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The Pitfalls of Ad Segmentation

By: Liz Nelligan – Paid Media Strategist

When thinking about market segmentation, let’s first address the elephant in the room: better ad segmentations, and more of them, positively impact your campaigns. But at what point does too much segmentation prove the adverse effect?

Segmentation is the ability to use data and technology to match ads, content, and consumers. Segments are made up of people or companies with one or more characteristics that are in the market for a similar product or service. Characteristics for segmentation can include demographic, geographic, lifestyle behaviors, and many more. Segmenting based on these allows you to deliver content that truly resonates and appeals to your audience, and in turn, attract and convert quality leads for your business.

The benefits of market segmentation are plentiful. For example, according to MailChimp, segmented campaigns achieve a 14.31% higher open rate, and a 100.95% increase in click-rate than non-segmented campaigns. While many marketing agencies use this technique to create effective, defined marketing campaigns, segmentation can be difficult to master, causing potential pitfalls.

Size of Your Target Market

If a target market is too small, the amount of potential customers that see your ad is limited. This ultimately impacts a company’s ROI by playing the sheer numbers game. You could also run the risk of excluding a section of your customer base that is likely to purchase your product or service. If a target market is too large, a company could end up spending more money to acquire the right customer.

Sizing your market is one of the most crucial steps to take before firing your ads. It tells you, and your investors if you’re a startup, how much potential business is out there. This will help guide how you segment your ads and the amount of money needed to effectively target your audience. From here, you’ll be able to break down your audience into smaller segments for more effective targeting.


Mass Marketing Due to Expenses

In order to have segmented your market effectively, a certain level of market research is necessary. And market research – including surveys, focus groups, field tests, observations, and interviews – is costly.

A company may choose mass marketing to cut costs, but that ultimately impacts the effectiveness of your ad spend. To put it simply, mass marketing is dead. Think about it – when was the last time you responded to a general ad online? The ads you see on social media, online shopping, or while using a streaming service are all catered to your past behaviors.

Personalization should be a top priority when it comes to developing ads. By digging into your audience, your marketing team will be able to evaluate your marketing ecosystem and strategically plan to target similar groups with ads that appeal to them. In turn, you’ll stop wasting money and see a positive impact on your ROI.


Utilizing the Wrong Segmentation

Once preliminary information about your customer base has been acquired, it’s time to determine how to segment your market. This is a pivotal part of segmentation and oftentimes, marketers run a risk of targeting the wrong kind of segment.

For example, as an HR software company, using firmographic segmentation can classify your audience based on the number of employees, but doesn’t take into consideration past purchases of HR software. Demographic segmentation can classify individuals based on geography, gender, education, or income but doesn’t take into consideration psychographic segments, such as whether they prefer classical or country music. Understanding the types of segmentation will allow you to create a proper marketing plan based on your audience.

Although it takes time and effort to develop audiences for your industry, you’ll be able to effectively market your business or product to the right people. Not sure where to start? We can help. Give us a call or look into our conversion audit services to set your business up for success.

Written by Liz Nelligan – Paid Media Strategist

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