Retargeting vs Prospecting: When to Use Each Strategy

Two Approaches to Reaching Your Audience

Every advertising campaign falls into one of two fundamental categories: you’re either reaching people who already know you (retargeting), or you’re introducing yourself to people who don’t (prospecting). Understanding the difference—and knowing when to use each—is crucial for optimising your marketing investment.

This guide breaks down retargeting and prospecting strategies, when each excels, and how to balance them for maximum lead generation results.

Defining the Terms

What Is Prospecting?

Prospecting (sometimes called cold targeting or acquisition) involves reaching people who haven’t interacted with your business before. You’re introducing your brand to potential new customers.

Prospecting audiences include:

• Interest-based targeting (people interested in related topics)
• Demographic targeting (based on age, location, income, etc.)
• Lookalike audiences (people similar to your existing customers)
• Keyword targeting (search ads reaching new searchers)
• Contextual targeting (ads on relevant content)

The goal is awareness and initial engagement—getting on someone’s radar for the first time.

What Is Retargeting?

Retargeting (sometimes called remarketing) involves reaching people who have already interacted with your business in some way. You’re reconnecting with warm audiences.

Retargeting audiences include:

• Website visitors who didn’t convert
• People who abandoned forms or carts
• Previous customers for repeat purchases
• Email subscribers who haven’t engaged
• Social media engagers
• Video viewers

The goal is conversion—moving people who already know you toward taking action.

The Fundamental Trade-Off

Prospecting and retargeting have opposite strengths:

Factor	Prospecting	Retargeting
Audience size	Large (unlimited potential)	Small (limited to past interactions)
Cost per click	Higher	Lower
Conversion rate	Lower	Higher
Cost per acquisition	Often higher	Often lower
Scale potential	High	Limited
Brand building	Strong	Minimal

Neither is inherently better—they serve different purposes in your marketing funnel.

When Prospecting Excels

1. Building Brand Awareness

If your brand isn’t well-known in your market, prospecting is essential. You can’t retarget people who’ve never heard of you.

Situation: A new plumbing company in Auckland needs to establish presence. Approach: Prospecting campaigns introducing the brand to homeowners in target areas.

2. Entering New Markets

Expanding to new geographic areas or customer segments requires reaching new people.

Situation: An established Wellington firm expanding to Christchurch. Approach: Prospecting campaigns targeting the new region’s audience.

3. Launching New Products or Services

Existing customers are valuable, but growth often comes from reaching new buyers.

Situation: A renovation company adding commercial fit-outs to residential services. Approach: Prospecting campaigns targeting commercial property managers.

4. Scaling Beyond Retargeting Capacity

Retargeting audiences are limited by past website traffic. If you’re spending your retargeting budget efficiently and want more leads, prospecting is the only way to scale.

Situation: A business has optimised retargeting but needs more volume. Approach: Investing in prospecting to fill the top of the funnel.

5. Testing Messages and Offers

Prospecting provides fresh, unbiased audiences for testing. Retargeting audiences have context that can skew results.

Situation: Testing whether a new offer resonates with the market. Approach: Prospecting campaigns to neutral audiences for unbiased data.

When Retargeting Excels

1. Converting High-Intent Visitors

Someone who visited your pricing page or started filling out a contact form showed strong intent. Retargeting keeps you top-of-mind until they’re ready to convert.

Situation: 70% of enquiry forms are abandoned before submission. Approach: Retargeting abandoned form visitors with conversion-focused messaging.

2. Nurturing Longer Sales Cycles

For considered purchases with longer decision timelines, retargeting maintains presence throughout the research phase.

Situation: B2B services with 3-6 month decision cycles. Approach: Retargeting website visitors with educational content and trust-building messaging.

3. Maximising Efficient Budget Allocation

With limited budgets, retargeting often delivers better ROI because you’re reaching warmer audiences who are more likely to convert.

Situation: Limited monthly advertising budget. Approach: Prioritising retargeting for cost-efficient conversions.

4. Re-Engaging Past Customers

Previous customers who had positive experiences are often your best prospects for repeat business.

Situation: Service business with customers who may need services again. Approach: Retargeting past customers with seasonal or maintenance offers.

5. Recovering Lost Opportunities

Not everyone converts on their first visit. Retargeting gives you multiple chances to capture interested prospects.

Situation: High website traffic but low conversion rate. Approach: Retargeting visitors with different messages and offers.

Strategic Budget Allocation

The Classic Split

Many advertisers start with a 70/30 or 80/20 split favouring prospecting:

• 70-80% Prospecting: Building awareness and driving new traffic
• 20-30% Retargeting: Converting that traffic efficiently

This reflects the reality that you need a constant flow of new prospects to have anyone to retarget.

