Audience Targeting

Reaching the right people

Who your campaigns target, and who they actually reach, is arguably the very most important factor in determining the impact and therefore the ROI of those campaigns.

Companies must start with a clear definition of the total addressable market for their products or services, or the broadest possible target audience. But then each individual campaign's objectives must drive clear definition of specific KPIs, and those in turn must inform the audience each campaign targets (as well as the experience provided to that audience).

In performance marketing the objective most often starts with immediate sales, or leads in the case of B2B or big-ticket B2C purchases, which means targeting 'lower-funnel' audiences of people further along in the purchase process with a higher likelihood of making near-term buying decisions. However, as those opportunities begin to be exhausted companies will run into diminishing returns as they attempt to drive additional volume, requiring movement 'up-funnel' into campaigns intended to drive consideration and favorability, rather than immediate action, among people who are earlier in their individual purchase journeys.

Regardless of the goals and KPIs of a campaign, or the channels they're running on, optimized audience targeting is absolutely crucial to driving efficient performance with digital marketing. Fortunately, there are effective tools for helping to inform this sort of audience targeting in a simple, repeatable, and data-driven manner.

Enabling personalization

Beyond just limiting your ads to the right people, further segmenting target audiences within campaigns enables personalization which can drive significant additional performance improvements.

Whether simply paying more (per impression or click) to reach higher value users or entirely customizing the messaging and on-site experiences for different audiences, personalization is a key factor in driving engagement and influencing people and therefore a key opportunity for competitive differentiation.

Combining multiple targeting methods

Given the complexity of digital marketing today it’s far too easy to waste entire campaign budgets by serving ads to the wrong people, and the 'best practices' offered by ad platforms like Meta and Google aren't much help, tending to recommend overly broad targeting and just trusting their algorithms to optimize performance.

It sounds like a good proposition in theory, but in reality those algorithms rarely have enough information to make good decisions about who to target with your ads (and the companies behind those algorithms are more incentivized to make sure you spend your entire budget than they are to prioritize efficiency). One big problem with that approach ties back to the major limitations of attribution modeling in today's digital world, which can lead to significant over-crediting (and under-crediting) relative to a campaign's actual, incremental impact and can therefore lead to poor decisions by the targeting algorithms.

Instead, to maximize impact and ROI from campaigns, multiple targeting approaches should be layered together in a more thoughtful and intentional way to efficiently narrow in on the ideal target audience. Below are some of the most common and effective targeting methods to leverage in order to maximize performance.

Keyword targeting: Search engine marketing (SEM) keyword targeting involves selecting specific words or phrases that potential customers are likely to search for online. By bidding on these keywords in platforms like Google Ads, businesses can ensure their ads appear prominently in search results when people are looking for relevant products or services.

This is one of the most effective forms of advertising, and as a result it continues to drive the majority of Google's overall revenue. That's because, through the search terms they enter, people provide search engines with very specific information about their intent - in other words, topics they're looking to learn more about and products or services they're considering paying for.

That information on intent, and the ability for marketers to target people in the very moments when they're acting on that intent, is precisely why SEM advertising is so effective and has become such a massive business. However, because targeting users on search is so effective, competition for especially high-intent, commerce-related keywords continues to grow, driving up costs-per-click (CPCs).

Those high CPCs on valuable search terms mean that it's essential to be very thoughtful, and data-driven, in selecting which keywords to target, which terms to exclude, and which other methods to layer on top of keyword targeting in order to efficiently narrow in on the ideal audiences.

Retargeting: Retargeting, or 'Remarketing' as Google refers to it, is a digital marketing strategy that targets users who have previously interacted with a brand's website or app. Retargeting audiences, or lists, can be created based on the specific pages of a digital property (website or app) users have interacted with, specific actions they did or did not take on those properties, and other data available to the marketers defining those audiences.

This is another very effective and therefore common form of targeting, because like search it also identifies specific users likely to have high intent to research and/or purchase the products or services offered by the company.

Historically retargeting has been based on cookies, but as third-party (3P) advertising cookies continue to be blocked in more and more situations retargeting audiences are often now created by uploading lists of specific people based on their personally-identifiable information (PII), e.g. email, name, phone, address, etc. That data can come from CRM systems, Marketing Automation tools, CDPs (Customer Data Platforms), or any other internal systems managing customer information. (To be clear, all the major platforms that provide this capability effectively anonymize/'hash' that PII data so it's never exposed within ad platforms or other systems outside the marketers' control.)

