How Does Retargeting Work

June 20


How Does Retargeting Work

By Hanson Cheng

June 20, 2023

  • minute read
  • Last Updated on June 20, 2023 by Hanson Cheng

    Retargeting is a marketing strategy that aims to bring people who have interacted with a brand’s website or content back into the sales funnel. It works by displaying ads to these individuals as they browse other websites, reminding them of the brand’s products or services and encouraging them to make a purchase. In this article, we will explore the basics of retargeting and how it works to help businesses boost their conversions and revenue.



    Retargeting is a type of online advertising that uses cookie-based technology to show personalized ads to individuals who have previously interacted with a website, product, or service. Essentially, it involves targeting people with ads after they have visited a particular website or taken a specific action online. Retargeting works by tracking user behavior through the use of cookies or tracking codes.

    It works by using a pixel or piece of code embedded on a website that places a cookie in the user’s browser to track their browsing behavior. The cookie then allows advertisers to display ads to the user for products or services that they have previously shown interest in. By targeting people who have demonstrated some level of interest in a brand or product, marketers can re-engage with users, prime them for conversion, and eventually boost sales.

    Retargeting can also be used to build brand awareness and create a positive image of the brand in the user’s mind. When done correctly, retargeting can be a cost-effective way to increase conversions, improve brand engagement, and drive growth in a business. In summary, retargeting is an important marketing technique that allows businesses to get their message in front of people who have previously shown interest in their products or services.


    Retargeting is a marketing strategy that aims to target website visitors who have previously interacted with a business’s website or content but have not converted. The purpose of retargeting is to remind potential customers about the brand and encourage them to return to the website to complete a desired action such as making a purchase, signing up for a service, or filling out a form.

    Retargeting is based on the concept of reaching a warm audience composed of people who already have some form of interest or engagement with the brand. By retargeting, businesses can increase their chances of converting potential customers by presenting them with relevant and personalized messages that speak to their needs and interests.

    The main purpose of retargeting is to drive conversions and generate revenue by leveraging data-driven insights to deliver effective and targeted advertising. Retargeting campaigns are typically less expensive and more effective than traditional marketing methods because they target a specific audience that has already demonstrated an interest in the brand, resulting in higher conversion rates and a lower cost per acquisition.


    Retargeting, also known as remarketing, is becoming an increasingly popular digital marketing strategy used by businesses worldwide. It is a technique used to target individuals who have previously interacted with a brand’s website or online content by displaying relevant ads to them across the internet. There are various types of retargeting strategies that businesses can use to target specific audiences and achieve their marketing goals.

    The most common types of retargeting include site retargeting, search retargeting, email retargeting, and social media retargeting. Site retargeting is the most commonly used form of retargeting, which targets individuals who have previously visited a brand’s website or landing page. Search retargeting is another form of retargeting, which targets individuals who have searched for specific keywords or phrases online that are related to a brand’s products or services.

    Email retargeting, on the other hand, targets individuals who have previously interacted with a brand’s email campaigns, and social media retargeting targets individuals who have previously interacted with a brand’s social media content. Each type of retargeting has its unique advantages, and businesses should choose a strategy that is most suited to their marketing goals.

    How Retargeting Works


    In order to better understand how retargeting works, it is important to first examine the process of tracking. Tracking is the method by which retargeting algorithms gather data on consumer behavior to determine the most effective advertisements to display. This involves the use of cookies, which are small text files that are stored on a user’s computer or device when they browse a website.

    When a user visits a website, the website places a cookie on their computer that contains information such as the pages they visited, how long they spent on each page, and any products they viewed or added to their cart.

    This information is then reported back to the retargeting platform, which uses it to display advertisements that are most relevant to the user’s interests. While cookies are the most common form of tracking used in retargeting, there are other methods such as device fingerprinting and pixel tracking that are also used to gather data.

    It is worth noting that in order for retargeting to work effectively, a user must have already visited the advertiser’s website or shown interest in their products or services in some other way. This is why retargeting is often used in conjunction with other forms of marketing such as social media advertising or email marketing. By targeting users who have already shown some level of interest in their brand, advertisers can more effectively convert leads into customers.

    However, it is important to recognize that there are also concerns around the tracking of consumer behavior online. Many users view cookies as a violation of their privacy and some have even opted out of retargeting altogether by using browser extensions or other tools that block cookies.

    Advertisers must therefore strike a delicate balance between providing relevant advertisements to users while also respecting their privacy rights and preferences. As such, many retargeting platforms and advertisers have implemented measures such as transparency and user control to address these issues.


    Retargeting is a digital marketing strategy that allows businesses to reach potential customers who have previously shown an interest in their product or service. To make this possible, businesses use a process called segmentation to group website visitors based on their behavior. There are several types of segmentation, including demographic, geographic, behavioral, and psychographic.

