Audience Segmentation: How to Use for Consumer Targeting & Ad Measurement
06/13/2023
Audience segmentation is a marketing strategy based on identifying subgroups within the target audience in order to deliver more tailored messaging and build stronger connections. The subgroups can be based on various criteria, such as demographics, behavior, psychographics or stage in the buyer’s journey. Audience segmentation recognizes that different groups will respond differently to marketing communications and advertising messages.
In this blog post, we will explore the following topics:
- What is audience segmentation?
- Why is audience segmentation important?
- What are the different types of audience segmentation?
- What are some examples of audience segmentation?
- What are some audience segmentation strategies?
- Audience segmentation tips & best practices
- and more!
What is Audience Segmentation?
Audience segmentation is the process of dividing a large and diverse audience into smaller and more homogeneous segments based on shared characteristics or needs. The goal of audience segmentation is to create more personalized and relevant marketing campaigns that can resonate with each segment and motivate them to take action (e.g. click, browse, engage, visit, purchase, etc.).
Audience segmentation is important because it helps marketers to:
- Define their target audiences and understand their needs, preferences, pain points and motivations
- Tailor their message and offer to match each segment’s interests and expectations
- Meet a specific need that can help drive up conversion rates
- Build a relationship with their customers and earn their loyalty
- Bring in leads to accelerate the brand’s sales cycle
- Optimize the brand’s marketing budget and resources by focusing on the most profitable segments
Audience segmentation avoids the pitfall of creating generic and mediocre content that tries to please everyone but ends up pleasing no one. By segmenting their audience, marketers and brands can communicate with their customers on their level and deliver value that they care about.
Why is Audience Segmentation Important for Ad Targeting?
Advertising targeting is the process of selecting and delivering ads to the most relevant and responsive segments of the audience. By combining audience segmentation and advertising targeting, marketers can create more effective and engaging campaigns that can reach and influence their target audience.
Audience segmentation can bring many benefits for advertising targeting, such as:
Increased Relevance
By delivering ads that match the interests, preferences, pain points and motivations of each segment, marketers can increase the relevance and appeal of their ads and make them more likely to be noticed and clicked.
Increased Personalization
By tailoring ads to the specific needs and expectations of each segment, marketers can increase the personalization and value of their ads and make them more likely to resonate and convert.
Increased Efficiency
By focusing ads on the most profitable and responsive segments of the audience, marketers and brands can optimize their advertising budget and resources and reduce wasted impressions and clicks.
Increased Customer Acquisition
By creating more compelling and persuasive campaigns that appeal to each segment’s motivations and pain points, marketers can increase customer conversion and referrals.
Increased Customer Lifetime Value
By optimizing their marketing mix for each segment based on their profitability and potential growth, marketers can increase customer revenue and reduce customer churn.
Increased Competitive Advantage
By differentiating themselves from their competitors who may use a one-size-fits-all approach, marketers can create a unique brand identity and position themselves as experts in their niche.
What Are The Different Types of Audience Segmentation?
Audience segmentation is a marketing strategy that involves dividing a target audience into distinct groups based on certain criteria. This allows businesses to tailor their marketing efforts to specific segments, increasing the relevance and effectiveness of their messages. Here are some common types of audience segmentation:
Demographic Segmentation:
Demographic segmentation divides the audience based on demographic factors such as age, gender, income, education, marital status, and occupation.
Geographic Segmentation:
Geographic segmentation focuses on the physical location of the audience, including factors such as region, city size, climate, and population density.
Psychographic Segmentation:
Psychographic segmentation considers the psychological and lifestyle attributes of the audience, such as interests, hobbies, values, attitudes, and personality traits.
Behavioral Segmentation:
Behavioral segmentation segments the audience based on their behaviors, including purchasing patterns, product usage, brand loyalty, and response to marketing stimuli.
Technographic Segmentation:
Technographic segmentation, which is primarily used in B2B marketing, involves segmenting audiences based on the technology they use, such as software, hardware, and online platforms.
