It takes The New York Times one article to set the world abuzz (and a-twitter!) with how creepy re-targeting is and how it freaks people out and how advertising is evil.
The fire was started by a story on Ad Age about how one person saw the same pair of pants being advertised on every website they visited, leading to claims of being "stalked by advertising".
Interestingly enough, in both stories the only examples being mentioned are ads by Zappos. Which makes me to suspect someone helping Zappos with their advertising didn't get their Frequency Capping right. And that leads me right to my main point: what re-targeting has got going for itself:
1. Frequency Capping
Frequency Capping is a maximum limit to how many times a user may be shown a particular ad. Even when ads are not re-targeted, it is a well-known (and measured) fact that user interest - and hence the effectiveness of an ad - drops considerably if a user is shown the same ad over and over again. Typically, the same ad is not shown to a user more than 3 to 5 times in a 24-hour period. There is more ROI in showing another relevant ad to the user.
With re-targeting, frequency capping is in effect across websites. So users will see the same ad even fewer number of times - because the same frequency cap is in effect across multiple sites that the user is browsing to, rather than allowing a max of 3 ad views on every individual site. Similar to Frequency Capping is another concept called Recency where users are not shown the same ad in quick succession. For the same reasons.
So the Zappos ad that has everyone cringing should never have been so frequent or so pervasive had their advertising partners got their frequency caps right (but that's my guess).
2. Behavioral Targeting
Re-targeting is a kind of behavioral targeting, different from using the context of the webpage you are browsing to determine what you might be interested in. It enables advertisers to push content to me that is relevant to me. Wouldn't you rather see ads for the kind of clothing you were browsing yesterday than for weight loss pills or home loans that you don't want? Also, contrary to popular misconception, instead of generating ads for the same product you have been looking at, re-targeting typically works at a product-category level where you would see ads for a variety of athletic shoes after having viewed a pair of ASICS Gel Kayano. Which certainly adds to the informational quality of advertising.
Think of re-targeting as being smarter about remembering some of the contextual information that was thus far being used only once to generate ads for you.
3. Nascent technology
Re-targeting and other kinds of behavioral targeting is pretty nascent and advertisers and advertising networks are experimenting to find out what works and what doesn't. Given the what is at stake - billions of advertising dollars as well as user experience - the only option is to find a win-win for both advertisers and users. Ads will only get more useful.
Regulation isn't required here; freedom to innovate is.