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

As consumers often abandon e-commerce carts, companies are shifting their online advertising budgets to immediate e-commerce cart re-targeting (ECR). They presume that early reminder ads, relative to late ones, generate more click-throughs and web revisits. We develop a conceptual framework of the double-edged effects of ECR ads and empirically support it with a multi-study multi-setting 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. We find that customers who received an early ECR ad within 30 minutes to one hour are less likely to make a purchase compared to those who did not receive it in the control. These findings reveal a causal negative incremental impact of immediate re-targeting. 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 in one to three days has a positive incremental impact on customer purchases. In Study 2, another field experiment on 23,900 different customers not only replicates such double-edged impact of ECR ads delivered by mobile SMS, 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 re-targeted ads for researchers and managers alike