Occasion-Based Segmentation:
Occassion-based segmentation considers when consumers are likely to make a purchase, focusing on events, holidays, seasons, or specific occasions.
Usage Rate Segmentation:
Usage rate segmentation divides the audience based on the frequency and intensity of product usage. This helps tailor marketing efforts to different levels of product engagement.
Social Segmentation:
Social segmentation focuses on social factors, such as family size, social class, and roles within a family or community.
Benefit Segmentation:
Benefit segmentation groups customers based on the specific benefits they seek from a product or service.
By understanding and employing these segmentation strategies, businesses can create more targeted and effective marketing campaigns, ultimately improving customer satisfaction and loyalty.
What Are Some Examples of Audience Segmentation?
See below for examples of each of the different types of audience segmentation that were defined above:
Demographic Segmentation Example:
A clothing brand may segment its audience by gender and age to offer different styles and sizes for men, women and children, or a company might target young, urban professionals with high incomes for a luxury product.
Geographic Segmentation Example:
A clothing retailer might market winter coats more heavily in colder regions.
Psychographic Segmentation Example:
A travel agency may segment its audience by personality type and offer different destinations for adventure seekers, culture lovers or relaxation seekers, or fitness brand might target individuals who value an active and healthy lifestyle.
Behavioral Segmentation Example:
A streaming service may segment its audience by usage frequency and offer different subscription plans for casual, regular and heavy users, or an online retailer might target customers who frequently make online purchases and respond well to email promotions.
Technographic Segmentation Example:
A software company might target businesses using a specific type of customer relationship management (CRM) system.
Occasion-Based Segmentation Example:
A flower shop might target customers with promotions for Valentine’s Day or Mother’s Day.
Usage Rate Segmentation Example:
A mobile phone provider might have different plans for light users, moderate users, and heavy users.
Social Segmentation Example:
A grocery store might tailor promotions based on the size and composition of households in a particular area.
Benefit Segmentation Example:
A toothpaste manufacturer might target one segment for its teeth-whitening benefits and another for its cavity protection.
How Do You Identify Audience Segments?
Identifying audience segments involves a systematic analysis of the target market to understand its diverse characteristics and preferences.
First, conduct thorough market research to gather data on demographics, geography, psychographics, behaviors, and other relevant factors. Utilize surveys, interviews, and data analytics tools to collect information directly from the audience or through third-party sources. Analyze the collected data to identify patterns, trends, and commonalities among the audience. Look for distinct groups that share similar traits or behaviors.
Once potential segments are identified, validate them by testing targeted marketing messages or campaigns and measuring the response. Refine and adjust segments based on feedback and ongoing analysis. It’s crucial to continually monitor and update audience segments as market dynamics evolve, ensuring that marketing strategies remain relevant and effective in reaching specific groups with tailored messages. This iterative process of research, analysis, testing, and refinement is key to successfully identifying and understanding audience segments.
How Do You Use Audience Segments?
Effectively using audience segments involves tailoring marketing strategies to resonate with the unique characteristics and preferences of each identified segment.
Once segments are defined, create customized messages, content, and campaigns that specifically address the needs and interests of each group. Utilize the appropriate channels and communication styles that align with the preferences of each segment. Implement targeted advertising, personalized promotions, and product positioning to appeal to the specific demographics, behaviors, or psychographics of each segment.
Once implemented, regularly assess and adjust campaigns based on performance metrics and feedback to optimize engagement and conversion rates. It’s an ongoing process that involves staying attuned to changes in the market and consistently refining strategies to meet the evolving needs of diverse audience segments.
What Are Some Audience Segmentation & Targeting Strategies?
There are many strategies to segment an audience depending on the goals of the campaign and the data available. Some common strategies are:
RFM Analysis
This is a method of segmenting customers based on their recency, frequency and monetary value of purchases. It helps to identify the most loyal and profitable customers and target them with special offers and incentives.
