Honest question: Do retargeting ads just appear to perform better because I already had purchase intent and I was already going to go back there to buy it later anyway?

It's hard to tell, since that data isn't publicly available. But I read this article, which makes the case that this is often the case, and that marketing departments are willfully ignoring this, because it's in their interest to appear useful to the rest of their organization, and it's easy to hide using bad statistics: https://thecorrespondent.com/100/the-new-dot-com-bubble-is-h...

This is a completely fair question and is something anyone working in performance optimization (marketing, product, etc.) should be asking themselves all the time when looking at data and finding ways to suss it out.

In the case of retargeting ads, you can run tests to figure it out. When I was doing more on the marketing side, I used to find a non-profit and then show ads for the non-profit to my retargeting audiences. That way we could test to see what kind of value our retargeting ads had vs. a completely irrelevant retargeted ad.

For the most part, the relevant retargeted ad outperformed irrelevant by enough magnitude to make the retargeting campaign profitable.

I think the illusion of "cheap" confuses most marketers. Marketers are left with an unbalanced sense that they are getting higher bang for their buck, ignoring centuries of marketing best practices about expanding reach and exploring non-traditional targets for secondary/tertiary effects. But I think it works well for the ad platforms themselves in the way that it encourages whales just like microtransactions in games. A marketer has an easier time considering opportunity cost for one big ad spend, versus not even paying attention to opportunity cost as they buy a lot of individual micro-targets. (And relatedly not paying attention to how much they are over-spending on people that already have their message versus missing opportunities on greater reach.)