Does retargeting work, or does it just take credit for people coming back anyway?

Does retargeting work, or does it just take credit for people coming back anyway?

The question: retargeting reliably shows spectacular last-click and even data-driven ROIs. It also shows ads to people who already visited your site — i.e., people already predisposed to return. How do you separate the ad's effect from the user's pre-existing intent?

What the research found: this is the textbook case of selection bias in attribution, and it's been tested rigorously. Multiple large-scale incrementality experiments on retargeting found that observational ROI dramatically overstates causal lift — in several published studies, true incremental conversions were a small fraction of attributed ones, and in some segments the incremental effect was statistically indistinguishable from zero. The retargeting wasn't causing the return; it was advertising to people who were returning regardless, then claiming them.

The nuance: retargeting absolutely can be incremental — for cart-abandoners with a real nudge, for long consideration cycles, for re-activating lapsed users. The point is not 'retargeting is fake.' It's that observational attribution cannot tell you which case you're in, because the same data pattern (saw ad, converted) appears whether the ad caused it or not. That's the definition of confounding.

What to actually do: run a holdout where a random slice of your retargeting pool gets no ads. Measure the conversion gap. Budget to the gap, not to the attributed total.

Bottom line for practitioners: retargeting is where correlation and causation diverge most violently. Without a holdout, you are paying to advertise to people who already decided.