Adjusting Based on Business Stage

New businesses (limited traffic):

• 90% Prospecting / 10% Retargeting
• Focus on building retargeting audiences

Growing businesses (moderate traffic):

• 70% Prospecting / 30% Retargeting
• Balance between acquisition and conversion

Established businesses (high traffic):

• 60% Prospecting / 40% Retargeting
• Maximise conversion of existing audiences

Traffic-rich, conversion-poor businesses:

• 50% Prospecting / 50% Retargeting
• Heavy focus on converting existing audiences

Signs You Need More Prospecting

• Retargeting audience sizes are shrinking
• Retargeting frequency is too high (people seeing ads too often)
• Retargeting CPAs are rising due to audience fatigue
• You’re hitting budget limits with small audiences
• Brand awareness is low in your market

Signs You Need More Retargeting

• High website traffic but low conversion rates
• Visitors leave without taking action
• Long sales cycles with consideration phases
• Cost per acquisition from prospecting is unsustainably high
• You have engaged but unconverted audiences

Platform-Specific Considerations

Google Ads

Prospecting options:

• Search campaigns targeting new keywords
• Display campaigns with audience targeting
• YouTube campaigns for awareness
• Performance Max for broad reach

Retargeting options:

• RLSA (Remarketing Lists for Search Ads)
• Display remarketing
• YouTube remarketing
• Customer match audiences

Facebook/Meta Ads

Prospecting options:

• Interest-based targeting
• Lookalike audiences
• Broad targeting with conversion optimisation
• Detailed demographic targeting

Retargeting options:

• Website custom audiences
• Video engagement audiences
• Lead form engagement audiences
• Customer list audiences

LinkedIn Ads

Prospecting options:

• Company targeting
• Job title targeting
• Industry targeting
• Lookalike audiences

Retargeting options:

• Website retargeting
• Video viewers
• Lead form openers
• Company page engagers

Optimising Each Strategy

Prospecting Best Practices

1. Start broad, then narrow: Let algorithms find your audience before constraining targeting
2. Use lookalikes strategically: Build from your best customers, not just any customers
3. Test multiple messages: Cold audiences need compelling hooks
4. Focus on value propositions: Answer “why should I care?”
5. Accept higher initial costs: Optimisation takes time
6. Track micro-conversions: Measure engagement, not just final conversions

Retargeting Best Practices

1. Segment by engagement level: Treat pricing page visitors differently from blog readers
2. Match message to behaviour: Reference what they’ve already seen
3. Use frequency caps: Don’t overwhelm people with repetitive ads
4. Create sequential journeys: Progress messaging through awareness to conversion
5. Exclude converters: Don’t waste budget on people who’ve already converted
6. Set appropriate windows: Recent visitors convert better than distant ones

Common Mistakes to Avoid

Prospecting Mistakes

• Too narrow targeting: Limiting reach and increasing costs
• Expecting retargeting results: Cold audiences convert at lower rates
• Giving up too quickly: Prospecting needs time to optimise
• Ignoring frequency: High frequency without awareness wastes budget
• Not feeding retargeting: Prospecting should fill retargeting audiences

Retargeting Mistakes

• No segmentation: Treating all visitors identically
• Excessive frequency: Annoying prospects with constant ads
• Generic messaging: Not acknowledging past interaction
• Infinite windows: Retargeting visitors from months ago
• Including converters: Wasting budget on completed goals
• Over-reliance: Neglecting prospecting that feeds the funnel

Measuring Success Differently

Because prospecting and retargeting serve different purposes, they should be measured differently.

Prospecting Metrics

• Reach: How many new people are you touching?
• CPM: Cost to reach one thousand people
• Click-through rate: Are ads generating interest?
• Cost per website visitor: Efficiency of driving traffic
• Assisted conversions: Value in the full customer journey

Retargeting Metrics

• Conversion rate: Percentage taking desired action
• Cost per acquisition: Efficiency of generating leads/sales
• Return on ad spend: Revenue generated versus cost
• Frequency: How often people see your ads
• Time to conversion: Speed of moving people to action

Building an Integrated Strategy

The most effective approach integrates prospecting and retargeting into a cohesive system:

1. Prospecting drives awareness: Introducing your brand to new audiences
2. Website captures interest: Landing pages and content engage visitors
3. Retargeting maintains presence: Staying top-of-mind with engaged visitors
4. Conversion completes the journey: Retargeted visitors become leads or customers
5. Analysis informs optimisation: Data from both informs ongoing improvements

This full-funnel approach maximises the value of every advertising dollar.

Conclusion

Retargeting and prospecting aren’t competing strategies—they’re complementary components of effective lead generation. Prospecting fills your funnel with new potential customers; retargeting efficiently converts those who’ve shown interest.

The right balance depends on your business stage, traffic levels, sales cycles, and growth objectives. Start with a reasonable split, measure results rigorously, and adjust based on what the data tells you.

Most importantly, don’t neglect either strategy entirely. Businesses that only prospect miss efficient conversion opportunities. Businesses that only retarget will eventually run out of people to reach.

Want help building an integrated prospecting and retargeting strategy? Lucid Leads can develop a balanced approach tailored to your business. Contact us to discuss your lead generation goals.