The Importance of Audience Segmentation in 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 and why is it important?
• What are some examples of audience segmentation?
• What are the benefits of audience segmentation?
• What are some audience segmentation strategies?
• How to measure advertising performance for campaigns using audience segmentation?

 

 

What is Audience Segmentation and Why is it Important?

 

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.

 

 

What Are Some Examples of Audience Segmentation?

 

There are many ways to segment an audience depending on the product or service being marketed, the objectives of the campaign and the data available. Some common types of audience segmentation are:  

 

Demographic Segmentation

 

This is based on observable characteristics such as age, gender, income, education, location, marital status, family size, etc. For example, a clothing brand may segment its audience by gender and age to offer different styles and sizes for men, women and children.

 

 

Behavioral Segmentation

 

This is based on how the audience behaves in relation to the product or service, such as purchase history, usage frequency, loyalty status, benefits sought, etc. For example, a streaming service may segment its audience by usage frequency and offer different subscription plans for casual, regular and heavy users.

 

 

Psychographic Segmentation

 

This is based on the psychological attributes of the audience, such as personality traits, values, attitudes, beliefs, lifestyles, interests, etc. For example, a travel agency may segment its audience by personality type and offer different destinations for adventure seekers, culture lovers or relaxation seekers.

 

 

Stage in the Buyer’s Journey

 

This is based on where the audience is in their decision-making process, from awareness to consideration to purchase to retention. For example, a software company may segment its audience by stage in the buyer’s journey and offer different content for prospects who are just learning about their product, those who are comparing different options and those who are ready to buy.

 

 

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 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.

 

 

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 3^rd 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!