    Demographic segmentation sorts visitors by their age, gender, income, level of education, and other personal characteristics. Geographic segmentation puts visitors into groups based on their location, city, state, or country. Behavioral segmentation identifies visitors based on how they interact with a website, including what pages they visit, what actions they take, and how long they spend on the site.

    Finally, psychographic segmentation considers the personality traits, values, attitudes, and interests of website visitors. After grouping visitors into these categories, businesses create specific content that is tailored to each segment’s specific needs and interests. By segmenting website visitors in this way, businesses can deliver more relevant ads and messaging to them, which can increase the chance of conversion and ultimately lead to more sales.

    Ad Serving

    One crucial element of retargeting is ad serving, which involves showing the right ad to the right person at the right time. Ad serving is enabled through cookies, small text files stored on a user’s device after they visit a website. These cookies, which contain information about the user’s browsing history and interests, allow ad serving platforms to deliver targeted ads to specific users. When a user visits a website, the site sends a request to the ad server, which responds by loading an ad in the user’s browser.

    The ad server determines which ad to show based on the user’s cookie data, as well as factors such as the website being visited, the time of day, and the user’s location. Ad serving platforms use complex algorithms and machine learning to analyze user behavior and make real-time decisions about which ads to serve. Through this process, retargeting allows advertisers to reach potential customers who have already shown an interest in their product or service, increasing the likelihood of a conversion.

    However, it is important to note that ad serving must be done carefully to avoid bombarding users with too many ads or violating their privacy. Advertisers should limit the number of times a user sees an ad and provide options for opting out of ad tracking. Overall, ad serving is a critical component of successful retargeting campaigns, allowing advertisers to show relevant ads to users at the right time and increase their chances of converting.

    Conversion Tracking

    Conversion tracking is a crucial aspect of retargeting. It involves tracking the actions of users who interact with the retargeting ads and measuring the success of those ads. The goal of conversion tracking is to ascertain if the ads are generating ROI (return on investment) by leading to conversions such as purchases, sign-ups, and downloads. Conversion tracking involves placing a conversion tracking tag or pixel on the advertiser’s webpage.

    When a user visits the webpage after being served with a retargeting ad, the tracking tag or pixel sends information to the ad network or platform indicating that a conversion occurred. The ad network or platform then matches the user’s identification information (such as IP address or cookie ID) with the data collected by the tracking tag or pixel.

    This allows the ad platform to track the user’s behavior across multiple websites and personalize the retargeting ads accordingly. Conversion tracking benefits advertisers by providing insights into the effectiveness of their retargeting campaigns and allowing them to optimize their targeting and messaging for better results.

    Benefits Of Retargeting

    Increased Conversions

    One of the primary benefits of retargeting is increased conversions. When a user visits a website, it’s unlikely that they’ll make a purchase on their initial visit. However, retargeting allows businesses to stay in front of that user, by serving them with relevant ads after they’ve left the website. This keeps the brand or product top of mind for the user, increasing the likelihood that they’ll return to make a purchase.

    According to a study by AdRoll, retargeted ads have a 10x higher click-through rate (CTR) compared to regular display ads. Additionally, retargeted visitors are 70% more likely to convert compared to non-retargeted visitors. Retargeting also allows businesses to reach users who are further down the sales funnel, meaning they’re more likely to make a purchase.

    By retargeting users who have already shown interest in a product or service, businesses can maximize their advertising budget by targeting those who are more likely to convert. Overall, retargeting is an effective way to increase conversions and maximize advertising ROI.

    Brand Awareness

    One of the key benefits of retargeting is that it helps to increase brand awareness among potential customers. By advertising to people who have already interacted with your website or products, retargeting keeps your brand at the forefront of their minds. This is particularly important for businesses with long sales cycles or complex products, as it may take several interactions with a brand before a potential customer is ready to make a purchase.

    By continuing to show relevant ads to these individuals, retargeting helps to reinforce your brand message and encourages them to engage with your business further. Moreover, retargeting can also help to build the credibility of your brand in the eyes of the consumer.

    By seeing your ads on multiple websites and platforms, potential customers may start to view your business as more established and trustworthy, which could make them more likely to convert in the future. Ultimately, retargeting can play a critical role in building your brand and fostering a deeper connection with your target audience.


    One of the most appealing aspects of retargeting is its cost-effectiveness. Traditional ad campaigns can be extremely expensive, as companies have to spend a significant amount of money to reach their target audience. However, with the help of retargeting, businesses can focus their efforts on a smaller, more engaged audience that has already shown interest in their products or services.

    This targeted approach reduces wasted ad spend and allows companies to stretch their marketing budget further. Additionally, retargeting campaigns often see a higher ROI than traditional campaigns, as they can lower the cost per acquisition and increase conversion rates.

