How Do Retargeting Ads Work, Anyway?

In today’s digital marketing landscape, attention is the new currency—and few strategies are as powerful in recapturing attention as retargeting ads. These ads are not just reminders; they are strategic nudges that guide potential customers along their buying journey.

Since Google Ads introduced retargeting in 2010, the way marketers reconnect with potential buyers has transformed dramatically. Now, the question isn’t should you use retargeting—it’s how to use it effectively.

Whether you’re new to the concept or looking to sharpen your skills, this guide explores how retargeting ads work and how to build a campaign that actually converts. We’ll also dive deep into answering a critical question: what is the first step of display retargeting?

The Value of Retargeting Ads

It’s no secret that conversions don’t usually happen on the first click. In fact, global eCommerce conversion rates sit between 0.7% and 4%, meaning over 95% of your website visitors likely leave without taking any action.

That doesn’t mean your efforts are wasted. It means they’re just beginning.

Think of retargeting as the bridge between awareness and conversion. Most people browsing your site are still exploring—they’re not ready to buy, but they’re open to being guided. Retargeting helps your brand stay top-of-mind by re-engaging those users with targeted messages as they continue their journey across the web.

But here’s the catch: Retargeting isn’t about bombarding users with the same “Buy Now” message. In fact, doing so often backfires because your messaging doesn’t align with their readiness to purchase. The real power of retargeting lies in segmentation, timing, and personalization.

What Do Retargeting Ads Actually Do?

Retargeting ads are designed to move users to the next logical step in their buyer journey. That step could be anything—reading a blog, signing up for a free trial, downloading an eBook, or eventually making a purchase.

What retargeting should not be is a simple repetition of your original campaign. That first message didn’t convert, so doubling down on it won’t magically work the second time. Instead, your remarketing strategy must evolve.

Let’s say you run a SaaS company and bid on search terms like “best cloud software.” A visitor clicks your ad and lands on a page promoting your product—but they don’t sign up.

Many marketers would then retarget that same user with the same message. But here’s the issue: it didn’t resonate the first time. Why would it now?

That’s where smart retargeting shines. It tailors the next ad to where the user is in their journey, encouraging a small step forward—maybe reading a case study or watching a demo—rather than pushing the final sale prematurely.

Step 1: Start With Tagging (What Is the First Step of Display Retargeting?)

Here’s the answer to a question we hear often: what is the first step of display retargeting?
👉 The first step of display retargeting is proper tagging—setting up tracking mechanisms that collect user data anonymously based on their website activity.

Without tags (or pixels), your retargeting campaign has no fuel. These tags allow platforms like Google Ads, Meta, LinkedIn, and TikTok to identify users who have interacted with your site, app, or videos. Once tagged, these users can be served personalized ads as they browse other platforms.

Each platform has its own pixel or tag, such as:

• Google Ads Global Site Tag (gtag.js)

• Meta Pixel (Facebook & Instagram)

• LinkedIn Insight Tag

• TikTok Pixel

These snippets of code are installed on your website or app to monitor user actions—page views, button clicks, time on site, product views, etc.

💡 Pro Tip: Managing multiple tags can slow down your site. To avoid this, use Google Tag Manager, a free tool that allows you to implement and manage multiple tracking codes efficiently.

As third-party cookies fade away, this step becomes even more important. Retargeting in a cookieless world will rely heavily on first-party data and proper tag management.

Step 2: Understand How Tags Work

Once you’ve implemented your tags, they begin tracking user behaviors anonymously. These behaviors are translated into audience segments—groups of users who meet certain criteria.

For example:

• Visited a product page but didn’t purchase.

• Spent more than 3 minutes on your website.

• Watched more than 50% of a video ad.

• Abandoned a shopping cart.

These signals help you build remarketing lists, which you can target later with tailored messages.

But there’s a looming challenge: the deprecation of third-party cookies. Google Chrome is phasing them out, and other browsers already have.

So, what does this mean for tags?

You must shift your strategy to first-party data collection—capturing user information directly, such as through:

• Email newsletter signups

• Free trial registrations

• Event RSVPs

• Resource downloads

This data becomes the backbone of your future retargeting campaigns.

Step 3: Create Meaningful Audiences

Now that you’re tracking users, the next step is building segmented, meaningful audiences. This segmentation lets you personalize retargeting ads to match user behavior.

Here are a few ways to segment your audiences:

• Acquisition channel (organic, paid, social, referral)

• User behavior (pages visited, time spent, actions taken)

• Purchase intent (added to cart, started checkout, viewed pricing)

• Content engagement (blog readers vs. video watchers)

• Customer lifecycle stage (new visitor, returning, loyal customer)

You can also use customer data platforms (CDPs) to enrich these segments further and sync them with your ad accounts.

Platforms like Facebook, LinkedIn, and Google allow you to upload hashed customer data—email addresses, phone numbers, etc.—to create custom audiences. If the platform matches those users, your ads can reach them even outside your website.

