Retargeting campaigns report strong ROAS because they reach audiences pre-selected for purchase intent — site visitors, cart abandoners, and CRM-matched contacts who were already close to buying. The performance metric reflects audience selection, not ad effectiveness. As budget shifts toward retargeting based on reported efficiency, prospecting investment shrinks and the supply of new high-intent users entering the retargeting pool begins to decline.
Net-new customer acquisition slows as prospecting is defunded in favor of retargeting, creating structural dependency on a recycling pool that shrinks without new demand entering at the top.
Retargeting ROAS stops being a reliable indicator of demand creation — it measures demand capture from an audience already moving toward purchase.
Retargeting ROAS is strong or improving while net-new customer acquisition rate is declining in the same period. Retargeting-attributed conversions account for more than 50% of total attributed conversions — the program is recycling existing demand rather than generating new customers.