May 1, 2024 | 9 min read

Master ad retargeting strategy for ROI

It’s always exciting when someone new visits your website. However, it’s usually still too early to break out the confetti canons—only 2% of newbies convert to customer status on the first visit. 

It's a testament to your brand awareness and the resonance of your message. With each visit, you've captured attention and nurtured awareness, laying the foundation for future engagement. 

Now, armed with this invaluable insight, it's time to craft an ad retargeting strategy that transforms curiosity into conversion and drives sales or leads to new heights.

How ad retargeting works

In the early days of Internet advertising, marketers thought of banner ads as similar to taking out ad space in a magazine—renting a spot on a website that made sense for their target market. 

Now, instead of slapping a banner ad in a static location and hoping a customer comes wandering through, retargeting allows ads to follow the customer, presenting them with a relevant ad tailored to their interests and previous interactions. 

Ad retargeting is also known as behavioral retargeting because it responds to an individual's behavior rather than their demographic information or buying history. 

There are two types of retargeting to be aware of: pixel-based and list-based.

Pixel-based retargeting

Pixel-based retargeting starts at your website by adding a Javascript code (or pixel) that’s invisible to users and doesn’t affect your site’s functionality. When someone visits your site, the code stores a cookie on their browser. 

The cookie contains information about their traffic footprint on your site—where they came from, what pages they visited, and what actions they took. 

Once embedded in their browser, the cookie follows the visitor and communicates with social media and web retargeting platforms. As soon as they visit a site that engages with third-party ad platforms or has its own native ad functionality, they’ll see your retargeted ads speaking to the pages they visited or actions they took on your site. 

Example: A visitor browses your site and adds a product to their shopping cart before leaving without a purchase. Your pixel coding communicates the visit details to the retargeting ad service. The visitor immediately starts seeing banners on other sites that promote the product that’s in their cart. 

List-based retargeting

Unlike pixel-based retargeting, list-based retargeting (or ely on user behavior and has nothing to do with whether someone visited your site. Instead, it’s a way to re-engage existing customers by taking the customer lists in your possession and pushing out specific ad campaigns to them using retargeting systems. 

Simply create a text file of either email addresses or mobile phone numbers, and upload it to an ad service such as Google, Twitter, or Facebook, or a third-party retargeting platform. The network matches your list to its customer pool—for customers that give the same email or mobile number—and serves your ad campaign to them. 

Example: A company with a seasonal cycle captures a list of the customers who’ve only made purchases during a particular month or two in the last few years. Through list-based retargeting, it serves ads to them in the month prior to the hot buying season to offer a reminder and incentive to purchase their goods or services. 

Benefits of ad retargeting

What would you do if a stranger stopped you on the street, asked about your local business and gave you their card? For most small business owners, following up would top their task list. 

Ad retargeting is the digital equivalent of this. A potential customer visited one of your sites or accounts, poked around, and went on their way. If you have the tools in place, you can follow up by showing them web ads on other sites. 

One of the main benefits of ad retargeting is that there’s no wait time for this process—your interested customers can start seeing effective retargeting ads on the very next site they visit. 

Essentially, because you’re skipping the brand introduction stage, you can jump straight into a call to action based on the interest they’ve already expressed. This means: 

  • Increased conversion rates – A user exposed to a retargeting campaign is 70% more likely to convert. 
  • Improved ROI – It’s all about the bottom line when it comes to digital marketing spend, and a retargeting strategy proves its value through multiple metrics. In addition to increased conversions, retargeted ads have a click-through rate (CTR) 10x higher and an engagement rate 400% higher than standard display ads. 
  • Enhanced brand recall – Effective brand promotion is a numbers game. The more times someone sees a brand promoted in different formations and environments, the stickier it will be. In response to a retargeting strategy, brand search increases by a whopping 1046%.

Components of a successful ad retargeting strategy

The right place, the right time, the right network and the right message—they’re all important to retargeting strategy. Your campaign should launch seamlessly from a visitor’s departure from your site, and extend for a limited time with a series of messages.

Choosing the right platform

Where do your customers and potential customers gather? Match your ad networks and platforms to interests, habits and needs, as well as geographic location. Doing so will allow for easier n of a custom audience. Incorporating the right platforms into your strategy ensures your remarketing campaign reaches users who are already interested in what you offer. Consider: 

  • Nextdoor, the neighborhood network (that’s us, wink wink)
  • Search platforms such as Google Ads
  • Social platforms like Facebook, LinkedIn, and Twitter
  • Third-party platforms such as SharpSpring Ads, AdRoll, Outbrain, or Criterio

Nextdoor, in particular, can be extremely helpful when it comes to local targeting. For instance, real estate agent Clinton Brown used Nextdoor to target potential customers, specifically in the neighborhood he serves. When speaking about Nextdoor, Clinton notes, “Nextdoor is more effective for my business and hyperlocal strategy because it allows me to segment by ZIP code and also gives me meaningful customer engagement.”

