1. Introduction to Programmatic Advertising
In the world of digital advertising, programmatic has emerged as one of the most efficient and data-driven ways to reach audiences. Simply put, programmatic advertising refers to the automated buying and selling of online ad space. Rather than purchasing placements in a manual, time-consuming way, advertisers can use sophisticated platforms and algorithms that handle real-time bidding (RTB) for ad impressions. This technology allows marketers to optimize campaigns dynamically, targeting specific audiences with relevant messages at the optimal time.
Despite the automated nature of programmatic campaigns, the overarching objectives remain the same as in traditional advertising: build brand awareness, foster engagement, and drive conversions. Within programmatic, two strategies usually stand out:
- Prospecting
- Retargeting
Each strategy serves a distinct purpose in the marketing funnel. Prospecting typically focuses on discovering new audiences who have not yet engaged with your brand, while retargeting focuses on re-engaging existing audiences who have already shown some level of interest.
Marketers often note that most conversions in programmatic advertising come through retargeting campaigns rather than prospecting. But what exactly does this mean, and is it any indication that prospecting is ineffective? As you will see, the reason lies in how consumers move through the marketing funnel and the broader role of advertising in shaping user journeys.
2. Defining Prospecting vs. Retargeting
Before diving into why retargeting line items generate more conversions, it’s crucial to understand the fundamental differences between prospecting and retargeting.
Prospecting Line Items
Prospecting (also known as acquisition or awareness campaigns) is designed to reach new users who may have never interacted with your brand. Prospecting campaigns aim to expand your brand’s visibility and introduce your products or services to a fresh audience. In the context of programmatic advertising, prospecting often involves:
- Interest targeting: Leveraging user interests or affinities to serve relevant ads.
- Contextual targeting: Placing ads on websites or content categories that align with your brand.
- Lookalike audiences: Using data to find new users who share similar characteristics or behaviors as your existing customers.
- Demographic and geographic filters: Narrowing down potential audiences based on age, location, or other relevant demographic details.
Because prospecting typically reaches users who have not yet engaged with your brand, the immediate conversion rate can be relatively low. These users are at the top or middle of the funnel, learning about your brand, products, and services for the first time. Although conversions happen in prospecting campaigns, they are less frequent because you’re starting from a position of lower brand recognition and trust.
Retargeting Line Items
Retargeting, on the other hand, focuses on re-engaging users who have already visited your website, engaged with your brand, or shown explicit interest in what you offer. This is often done by using cookies or other forms of user identification to serve ads to people who have performed a certain action—such as visiting a particular page or adding items to an online cart.
Retargeting campaigns usually involve:
- Site retargeting: Showing ads to people who have visited your website.
- Search retargeting: Targeting users who have searched for relevant keywords related to your business.
- CRM retargeting: Using customer data (emails, phone numbers) to reconnect with existing or past customers.
- Dynamic retargeting: Serving personalized ads based on a user’s specific browsing history or the product pages they visited.
Retargeting strategies typically have higher conversion rates because the audience is already “warm” or “hot.” These individuals have shown intent or interest, making them more likely to complete a purchase or take another desired action.
3. The Role of Multiple Touchpoints in the Customer Journey
Modern consumers rarely make a purchase after just one interaction with a brand. Whether they are shopping for a new laptop, exploring the latest fashion trends, or booking travel arrangements, people usually take a more complex journey. This journey involves multiple touchpoints across various channels, including:
- Social media ads
- Search engine results
- Email marketing
- Website visits
- Product reviews and influencer recommendations
- Display ads on relevant publisher sites
The adage “the customer journey is no longer linear” rings true. Users today might discover a new product on Instagram, research reviews on YouTube, compare prices on a shopping aggregator, and then finally convert after seeing a dynamic retargeting ad for that product. The journey can span minutes, hours, days, or even weeks, depending on the product category and consumer preferences.
First Click vs. Second Touch
Because of this fragmented journey, that initial touchpoint—prospecting—is frequently a user’s first click or first exposure to your brand. They might not be ready to convert. They are still evaluating or gathering information. By the time the user sees a retargeting ad, they have had time to reflect on your product, compare alternatives, or look for more information. The second, third, or even fourth touch is often where that final decision to convert is made.
As a result, the attribution of a conversion often goes to a retargeting campaign, even though the user was originally introduced to the brand through a prospecting line item. This phenomenon can make it appear as though retargeting is solely responsible for driving sales—when, in reality, prospecting planted the seed.
4. Why Retargeting Tends to Yield More Conversions
Now that we understand the difference between prospecting and retargeting and the importance of multiple touchpoints, let’s examine the reasons behind the higher conversion rates in retargeting campaigns.
4.1 The Audience is Already Warm
The most straightforward reason is that in retargeting, you are targeting users who have already demonstrated interest or intent. Whether they browsed your product pages, added items to a cart, or subscribed to your newsletter, these users have moved closer to the purchase stage. Convincing them to convert is often easier because they already have a baseline familiarity with your brand or offering. Retargeting simply nudges them to complete the action they’ve already considered.
4.2 Reduced Friction and Higher Relevance
Retargeting often uses customized ad creative that directly addresses user behavior. For instance, a user who added a pair of running shoes to their cart but abandoned the session might receive a dynamic ad showing the exact shoes they were interested in, often with a special offer like free shipping or a discount. This laser-focused relevance drives higher click-through rates and conversion rates because the ads speak to the user’s immediate interests.
4.3 Multiple Touchpoint Effect
Because most consumers need multiple touchpoints before converting, retargeting fits seamlessly into the natural progression of a buyer’s journey. A user might have first encountered your brand through a prospecting ad on a news site or a social platform. Later, they see a retargeting display ad reminding them of a product they viewed. Another day, they receive a social retargeting ad with a promotional code. The combination of these ads over time often leads to a purchase. Since retargeting campaigns typically serve ads to users already in consideration mode, the probability of converting during these retargeting impressions is higher.
