Maybe it’s not exactly what they had in mind, but we can take some inspiration from Dire Straits when thinking about how to measure and optimise online advertising. Basically, you shouldn’t have to pay for what’s already yours. As more and more online advertisers turn to retargeting, one question continues to vex marketers: how to ensure that they are truly driving incremental conversions, instead of merely shifting credit from other (possibly free) marketing channels.

This is especially relevant to site retargeting, a proven driver of online sales. While a lot has been written on the weaknesses of last-click-based attribution models, when applied to retargeting, it’s especially dangerous since you’re only targeting people who’ve already been to your site. Or, think of it this way: if you turned off retargeting, what percent of conversions would come from people who’ve already visited your site? If you did nothing at all, many of these site visitors would have returned on their own. So, what percent of paid retargeting clicks do you think would've happened for free? 30%? 50%? If it's 50%, then double the CPC you're actually paying to account for what should've been free. Does that CPC still seem so appealing?

It doesn’t have to be this way: retargeting is one of the few marketing channels where measuring incremental lift is a relatively straightforward process — though too few marketers take advantage of this.

To measure lift, advertisers can use a ‘hold out’ control group. This is a group of randomly selected visitors to an advertiser's site that are not shown retargeting ads (ideally, they're shown control PSA ads). Advertisers can then compare the behaviour of the control group with the behaviour of the default group (who see the advertiser’s retargeting ads) and measure the incremental conversion rate between the two. This ensures that you're only measuring the true lift that retargeting delivers, and not counting customers (whether for clicks, views, engagements, etc.) who would have returned to your site on their own.

When using control and default groups to monitor lift, the optimisation techniques that produce incremental conversions over lower cost-per-clicks (CPC) and last-click cost-per-action (CPAs) are quite different.

Here are some tactics that focus on generating lift over shifting credit from other (possibly free) marketing channels:

Timing Is Everything: Segment into Time Cohorts
When it comes to optimising for lift, timing is everything. When you retarget people can be just as important as what you retarget them with. Yet, the use of time cohorts remains one of the most underused methods for optimising lift. We’ve found that with many advertisers, if they did no retargeting whatsoever, 80-90% of conversions would occur within five days of a person’s first visit to their site. If the goal were simply to drive the lowest last-click CPA, then it would be ideal to retarget people during this time period to get the credit for as many conversions as possible. This clearly creates misaligned incentives. Focusing on last-click CPA also incentivises going after the least incremental group of people.

To optimise for lift, segmenting your campaign into time cohorts — for example, people who haven’t been back to your site within 5 days, 10 days, and 15 days — is a must. You can concentrate on re-engaging people who would have been lost had you not retargeted them. You can also use specific events as indicators to change strategy. The most obvious one is a conversion. When someone converts, you most likely want to exclude that person from the campaign for a period of time, or you might want to shift your messaging to ask the consumer to Like you on Facebook. Whatever you choose, using time cohorts will help you ensure retargeting generates enough incremental conversions to justify the media spend.

Explore On-Site Behavioral Patterns, Not Just Cart Abandonment
Who are the most likely visitors to click on ad and convert once they’ve left your site? Typically, when trying to optimise for the lowest CPC and lowest last-click CPA, the focus falls on people who’ve put items in their cart — and, why not? They are the low hanging fruit, but aren’t these people also the most likely to come back and covert on their own? When going for incremental lift instead of cheap clicks, it’s necessary to examine other intent signals, and to look closely at other areas of a site that might signal high potential customers. For example, you can target visitors not only for cart abandonment, but also target visitors who viewed multiple product pages or have purchased in the past.

Design Your Ads to Inspire, Not Just For Clicks
To generate lift and incremental conversions, you need to inspire desire in hesitant consumers. It’s a shockingly basic principle of advertising that tends to get forgotten when we strap our direct response hats on too tightly. Lift-oriented creative requires attractively designed units that reinforce the benefits of your product and feature the best possible product imagery and branding. If, however, your strategy is to pursue clicks and a low CPC, an ad unit that looks more like a shopping widget might make more sense. You'll want to maximise interest by showing a variety of products.

Use Frequency Caps to Prevent Bombarding Visitors
No one likes a hard sell. Just because someone has visited your web site, doesn’t mean he or she needs to see your ad everywhere and anywhere. This type of retargeting does no one any favours, and even the most carefully cultivated brand can take a negative hit. Using multiple vendors for the same cookie pool is often a culprit. Putting in place a frequency cap will ensure that there’s a limit to the number of times a visitor to your site sees your ads, and prevent them from feeling ‘followed’.

However, the problem of bombardment can be exacerbated by the attribution model. If a retargeting vendor is getting compensated and measured by clicks, it's only natural that they err on the side of being in front of a user more times in order to get that click. However, if your goal is incremental lift, the vendor needs to tread more carefully. A lift-oriented strategy will focus more closely on the average number of impressions prior to conversion and prioritise exposure during that period, while tapering off after the point of diminishing returns.

Brands and their agencies have a variety of reasons for why they attribute different channels in different ways. However, with site retargeting, you can clearly measure the incremental lift it delivers, so why not take advantage of these techniques to optimise lift?