Fire pit, hearth and patio retailer Spotix achieves a 28-to-1 return on its ad spend with digital display ads.

Outdoor furniture retailer Spotix Inc. grew its online sales 56% from 2015 to 2016 thanks to using digital ad retargeting, says Adam Kahler, the retailer’s director of sales and marketing.

Adam Kahler

Adam Kahler

In addition to selling fire pits, fireplaces, grills and patio products, Spotix is the parent company to four other e-commerce sites including: FirePitsDirect.com, KickAssGrills.com, FireplaceRemoteControls.com and Teakfurnitureclassics.com.

The retailer has one 4,000-square-foot showroom in Iowa, where it is headquartered, however the majority of Spotix’s sales are online. Spotix and its e-commerce sites generated between $7-$10 million in web sales in 2016, which includes sales from online marketplaces. About 45% of its sales are via marketplaces operated by Amazon.com Inc., No. 1 in the Internet Retailer 2017 Top 500Wal-Mart Stores Inc. (No. 3), eBay Inc. and others.

Since the retailer’s  2011 launch, Spotix has allocated the majority of its marketing budget to paid search, Kahler says. But Kahler, who joined Spotix in November 2015, diversified the retailer’s marketing mix by increasing its marketing budget to add digital display ads. It works with marketing data vendor OwnerIQ Inc. to manage its digital display ad campaigns.

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OwnerIQ uses consumer tracking data to retarget consumers with display ads based on their previous web browsing behavior. Spotix places a pixel tag, which is a snippet of code, onto its site to enable this tool.

For example, if a consumer searches for a Napoleon brand fireplace, she may look at the Napoleon website to learn more about the product (Napoleon does not sell directly to consumers). Because the brand manufacturer also put the OwnerIQ pixel on its website, Spotix can retarget the shopper who was on the Napoleon website with a co-branded ad featuring a product within the same category she was looking at. If she clicks on the ad, she will then go to the Napoleon category landing page on the Spotix website. A shopper may see the ad while browsing on other web pages, such as WeatherChannel.com.

About 11 of the 50 brand manufactures that Spotix works with put the tracking pixel on their site, Kahler says. The display ads are typically created by brand manufacturers and Spotix puts its logo on top of it. Because these brands don’t sell direct to consumer and Spotix is an authorized reseller, there is no conflict of interest or channel conflict, he says.

“The manufacturers don’t ask for anything in return beyond incremental sales and highly targeted brand exposure,” Kahler says.

Spotix also uses the pixel to track shoppers based on their previous browsing history other than on brand manufacturer sites. For example, if a consumer is searching for home loans, the shopper will likely be buying a house soon and may be making home-related purchases in the future, Kahler says.

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Since launching the tag in January 2016, the ads have helped the retailer increase order sizes by 17% and boosted overall orders by 21%, on average, across Spotix’s sites, Kahler says.  It averages a $28 return on ad spend for every $1 it spends on the display ads, and some brands are even a $45-to-$1 ratio, he says. That far outpaces the $4 or $5 for every $1 that Spotix averages across all of its marketing campaigns, which include paid search, email marketing and Facebook, he says.

The retailer spends $7,000-$10,000 a month on the retargeting campaigns, which is on a cost-per-click model, Kahler says. Spotix now allocates 20% of its marketing budget to these retargeted display ads, which is a large increase from 10% in 2016, he says.

The display ads have opened up a new way to acquire customers who may not know of Spotix or its other websites, Kahler says. Plus, these shoppers are likely closer to making a purchase than a consumer who is on Google searching “grills,” he says.

“Someone that is visiting a brand website is typically further down the funnel; they are doing final fact checking and are closer to actually making those purchases,” Kahler says.

Spotix applies a frequency cap of five to seven ad impressions before it stops showing the consumer the ad. If a shopper makes a purchase on Spotix, that data is passed on to the retailer so it knows to stop retargeting the shopper as well, Kahler says.

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It took about a month from the time Spotix and OwnerIQ started talking to launch the feature, and it took less than a week place the pixel on its site, Kahler says.