    By focusing on individuals who have already shown interest, businesses can increase the likelihood of conversion and drive revenue growth. Overall, the cost-effectiveness of retargeting makes it an attractive option for businesses looking to maximize their marketing budget and reach their target audience.

    Challenges Of Retargeting

    Ad Fatigue

    One of the critical challenges of retargeting is Ad Fatigue. Ad Fatigue refers to when customers are repeatedly exposed to the same ads, prompting them to become uninterested or irritated by the ads. The constant appearance of the same ads can turn off potential clients, leading to decreased click-through rates (CTR) and ad revenues for businesses.

    Ad Fatigue poses a challenge for advertisers as they try to maintain campaign engagement while keeping ad frequency in check. Businesses may need to allocate more campaigns to precisely target the audience without overexposing them to the same retargeting ad. Notably, businesses must be creative in the way ads are framed by continuously designing innovative and engaging ads.

    They must also construct their retargeting campaigns with a specific plan to avoid over-exposing their target audience to their ads. Regularly testing and monitoring ad performance and CTR can provide insights into the effectiveness of a particular ad.

    Such information can allow businesses to adjust and optimize their retargeting campaigns. To sum up, as businesses aim to use retargeting to increase brand awareness and sales, they must always be mindful of Ad Fatigue and work to reduce its impact by creating compelling ads, balancing their retargeting campaigns, and monitoring their target audience’s responses.

    Privacy Concerns

    Privacy concerns have been an ongoing challenge for retargeting campaigns. Retargeting works by tracking users’ online behavior and displaying personalized ads based on their past interactions with a website or brand. While this approach can lead to higher conversion rates, it also raises several privacy concerns.

    Firstly, many consumers consider retargeting to be intrusive and feel uncomfortable with the idea that their every move online is being tracked.

    Secondly, there is the risk of sensitive information being leaked or mishandled by companies. Lastly, retargeting can also result in ads being displayed to the wrong audience, which can lead to embarrassment or even legal trouble. With more and more people becoming aware of their privacy rights, it is crucial for companies to be transparent about their data collection and usage policies.

    This means clearly communicating what data is being collected, how it is being used, and providing users with the option to opt-out of retargeting altogether. Failure to do so can result in a loss of trust and ultimately harm a company’s reputation. While privacy concerns remain a challenge for retargeting, it is possible to address these issues with responsible data usage and transparent communication.

    Limited Reach

    Retargeting is a powerful marketing tool that allows advertisers to reach potential customers who have previously interacted with their brand. However, one of the major challenges of retargeting is limited reach, which can be defined as the inability to target a significant portion of potential customers due to various factors such as ad blocking, limited access to browsing data, and a small user base.

    Ad blocking software, which prevents ads from being displayed to users, is becoming increasingly popular, and can significantly reduce the reach of retargeting efforts. In addition, not all browsers provide the same level of browsing data, which can make it difficult to effectively target users based on their previous browsing behavior.

    Moreover, retargeting efforts can be limited by the size of the user base, which can reduce the pool of potential customers that can be reached through retargeting. To overcome these challenges, advertisers need to employ a multi-pronged approach that includes diversifying their ad formats and delivery channels, implementing effective ad targeting strategies, and monitoring their retargeting efforts to ensure that they are reaching the right audience. By doing so, advertisers can maximize the potential of retargeting to reach their target audience and drive conversions.

    Best Practices for Retargeting

    Frequency Capping

    One of the major concerns when it comes to retargeting ads is the frequency with which they are shown to users. It’s important to strike a balance, as showing the same ad too many times can result in annoyance, while showing it too infrequently could result in missed opportunities to convert users. To ensure that your retargeting campaigns are effective and well-received, it’s essential to leverage frequency capping mechanisms.

    This involves setting a limit to how many times individual users will see your ads over a designated time period. The threshold for capping varies depending on the context, but it’s generally advisable to cap frequency at around five to seven impressions per week. This ensures that users see your ads enough times to remember your brand, but not so many times that they become desensitized or annoyed.

    Additionally, it’s important to adjust the capping settings based on the length of your retargeting campaign. If it’s a short, intensive campaign, you may want to cap frequency at a higher rate to ensure that users see your ads enough times to convert.

    Conversely, if it’s a longer campaign, you might want to cap frequency at a lower rate to avoid fatigue. Overall, frequency capping is an essential best practice for effective retargeting campaigns, as it ensures that users see your ads enough times to convert without becoming overwhelmed or disinterested.


    When it comes to retargeting, one of the most critical aspects is segmentation. This process involves dividing your target audience into distinct groups based on similar characteristics or behaviors. By doing so, you can customize your retargeting campaigns to each group’s unique preferences, increasing the chances of conversions. In order to effectively segment your audience, you need to collect data on their browsing behavior, demographics, and past purchases.