Audience building is where real targeting power lies. The more relevant your segments, the more precise and persuasive your retargeting can be.

Step 4: Choose the Right Messaging

Now that you’ve got your audience, it’s time to speak their language.

This is where many businesses fail. They serve the same generic “Buy Now” ads to everyone—regardless of where they are in the decision-making process.

Imagine this:

• A first-time visitor sees your homepage.

• You retarget them with the exact same homepage.

• They scroll past again.

Rinse. Repeat. Result? Wasted ad spend.

Instead, segment your messaging based on user behavior:

• First-time visitor → Show an educational resource, like a blog or explainer video.

• Visited pricing page → Offer a limited-time discount or product demo.

• Watched a webinar → Encourage them to book a consultation or free trial.

Here’s a smart funnel approach:

1. Create brand awareness → Reach new users with your unique value proposition.

2. Educate with value → Use retargeting to share case studies, testimonials, or whitepapers.

3. Warm up leads → Offer free trials, demos, or consultations.

4. Convert → Hit them with your best sales offer after they’ve shown intent.

Each touchpoint should bring the user closer to the conversion goal. Think of retargeting not as a pitch, but as a conversation.

Step 5: Reach Users on the Right Platform

Not all platforms are equal when it comes to retargeting. Choosing the right one depends on:

• Your audience type (B2B vs. B2C)

• Where your users spend time

• What kind of data you’re collecting (personal vs. professional)

Here’s how to think about it:

✅ Best platforms for B2B:

• LinkedIn: Ideal for targeting decision-makers, professionals, and high-intent audiences.

• Google Display Network: Great for scalable awareness with contextual relevance.

• Quora: Reaches users seeking solutions to niche problems.

✅ Best platforms for B2C:

• Meta (Facebook/Instagram): Offers advanced segmentation and behavioral targeting.

• TikTok: Works well for visual, lifestyle, and impulse-driven products.

• Pinterest: Strong for ecommerce and lifestyle categories.

Before choosing, ask:

• Is my audience active here?

• Can I track and segment user behavior effectively?

• What creative assets work best on this platform?

Start with 1-2 platforms and expand as your data and budget allow.

Conclusion

Retargeting is not just about stalking users with repetitive ads. It’s about building a meaningful relationship that respects where the user is in their journey and offers something valuable each time.

So, the next time you think about launching a campaign, remember this:

• Start by tagging your users properly (yes, that’s the answer to what is the first step of display retargeting).

• Build meaningful, behavior-based audience segments.

• Serve messages that align with their stage in the buying journey.

• Choose platforms that match your audience behavior.

• Nurture the relationship step-by-step—and the conversions will follow.

 

FAQs

1. What is the first step of display retargeting?

The first step of display retargeting is setting up proper tagging on your website or app. Tags or pixels track user behavior (anonymously) and allow you to build remarketing audiences based on specific actions like page visits, clicks, or time spent. Without tagging, you cannot collect the data needed to retarget users effectively across platforms like Google, Meta, or LinkedIn.

2. How do retargeting ads work?

Retargeting ads work by displaying personalized ads to users who have previously interacted with your website, app, or content. Using tracking pixels or first-party data, these ads are shown on other websites or social media platforms to bring the user back and guide them further along the buyer journey—whether that means reading more content, signing up, or making a purchase.

3. What platforms support retargeting ads?

Major platforms that support retargeting include:

• Google Ads (Display & YouTube)

• Meta (Facebook & Instagram)

• LinkedIn

• TikTok

• Snapchat

• Microsoft Ads

• Pinterest

• Twitter

Each platform has its own pixel or integration to track and build remarketing audiences.

4. Do retargeting ads increase conversions?

Yes. Retargeting ads have been proven to significantly improve conversion rates by re-engaging users who are already familiar with your brand. Because these users have shown intent, retargeting helps reinforce your message and encourage action with personalized, relevant offers.

5. How is retargeting different from remarketing?

While often used interchangeably, retargeting typically refers to online ad targeting based on pixel data, while remarketing is broader and can include re-engaging users through email marketing or CRM tools using first-party data. That said, in many digital marketing contexts, the terms are used synonymously.

6. Can I run retargeting ads without a website?

It’s difficult to run traditional retargeting ads without a website because tracking behavior is essential. However, platforms like Facebook and Instagram allow you to retarget based on engagement with social media actions like video views, profile visits, or post engagement—even without a website.

7. What kind of creatives work best for retargeting?

Effective retargeting creatives should:

• Address specific actions the user has taken (e.g., viewed a product, added to cart)

• Include clear calls to action

• Use urgency (limited-time offers, discounts)

• Offer something new if the user didn’t convert the first time (e.g., free trial, demo, bonus content) Also, A/B test your creatives to learn what resonates best with each audience segment.

8. How long should a retargeting window be?

This depends on your sales cycle. For eCommerce, 7 to 14 days may be ideal. For B2B or high-ticket items, a retargeting window of 30, 60, or even 90 days could be more effective. Most platforms let you customize this based on your goals and user behavior.