power of predictive advertising. It relies entirely on your users receiving a tracker and visiting social media. If they clear their trackers, block them entirely or have ads blocked, they are immune to your retargeting.
  • An extension of predictive advertising, product suggestions, are also limited. If a user considered buying a particular piece of clothing, for example, a predictive advertisement might suggest accessories that go along with the style. Facebook ad retargeting cannot make these associations.
  • Facebook ad retargeting offers one single opt-out for users, which means it’s significantly easier to opt out of the program entirely. With the traditional FBX, users had to opt out of each advertiser individually, a process few completed.
  • The cash flow and budget necessary to make use of retargeting is completely different. It may not be more expensive — that depends on the business and the advertising requirements — but it does require thorough analysis before investing.

In general, Facebook ad retargeting can be incredibly beneficial for businesses. On the other hand, the old FBX has a few advantages over the new system. Ideally, a business will be able to invest somewhat into both, taking advantage of the predictive ads in the FBX and the retargeted ads through the new system. Unfortunately, the budget balance necessary may not be easy to determine initially, and will require some experimentation on the part of the business involved.

Facebook is sure to refine their ad retargeting system over the coming years. As with the FBX, which launched several years after the other major names in the industry, the social media giant has taken their time to see how the technology works. This additional research has allowed Facebook to provide a powerful tool out of the gates, rather than waste time fumbling with processes that don’t entirely work. Retargeting is a great new advertising process, particularly when used in conjunction with traditional advertising to reach a broad base of customers and keep them returning for more.

 

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