Using audience segmentation for better advertising
March 27, 2025
Advertising is everywhere. Businesses are fighting for customer attention.
Social media
Streaming platforms
Print, digital and video ads
But not all ads perform the same. What’s the difference?
Audience segmentation.
What is audience segmentation?
Audience segmentation is the process of dividing your target audience into distinct groups based on shared characteristics. These could be age, location, behaviors, interests, purchasing habits or where they are in the customer journey.
For example:
A bank may segment based on financial status, education level and investment interest.
A pediatric health care clinic could target segments based on the age and number of children in a household and proximity to a clinic location.
A home improvement business may look at homeowners looking to remodel, do-it-yourselfers or home sellers.
Why audience segmentation matters
Audience segmentation is about understanding your audience and connecting with them effectively. By separating your audiences into smaller, more defined groups, you can develop messages written specifically designed around their needs and desires. This produces better engagement with higher conversion rates and uses your advertising budget more effectively.
The benefits of audience segmentation
If you are looking for ways to transform advertising for your business, consider the benefits of audience segmentation:
Better return on investment (ROI): All businesses want a better ROI. A recent study showed those who use segmentation see a 14% higher open rate and a 101% higher click-through rate.
Improved engagement: Segmentation makes customers feel connected to your business. In fact, 76% of consumers say they’re more likely to purchase from brands that personalize.
- Stronger customer relationships: With 40% of customers wanting brands to know more about their preferences and 60% of them becoming repeat customers after a personalized experience, you’ll want to embrace segmentation to build customer satisfaction and loyalty.
- Actionable insights: Segmentation allows you to personalize your customer messaging. As you analyze your data, use what you learn to refine and improve your advertising so it’s like having a one-on-one conversation.
- Cost-effective advertising: Targeting specific segments allows for a more efficient and precise allocation of your budget and resources to maximize your advertising efforts.
What audience segmentation provides
Audience segmentation gives you a complete picture of your customers. You’ll have the answers to the common 5 W’s and the H question.
The who: Detailed characteristics of who your customers are and where to find them.
The what: Benefits and features that matter most to your customers.
The when: Timing of your customers purchasing your products and services, how often and how much.
The where: Shopping and buying channels used by your customers so you can reach them at the right place.
The how: The way your customers explore and evaluate your products and services.
The why: The motivators and decision-drivers of why customers buy from your business.
How to effectively segment your audience
Segmenting your audience doesn’t have to be complicated. When done right, it delivers better engagement, stronger loyalty and measurable business growth. Follow these key steps to get started:
1. Determine your goals: What do you want to accomplish? What does your business need? Your goals will determine how to appropriately segment your customers. Each audience segment can have different goals so you communicate the right message at the right time.
2. Collect data: It all starts with gathering information about your customers from sources like website analytics, surveys or engagement on social media. The more details you have, the smarter your strategy becomes.
3. Decide segmentation criteria: How would you like to segment your audience? Common standards include:
Demographics
Who are your customers?
Data points: Age, gender, income, employment, education level
Geographics
Where are your customers?
Data points: Location, climate, urban vs. rural, zip code, region
Psychographics
What is the personality of your customer?
Data points: Interests, values, lifestyle, personality traits, follows, hobbies, social media platforms
Behavioral
How do your customers act?
Data points: Purchase history, clicks, downloads, website activity, product preferences
Technographic
What technology does your customer use?
Data points: Device used, operating systems, software applications, browser choice
Transactional
What is your customer’s purchase history?
Data points: Average order value, product categories, time between purchases
4. Create customer profiles: A customer profile is a description of your customer based on data and characteristics built around what you know about your target customers. Profiles help you set goals and make objective decisions for your business.
5. Personalize your advertising: Once you’ve defined your customer segments, apply what you have learned to your advertising. Use relatable visuals, adjust your tone and create offers that feel personal and resonate with the audience to drive conversions.
6. Test, analyze and optimize: Review performance metrics, test tactics and optimize your strategy based on what delivers the best results.
When to use audience segmentation
By using audience segmentation in advertising, your business develops compelling strategies to address its biggest challenges. We’ve outlined some of these issues:
Rapid market change: If external factors like economy, inflation or supply chain impact how customers use your business or buy your products, audience segmentation helps you adapt quickly.
Declining sales: Audience segmentation helps reach new and existing customers who may purchase your products or services if you experience a drop in revenue, slow growth or reduced profits..
New offerings: When your business offers new products or services, audience segmentation is ideal for expanding to new customer groups and reaching your existing customers with new content.
Market expansion: If your business is expanding into a new or adjacent market, you’ll want to determine the needs and preferences of your new target audience. Segmentation will assist you in effectively reaching these new customers or re-engaging existing customers in the area.
Resource allocation: When your business is looking at efficiency and investments, audience segmentation identifies the customers most willing to buy and who will give you the most ROI.
Best practices for segmentation
To make the most of your audience segmentation, avoid dividing your audience into too many small segments. You’ll want a good balance between segment size and desired impact to ensure your advertising strategies are cost-effective and yield the right returns.
Regularly updating your audience segments is essential to keep up with changing customer behaviors. By adjusting your strategies to meet changing customer needs, you increase engagement and solidify customer relationships. Make sure you incorporate your segmentation efforts across all advertising channels to reach your target audience effectively and maintain a consistent message.
Audience segmentation is more than simply dividing your audience. Your customers expect personalized experiences that speak directly to them. Segmentation allows you to understand them and know how to correctly engage with them. Create lasting customer relationships with audience segmenting, leading to better advertising engagement and higher conversion rates.
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