4.4 Last-Click Attribution
Often, the default setting for many analytics platforms is last-click attribution. In this model, the last ad or touchpoint that the user interacts with before converting gets all the credit for the conversion. Because retargeting is generally the “last touch” in many scenarios, it appears to drive a majority of conversions. While this is good news for retargeting statistics, it can understate the importance of prospecting in the full funnel strategy.
5. Common Retargeting Strategies
To better understand how retargeting consistently drives conversions, let’s look at a few popular retargeting tactics marketers use in programmatic campaigns.
5.1 Site-Based Retargeting
Arguably the most common form of retargeting, site-based retargeting tracks users who visited your website but did not convert. By placing a retargeting pixel or cookie on your site, you can serve display or social ads to these users as they browse other websites within your advertising network. This tactic is particularly effective if you segment your audiences by specific actions. For example:
- Homepage viewers: People who only visited your homepage and left.
- Product page viewers: People who looked at specific products.
- Cart abandoners: People who added something to their shopping cart but didn’t complete the purchase.
Segmenting in this way allows you to customize your creative and messaging for each audience segment, improving the likelihood of conversion.
5.2 Dynamic Retargeting
For e-commerce businesses, dynamic retargeting is a powerhouse. It automatically populates ad creative with products a user has previously viewed or interacted with. Coupled with personalized discount codes or free shipping offers, dynamic retargeting can be extremely persuasive for someone who was on the fence.
5.3 Search Retargeting
In search retargeting, you target users who have typed specific keywords or phrases related to your business into search engines. This is different from typical paid search campaigns because the ads are displayed on various websites through programmatic networks, not just on a search engine results page. The focus is on users who have shown explicit intent around a topic or product, but might not have visited your website yet.
5.4 CRM Retargeting
If you have customer data such as email addresses or phone numbers, CRM retargeting allows you to serve ads to these individuals across various networks. This can be particularly useful for upselling or cross-selling to existing customers, or re-engaging dormant ones. By syncing your CRM data with a programmatic platform, you can find those customers online and show them relevant ads, bridging the gap between your owned audience and programmatic channels.
5.5 Social Retargeting
Platforms like Facebook, Instagram, LinkedIn, and Twitter all allow pixel-based retargeting. By placing a pixel on your site, you can serve ads to your site visitors directly in their social feeds. Social retargeting can be highly effective because it reaches users where they frequently spend time and allows for visually engaging, native ad formats.
6. Best Practices for Effective Prospecting
While retargeting steals the spotlight when it comes to conversion metrics, prospecting remains essential for the overall health of your customer acquisition funnel. Without prospecting, you’ll eventually run out of new users to retarget, causing your pipeline of potential customers to dry up. Below are some best practices to ensure your prospecting campaigns are as effective as possible.
6.1 Laser-Focused Audience Targeting
One of the main criticisms of prospecting is that it can be wasteful—serving ads to people who have no interest in your brand. However, with the refined targeting options in programmatic advertising, you can minimize wasted spend. Consider using:
- In-market audiences: Target those who are actively researching or comparing similar products.
- Lookalike audiences: Based on your existing customer list or site visitors, find new people who share similar behaviors or demographics.
- Contextual relevance: Place ads in contexts that match your brand’s identity. For example, a sustainable fashion brand might choose to appear on eco-conscious blogs or lifestyle websites.
6.2 Engaging Creative and Messaging
When you’re introducing your brand for the first time, creative elements can make or break your campaign. Use eye-catching visuals and compelling copy to quickly convey your unique selling proposition (USP). Remember that you have just a few seconds to capture a user’s attention, so clarity and immediate value are crucial.
6.3 Funnel-Based Approach
Prospecting is typically top-of-funnel, so your calls to action should reflect a user’s position in the buyer’s journey. Instead of demanding an immediate purchase, consider softer CTAs like “Learn More,” “Discover Our Collection,” or “Get Started.” Focus on providing value and education, guiding the user to understand why your brand or product stands out.
6.4 Experimentation and Optimization
Prospecting requires continuous testing and optimization. Whether it’s testing new audience segments, creative variations, or bidding strategies, you should track the performance of each component and refine accordingly. Because the intent is lower in prospecting campaigns, constant iteration is key to improving performance over time.
7. The Synergy Between Prospecting and Retargeting
A programmatic strategy that focuses solely on retargeting is somewhat short-sighted. Yes, retargeting often yields a high return on ad spend (ROAS) and boasts impressive conversion rates, but without a steady influx of new prospects, the retargeting pool will diminish. Equally, relying exclusively on prospecting can lead to low conversion rates and higher costs.
7.1 Balancing Budgets
Finding the right balance between prospecting and retargeting budgets is crucial. If you underfund prospecting, you won’t attract enough new audiences to fill your funnel. If you underfund retargeting, you risk losing people who have already expressed interest. Many successful advertisers allocate a certain percentage of their total programmatic budget to prospecting, while ensuring a sufficient portion is available for retargeting to seal the deal.
7.2 Sequential Messaging
Another way to create synergy is through sequential messaging. The message you serve to a user at the awareness stage should be different from the one you serve at the consideration or conversion stage. For instance:
- Prospecting Ad: Introduce your brand’s unique selling points and highlight user benefits.
- Retargeting Ad: Showcase products the user viewed or complementary products. Offer more detailed information or promotional incentives.
- Advanced Retargeting Ad: If the user still hasn’t converted, use social proof, such as testimonials or reviews, or a higher-value offer.
This approach ensures that your ads stay relevant to where the consumer is in their journey. Done well, sequential messaging can significantly improve the user experience and increase overall conversion r
