The cohort for someone repurchasing the exact same item within the following month is probably a lot higher than just showing an ad for some other random item. This probably isn't a number like 20% more likely, it could be like 500-1000x. There may just not be enough data to exclude specific products. On the other hand retargeting companies definitely are over selling inventory to non sophisticated clients that should be excluded.

Targeting definitely works. A big entrepreneurial mistake is looking at things through your own eyes instead of those of users. Many brilliant coders can't get a handle on the business stuff because they just assume everyone else thinks and behaves like they do.