The Double-Edged Effects of E-Commerce Cart Retargeting: Does Retargeting Too Early Backfire?

Abstract

Consumers often abandon e-commerce carts, so companies are shifting their online advertising budgets to immediate e-commerce cart retargeting (ECR). They presume that early reminder ads, relative to late ones, generate more click-throughs and web revisits. The authors develop a conceptual framework of the double-edged effects of ECR ads and empirically support it with a multistudy, multisetting design. Study 1 involves two field experiments on over 40,500 customers who are randomized to either receive an ECR ad via email and app channels (treatment) or not receive it (control) across different hourly blocks after cart abandonment. The authors find that customers who received an early ECR ad within 30 minutes to one hour after cart abandonment are less likely to make a purchase compared with the control. These findings reveal a causal negative incremental impact of immediate retargeting. In other words, delivering ECR ads too early can engender worse purchase rates than without delivering them, thus wasting online advertising budgets. By contrast, a late ECR ad received one to three days after cart abandonment has a positive incremental impact on customer purchases. In Study 2, another field experiment on 23,900 customers not only replicates the double-edged impact of ECR ads delivered by mobile short message service but also explores cart characteristics that amplify both the negative impact of early ECR ads and positive impact of late ECR ads. These findings offer novel insights into customer responses to online retargeted ads for researchers and managers alike.