    This data can be used to create a list of attributes that define each segment. These groups can then be targeted with specific messaging, offers, and creative that resonates with their unique characteristics. Some common segmentation strategies include demographic, behavioral, and geographic segmentation. Demographic segmentation involves dividing your audience based on characteristics such as age, gender, and income.

    Behavioral segmentation involves dividing your audience based on their actions, such as pages viewed or items added to cart. Geographic segmentation involves dividing your audience based on their location. It is important to continually analyze and refine your segments to ensure that they remain relevant and effective. By using segmentation, you can create personalized retargeting campaigns that effectively drive conversions and build customer loyalty.


    In the context of retargeting, creativity is paramount. This is because, in addition to the evident benefits of retargeting campaigns, it is vital to cut through the digital noise and reach the intended audience authentically. Therefore, it is essential to craft creative, eye-catching ads that are tailored to draw the audience’s attention. The creative aspect is more than just an artistic endeavor; it is also a science that requires an understanding of the latest trends, consumer behavior, and data analytics.

    For instance, using dynamic ads that can vary their content in real-time based on the user’s browsing history or prior interactions with the brand can increase engagement and conversion. Similarly, A/B testing different ad formats, messaging, and images can help identify what resonates with the audience and optimize the campaign accordingly.

    Another best practice is to maintain coherence in branding across all the touchpoints, ensuring consistency in messaging, tone of voice, and visuals. Marketers should also leverage user-generated content, such as Instagram posts or social proof from customer reviews, to increase credibility and authenticity.

    Additionally, adopting an omnichannel approach that integrates different platforms and devices, such as social media, email, web, and mobile, can significantly increase the chances of reaching the target audience effectively. Above all, creativity in retargeting is not only about making flashy and attention-grabbing ads, but also about establishing a connection with the audience and delivering value that resonates with their needs and desires.


    In order to achieve desirable results with retargeting campaigns, testing should be a critical component of the overall strategy. The objective of testing is to identify patterns and audience behaviors that are effective in promoting conversions. One of the most important elements to test is the ad creative to observe the impact of visual and messaging changes. It is recommended to place multiple ads within a single retargeting campaign to determine which creative attracts the most attention.

    Another aspect to test is the frequency capping which identifies the optimal frequency of ad impressions before a user gets turned off by the message. A good frequency capping strategy improves performance by making sure the user sees the ad enough times to make an impression without being bombarded with it. Additionally, the timing of the ad is crucial to its success.

    One parameter to test is the length of the cookie duration such as analyzing whether extending the cookie period will result in higher ROI. Another testing parameter is to experiment with different retargeting pixel placements to understand which placements result in conversions. The testing phase helps to inform the best retargeting approach by providing valuable insights on the audience’s preferences. The insights may lead to better ways of segmenting audiences for better messaging and improved conversions.

    How Does Retargeting Work: FAQ

    1. What Is Retargeting?

    Retargeting is a digital marketing technique that displays advertisements to individuals who have previously interacted with a brand or website. This is done through the use of cookies, which track a user’s browsing history.

    2. How Does Retargeting Work?

    Retargeting works by placing a tracking pixel (or code) on a website visited by a user. This pixel tracks the user’s activity on the website and allows retargeting platforms to show relevant ads to the user on other websites they visit.

    3. Why Is Retargeting Effective?

    Retargeting is effective because it targets individuals who have already shown interest in a brand or product. This makes them more likely to engage with the ad and potentially convert to a customer.

    4. Can Retargeting Be Intrusive?

    Retargeting can be perceived as intrusive if ads are shown too frequently or are not relevant to the user’s previous browsing history. However, if done correctly, retargeting can provide a valuable and personalized experience for the user.

    5. How Can Retargeting Be Optimized?

    Retargeting can be optimized by creating tailored ad content based on a user’s previous browsing history, using frequency capping to limit the number of times an ad is shown, and testing and adjusting ad campaigns to improve performance.

    6. Is Retargeting Only Useful For E-commerce Businesses?

    No, retargeting can be beneficial for any type of business that wants to stay top of mind with potential customers. Service-based businesses, B2B companies, and other industries can also use retargeting to engage with their target audience.

    Thanks For Reading!

    You can get more actionable ideas in my newsletter.

     I'll give you info on actionable ideas to grow and cool things that are getting me excited.  Enter your email and join us!

    Hanson Cheng

    About the author

    Living in Portugal with my wife and puppies.
    Scaling online businesses and sharing lessons learned on this website and in our email newsletter.

    Always happy to hear from you, so find me on Instagram if you want to say hi!

    {"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}