Retargeting Ads for Shopping Cart Recovery: Evidence from Online Field Experiments

Abstract

Online marketers have widely adopted retargeting ads to convert customers who had previously browsed the websites or abandoned shopping carts. Yet, the effectiveness of such retargeting remains unclear. This study exploits several randomized field experiments to test how the effects of retargeting ads vary depending on the ad copy content and purchase funnel stages. The experimental results suggest that compared to the hold out without retargeting, the retargeting ads in lower funnel based on shopping cart abandonment history can engender significant incremental purchase responses. The effects are driven by the ad copy that highlights product return information rather than product reminder or shipping content. Due to the lack of touch, feel, and product trial of online orders, the ad copy with product returns can nudge customers to try the products with reduced online shopping risks and, thus, increase the purchase conversation rates. The net revenue for retargeting ads with product return information is about 49.7% larger than the conventional retargeting ads with production information. Also, a causal comparison with similar and randomly assigned customers suggests that the lower funnel retargeting is about 2.25 times as effective as the upper funnel retargeting in lifting purchase rates. These findings implicate that retargeting ads with customer services of product return information can effectively recover the shopping carts and boost sales revenues.