Why Customer Re-engagement Has Become More Valuable During COVID-19
Digital marketers during the coronavirus pandemic are facing a time of unprecedented challenges as well as opportunities. In some countries, the situation could still be weeks or months away from reaching its peak, relegating many to stay home and interact more digitally with the world than they have in the past. Users are spending more time on their mobile phones in general, which means a lot more screen time—more online shopping, playing, texting, video calling, and social media browsing—and the data as of the end of March reflect it, with e-commerce sales up 25 percent. Now, e-commerce businesses could find added incentive to improve their digital game plan and take advantage of the online boom.
As it stands, user acquisition is the dominant marketing strategy for e-commerce and rightly so. Without new users, of course, a business can’t grow or sustain itself. But re-engagement and retention are often greatly undervalued. For example, 28 percent of mobile app marketers told Liftoff in 2019 that they designated 5 percent of their budgets to re-engagement, while a mere 5 percent designated 95 percent to re-engagement. With users at home consuming more digital than ever, retargeting ads can become quite lucrative. Already, retargeted users are about three times more likely to click on an ad than users who’ve never interacted with the brand before.
What is re-engagement exactly? Re-engagement, or retargeting, is the act of advertising to customers who didn’t finish the conversion process or didn’t buy, and to re-familiarize customers with your brand in order to retain them. But at the very least, these users are familiar with the brand and have taken an initial interest. A retargeting ad, whether on a social platform, search engine, or elsewhere, is delivered to the customer for the specific item that he or she was interested in or maybe just to the brand page in general; it depends on what kind of interaction the user had the first time and when.
To reach these kinds of users, the cost is less than acquiring a new user, because it already cost a marketer to acquire the user in the first place, but marketers expect a higher ROI for retargeting because of the likelihood of the user buying increases. For comparison’s sake, SERP [Search Engine Results Page] Watch estimates that Google SERP pay per click (PPC) ads for e-commerce cost $1.88 on non-mobile devices. Mobile Google PPC ads cost on average $2.81 for retail, $1.88 for electronics, and $2.68 for home and garden. Other industries might find it cheaper or more expensive depending on the competition. To retarget users already familiar with a brand, the price drops off significantly. Ecommerce Nation estimates that for a $2 to $3 Google PPC SERP ad, the retargeting ad can cost as low as 25 to 60 cents per click.
So how should companies budget for re-engagement action? Many e-commerce businesses might spend 5 to 10 percent of their digital advertising budget on retargeting ads; others might go higher or lower. It depends entirely on the product and company’s buyer-seller relationship to the consumer, whether it’s frequent interaction or sporadic. At most, the retargeting percentage is likely to land anywhere from 5 to 25 percent of the total budget, except for rare cases where a marketer’s achieved more brand familiarization and mostly needs to retarget the same audience.
For example, a supermarket selling groceries online for delivery might find itself raising the percentage of its budget for retargeting closer to 25 percent, given the constant needs of the customer. At the same time, a business selling consumer electronics is far more likely to limit retargeting to small incremental percentiles, maybe even to a few percentage points. But that, too, could very well change depending on how many users are showing interest, statistically speaking.
More importantly, e-commerce marketers need to be careful about their re-engagement strategy. Sending remarketed ads to the same consumer who has already purchased, or sending ads to users too frequently, can disenfranchise users with a brand. A great example that many can relate to is when a user receives ads for hotels in cities in which he or she has already booked one. Poor attention to detail and data reaps irritated customers rather than new ones.
The key with retargeting, especially with a limited budget to begin with, is to carefully calculate the place and time an ad is shown to the user. If a proprietor is selling a TV, for example, retargeting can’t be done in a matter of hours, and it can’t be done in a matter of months either, because by then the customer is lost. To return to the same example of the accommodations industry, or even the airline industry, retargeting a customer within a matter of days or weeks won’t be effective either.
The coronavirus pandemic will not last forever, but the lessons that can be learned may be timeless. E-commerce businesses must always adapt to the situation, as user devices, habits, and economic circumstances change, but now is the time to embrace what retargeting or re-engagement can do for staying relevant during the tougher times.
Omri Argaman is cofounder and chief marketing officer of Zoomd, and a veteran in digital, mobile, and marketing sectors.