<b>Case #015: The retargeting that ate its own profit</b>

<b>Case #015: The retargeting that ate its own profit</b>

We layered a retargeting campaign on top of a working prospecting campaign and watched our blended ROI improve. We celebrated. The celebration was based on a number that was quietly lying.

— Prospecting alone: $200/day, 50% ROI
— Added retargeting: $80/day, reported 210% ROI
— Blended reported ROI: 95%

A 210% retargeting campaign looks like free money. It almost always is fake money, and here's why we eventually caught it.

We ran an incrementality test: paused the retargeting campaign entirely for four days and watched total revenue. If retargeting was generating $80/day worth of incremental sales, total revenue should have dropped meaningfully when we turned it off.

It barely moved. Total revenue fell by about 7%, not the 30% the retargeting's reported numbers implied. The retargeting campaign was claiming credit for conversions that would have happened anyway — people already deep in the funnel, who'd have converted from the prospecting touch alone.

— Retargeting's reported contribution: ~$170/day in revenue
— Retargeting's actual incremental contribution: ~$50/day
— We were paying $80 to harvest $50 of truly new revenue while it stole credit for $120 that wasn't its doing

We didn't kill retargeting — at $50 incremental on $80 spend it was a small loss, but it had value tightening abandoners. We shrank it to $30/day on cart-abandoners only and stopped letting it claim the prospecting campaign's wins.

The lesson: retargeting ROI is the most flattering and most fraudulent number in the funnel — run a holdout test, because a campaign can't take credit for conversions that would've happened without it.