Deciding on your retargeting budget percentage is one of those questions where the honest answer is "less than the retargeting salespeople want." Retargeting, showing ads to people who already visited your site, is genuinely useful. It's also easy to overspend on, because the numbers look great for reasons that have nothing to do with it actually working.
What retargeting is and why it looks so good
Retargeting follows people who've already been to your website and shows them your ads again as they browse elsewhere. The pitch is compelling: these people already know you, so they convert at a high rate and the cost per conversion looks fantastic on the dashboard.
Here's the catch. A lot of those people were going to come back and call you anyway. Retargeting takes credit for conversions that would have happened without it. So the reported "return" is inflated. That doesn't make it worthless, but it means you should be skeptical of pouring big money into it.
A reasonable starting split
For most local service businesses, a sensible starting point looks like this:
- 70-85% on prospecting: reaching new people who don't know you yet. This is what actually grows the business.
- 15-30% on retargeting: nudging people who already visited but didn't call.
If retargeting is eating more than a third of your budget, something's off. You're spending most of your money re-reaching a small pool instead of finding new customers.
Why the audience size caps it
The real limit on retargeting spend is simple math: you can only retarget people who already visited. If your site gets 1,500 visitors a month, that's your entire retargeting pool, and most of those are one-time visits. Dump a big budget on that small audience and you just show the same people your ad ten times a day until they're sick of you. There's a ceiling, and it's the size of your traffic.
When retargeting earns a bigger slice
Retargeting deserves more budget when your sales cycle is long or considered. If you're a general contractor or a roofer where people research for weeks and get multiple quotes, staying visible during that decision window is genuinely valuable. Our note on what Google Ads cost for general contractors touches on why longer consideration changes the math. For an emergency plumber, retargeting matters far less. People don't comparison-shop a burst pipe for two weeks.
When it's mostly a waste
- Emergency or urgent services where the decision happens in minutes.
- Tiny traffic, where the retargeting pool is too small to matter.
- When it's cannibalizing prospecting budget you need to find new people.
If you're not growing new-customer volume, no amount of retargeting fixes that. Retargeting harvests demand; it doesn't create it.
Set a frequency cap and move on
Whatever you spend, cap how many times a day someone sees your retargeting ad. Two or three is plenty. Beyond that you're annoying people and wasting money on repeat impressions. This one setting prevents most retargeting waste.
The short version: keep retargeting to a supporting role, usually 15-30% of budget, cap the frequency, and spend the bulk on finding new customers. If you'd rather have someone set the split correctly and adjust it as your traffic grows, that's part of how Arbor runs your ads, and there's more budget strategy in our growth guides. Retargeting is a good tool held wrong by a lot of businesses. Right-sized, it quietly helps. Oversized, it just recycles the same small crowd.