CLV Analysis
This is a method of segmenting customers based on their customer lifetime value, which is the predicted net profit from a customer over their entire relationship with the company. It helps to allocate marketing resources more efficiently and focus on the most valuable customers.
Persona Creation
This is a method of creating fictional characters that represent the ideal customers of a product or service. It helps to humanize the segments and understand their needs, goals, challenges and behaviors. The personas then help guide content, creative and copy so that the advertising speaks to the unique needs of the persona.
Audience segmentation is a powerful marketing tool that can help marketers create more effective and engaging campaigns that can reach and influence their target audience. By segmenting their audience, marketers can deliver more value to their customers and achieve better results for their business.
Audience Segmentation Tips & Best Practices:
Conduct Comprehensive Research:
- Gather data on demographics, psychographics, behaviors, and other relevant factors through surveys, interviews, and analytics tools
- Use both quantitative and qualitative research methods for a more holistic understanding
Define Clear Objectives:
- Clearly outline the goals and objectives you aim to achieve with audience segmentation
- Ensure alignment with broader business and marketing strategies
Identify Meaningful Segments:
- Look for distinct patterns and commonalities within the data to define meaningful audience segments
- Avoid creating overly broad or too niche segments
Validate Segments Through Testing:
- Test marketing messages and campaigns with targeted segments to validate the effectiveness of your segmentation
- Use A/B testing and other experimental methods to refine your approach
Utilize Multiple Criteria:
- Consider a combination of demographics, psychographics, behaviors, and other relevant criteria for a more nuanced segmentation
- Balance specificity with practicality
Stay Flexible and Adaptive:
- Regularly review and update audience segments as market dynamics and consumer behaviors evolve
- Remain agile and ready to adjust strategies based on ongoing analysis
Implement Personalization:
- Tailor marketing messages, content, and offers to the specific needs and preferences of each segment
- Leverage personalization tools and technologies for a more individualized approach
Select Appropriate Channels:
- Choose communication channels that align with the preferences of each segment
- Be present on social media, email, traditional media, or other platforms based on where your target audience is most active
Monitor and Analyze Performance:
- Set up key performance indicators (KPIs) for each segment and regularly monitor campaign performance
- Use analytics tools to assess engagement, conversion rates, and other relevant metrics
Respect Privacy and Ethical Considerations:
- Adhere to data privacy regulations and ethical considerations when collecting and using customer information
- Build trust with your audience by being transparent about data usage
How Do You Measure Advertising Performance for Campaigns Using Audience Segmentation?
Major momentum around consumer data privacy are making it much harder to measure advertising performance using consumer tracking approaches such as multi-touch attribution. These approaches are now far less accurate and will suffer even more data loss when Google shutters the 3rd party cookie and shuts down all individual-level consumer tracking in Chrome and Android in 2024. As a result, brands must seek other ways to measure ad campaigns that use audience segmentation and targeting.
One alternative is marketing mix modeling (or “MMM” for short) because MMM does not rely on PII or consumer-level tracking. It is well suited to measurement in situations that require a privacy-centric approach. The challenge for marketers using traditional forms of MMM is that it cannot get to these deeply detailed levels of measurement. The vast majority of MMM models cannot go much deeper than marketing channel levels. So more modern approaches are required to evaluate marketing performance at an audience level. For example, a more modern form of MMM can measure Paid Social campaigns run on Facebook broken out by each main audience or segment targeted by the campaign. This is generally 5-10 levels deeper in detail than traditional forms of MMM.
By using modern, automated measurement methods that leverage high-scale computing, machine learning and detailed approaches to managing complex campaign data, marketers and brands can measure the incremental lift driven targeted campaigns and understand the true ROI of these investments. This is a more future-proof and privacy-safe way to cover the consumer data loss faced in the market today.
Contact us today to learn how OptiMine’s 100% future-proof, privacy-safe solution can help your brand better measure campaign performance and more!