Because cookies and PII-based uploads work in different ways, and each is rarely anywhere near 100% effective on its own, both methods should be combined in order to maximize the share of those audiences who can actually be targeted.

In-Market audiences: Google, through its Google Ads and Display & Video 360 advertising platforms, provides 'In-Market' audiences, another of the more effective targeting options for typical performance marketing campaigns focused on driving conversions (as opposed to longer-term brand awareness/favorability).

In-Market audiences are groups of users who have shown interest a specific area of products or services, specifically with intent to make a near-term purchase. That differentiation is key, and the product works hard to separate people with general interest in a topic from those who are currently researching that topic to inform a purchase decision.

However, while it may sound like an In-Market audience for a category of products or services highly relevant to your business would be effective on its own, in order to drive efficient performance it's important to assume that these audiences are far from perfect at identifying the ideal group of people to put your ads in front of.

Lookalike audiences: 'Lookalike' audiences on Meta and Google are groups of users identified by those platforms as being similar to (but not actually included in) one or more of your retargeting audiences.

As with other methods, lookalike targeting can be quite effective when used appropriately but otherwise can easily lead to waste and poor performance. The key with lookalike audiences is to be very intentional with the 'seed lists' they're based on, or the specific retargeting lists you use to create them.

Using all recent site visitors from the past year as the seed list may help with targeting relevant people for broad awareness-focused campaigns, but it's unlikely to lead to strong performance in terms of near-term conversions. Instead, starting with a list of people who have converted on your site within the past 30 days, for example, is much more likely to help in identifying additional users with potential to take the same actions in the near future.

Interest targeting: Audiences defined based on their 'interests' (Meta terminology), or 'affinities' (within Google platforms), are groups of people determined to be interested in or passionate about specific topics.

This is another effective method of targeting when used appropriately, but it's important to understand the key difference between these and In-Market audiences - people within an interest/affinity audience haven't necessarily indicated that they plan to make any purchases related to that topic or category in the near future. That means these audiences tend to be much, much larger than their corresponding In-Market audiences, making them useful for broad campaigns focused on driving awareness/favorability but much less effective in driving near-term conversions.

That said, as with all options, interest/affinity targeting can be helpful in driving efficient near-term conversions when used in tandem with other targeting options to help narrow in on the ideal audience.

Geographic targeting: Geo targeting, perhaps quite obviously, refers to targeting people in specific locations and excluding those in other places from your campaigns.

Historically geo targeting has been one of the only methods available to marketers when running broad ad campaigns like on TV, radio, billboards/OOH, etc, other than the specific content those campaigns were run on (TV programs, radio stations, etc). In that sense it's a very rough method for targeting, but one that's still incredibly important to any company that doesn't offer their products or services nationally (ex: a Midwest-based retail chain wouldn't benefit much from paying to show ads to people in California).

However, in the digital world geo targeting can be defined in more granular and custom ways, including targeting people within range of one of your stores, within a major metro area, at an airport, etc. For some companies these options are absolutely crucial to driving optimal performance, and in others the applications are much more limited, but as always it's important for marketers to be thoughtful in how geo targeting is applied to their campaigns.

Demographic targeting: Targeting people based on demographic categories, mainly age or gender, is another important method to be considered when building digital marketing campaigns.

Similar to geo targeting, demographic targeting can range from being absolutely essential to being an additional layer to apply to drive smaller performance improvements. Some products and services are truly meant for limited segments of the overall population (ex: maternity wear), others are just more often purchased by certain groups based on age or gender (ex: concert tickets, dating apps/services), and still others are meant for just about anyone.

In most cases it makes sense to leverage demographic targeting to improve campaign performance, if only to exclude one or two age ranges. Even in the case of purchases regularly made by all, regardless of age or gender, there can still be significant value in differentiating the positioning of those products or services to better engage individual segments of the overall audience.

Time-based targeting: Targeting campaigns to run during specific times of the day, and/or on specific days of the week, is yet another lever to apply to help improve the ROI performance of digital marketing campaigns.

In many cases it makes sense to run campaigns all hours of all days and let the other forms of targeting optimize who sees your ads. However, there are also many products and services that are more often researched and purchased during business hours, or on weekends, and some campaigns drive people to phone a company's call centers which of course typically don't operate 24/7.