Is retargeting cannibalizing brand ROI?

As digital ad budgets tighten and performance pressure mounts, many marketers are leaning heavily on retargeting — the practice of serving ads to users who have previously interacted with a brand. Touted as a low-risk, high-efficiency channel, retargeting has earned a permanent place in most marketing playbooks. However, experts caution that an overreliance on retargeting may do more harm than good — cannibalizing brand ROI, stalling growth, and even irritating loyal customers.

Anand Jain, Co-founder and Chief Product Officer at CleverTap, points to a critical structural flaw in how many brands approach retargeting: a failure to close the loop. "All retargeting has a closure loop, right? Most of the times the retargeting is done,for example, if you detect a high intent… let’s say you added a product to the cart," he explains. However, many brands continue targeting users who have already converted, simply because their systems don’t recognize it.

"The problem with most of the MarTech solutions is that they don't close the loop… when you purchase the product, they should stop the retargeting campaign," says Jain. Without that logic layer, brands end up wasting spend and annoying consumers with redundant ads. "You keep on targeting the same user again and again, without realizing the fact that the purchase is already happening," he adds.

Jain highlights that platforms like CleverTap solve this by embedding intelligence into the retargeting cycle.

Shradha Agarwal, Co-founder and Global CEO of Grapes Worldwide, echoes the concern and offers a strategic lens on why retargeting is often overused. “With tighter media budgets, brands tend to lean on retargeting as it feels low risk and easy to measure,” she says. However, she warns that this comfort can be misleading. “When it is overused, it can lead to ad fatigue and may not improve results. Showing the same ads consistently to the same users might not guarantee conversions, and it will probably end up wasting a brand's time.”

Instead, Agarwal advocates for smarter segmentation and early-funnel engagement. “Businesses can perform better by focusing on smarter audience segmentation, using contextual signals, and building stronger brand engagement early in the funnel,” she says.

Strategies like lookalike modeling, creative personalization, and interest-based targeting can help brands reach new users while keeping messaging fresh for existing ones. “There’s just a need to find the right balance between reach, relevance, and frequency. Following new practices is essential for long-term brand growth in the digital landscape,” says Agarwal.

Sanjay Krishnamurthy, President of GALE India, dives deeper into the psychological and financial blind spots that come with a heavy reliance on retargeting. “With media budgets under pressure worldwide, it's quite understandable why so many brands are gravitating towards retargeting. It's often painted as the 'safe' play, promising those quick wins and seemingly lower acquisition costs by going after folks who already know you,” he says. “But I believe this reliance can be a bit of an illusion.”

Krishnamurthy points out that brands may be misattributing conversions to retargeting campaigns that were actually driven by organic search or other top-funnel activities. “If you lean on it too much, especially with those simple last-click models, you can miss the bigger picture… potentially annoying our loyal customers with too many ads.”

What’s more concerning is that this narrow focus can choke off future growth. “This laser focus on retargeting can really hurt our ability to bring in new customers, which is the lifeblood of sustainable growth, especially with acquisition costs climbing in the Indian market,” says Krishnamurthy. “Retargeting’s effectiveness can wane, and it’s not immune to ad fraud in our digital space.”

Data supports these concerns. According to Statista, the average cost per acquisition (CPA) in India has increased by over 30% in the last three years, driven in part by rising ad competition and privacy-driven targeting restrictions. Meanwhile, a Nielsen study revealed that only 45% of retargeted users consider ads they repeatedly see to be helpful — the rest consider them “annoying” or “creepy.”

To move forward, Krishnamurthy suggests a smarter, more holistic approach. “A smarter move, I believe, is to weave retargeting strategically into a broader tapestry of brand building and new customer acquisition efforts, all while keeping a close eye on the evolving privacy landscape and the power of first-party data,” he says. Predictive modeling and propensity scoring — tools that can identify potential customers before they interact — are gaining popularity. “Really digging into our own customer data is key to making this work well.”

He also sees the resurgence of contextual targeting as a promising shift. “Putting ads in places that naturally fit what someone’s looking at right now is becoming a really effective way to connect, without just following them around the internet based on what they did last week.”

The core message from all three experts is clear: retargeting is a valuable tool, but not a silver bullet. Used in isolation, it risks distorting attribution, exhausting audiences, and narrowing a brand’s growth pipeline. The real opportunity lies in intelligent orchestration — combining retargeting with strong upper-funnel storytelling, data-driven segmentation, and a deep respect for consumer experience.

As privacy regulations evolve and digital noise intensifies, brands that balance short-term performance with long-term brand equity will be the ones that win. The future of retargeting isn't about hitting the same person ten times — it's about hitting the right person, in the right moment, with the right message, just once.