Creative ad design

Make your banner ads effective. They should be: 

  • Relevant to what the viewer is interested in
  • Consistent with connecting elements to reinforce your brand
  • Actionable with an offer or appeal
  • Memorable with visually engaging content

For retargeting, relevance is particularly important. What was the visitor doing or looking at? What link directed them to the site—a search result, an ad campaign, a marketing email? 

Design your ads to align with the intent or interest this visitor has already displayed. 

Measuring the success of retargeting campaigns

Another valuable aspect of retargeting campaigns is the ability to view results and measure success so that you can continue to make strategic, data-driven decisions. 

Key performance indicators (KPIs)

Depending on your business type and what action you want visitors to take, you have options on how to effectively measure the success of your retargeting strategy. KPIs can include: 

  • Return on investment (ROI)
  • Return on advertising spend (ROAS)
  • Cost per acquisition (CPA)
  • Click-through rate (CTR)
  • Cost per click (CPC)
  • Click-through conversion (CTC)
  • Cost per thousand impressions (CPM)
  • View-through conversion (VTC)
  • Marketing qualified leads (MQLs)
  • Brand search metrics

More than 50% of polled marketers agree that return on investment (ROI) is the most effective KPI to track for retargeting. For e-commerce businesses, you can track direct ROI by comparing what you spent on retargeting and the sales total of purchases completed by customers after clicking on a retargeting ad. 

You can also measure ROI more loosely as a component of a multi-touch marketing strategy. Consider the sales of anyone who was served retargeting ads and then completed a sale through any channel within a window of time. 

See related: Retargeting vs. Remarketing

Tools for tracking and analysis

Ad networks and managers typically provide a dashboard with reporting capabilities that allow you to slice and dice your data in different ways. Look for the ability to parse your results by: 

  • Performance using the KPIs listed above
  • Ad sets and individual campaigns
  • Results over time, from day to lifetime

Nextdoor Ads Manager makes it easy to track performance with an interactive dashboard that provides real-time feedback. It’s what helped family-run Canseco’s Gardening Services grow their local business by 40%.

Optimizing your ad retargeting strategy

Campaigns aren’t a set-it-and-forget-it crockpot recipe—although functionality is automated, you’ll want to keep a close eye on results in order to respond to what is and isn’t effective. 

A/B testing for better results

A/B testing is an effective way to figure out what works best for your target audience. Tweak the use of color, images, the ad copy, or other elements of your retargeted ad before setting up an A/B test. Remember to keep all other campaign factors the same so that you can accurately compare apples to apples. 

Instead of using it occasionally, build A/B testing into your campaigns to guide continuous improvement that maximizes your ROI and offers insight into customer response factors. 

Analyzing and adjusting campaigns

If your ads aren’t garnering results, try something new. Track what does and doesn't work, and keep refining to optimize your success and ROI. 

With most networks, you should be able to upload new banners and tweak components of your strategy with immediate effect. 

Experience the difference ad retargeting can have on your business with Nextdoor

While retargeting campaigns incorporate complex functionality, you don’t need to be a wizard at either coding or marketing strategy to employ them effectively. With Nextdoor, you can customize your ad content and messaging to match website visitor and customer behavior, employ A/B testing and frequent oversight to improve results and use reports and tracking tools to gauge your success. Plus, with Nextdoor, your content and ads will be viewed by local customers looking for the exact products and services you offer.

Start by setting up a free Business Page to establish a local online presence. Next, use Business Posts to interact with the community and Nextdoor Ads to find your potential customer base and promote special offers. You can easily set up campaigns—including ad retargeting—using the Nextdoor Ads Manager.


  1. ReTargeter. What is ReTargeting and How Does it Work?
  2. Spiralytics. 20 Retargeting Statistics You Need to Know [Updated 2023].
  3. DemandSage. 72 Retargeting Statistics For 2024 (Facts, Insights & More).
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Author image Nextdoor Editorial Team At Nextdoor, we love local. The Nextdoor Editorial Team is dedicated to telling stories of local businesses, providing product education, and sharing marketing best practices to help businesses grow.