Audience segmentation explained
Market segmentation is a strategy defined as the organization of various types of audiences, to reach them with your ads and campaigns. By dividing your customers into audience segments, it becomes easier to reach them with relevant ads. In contrast, creating ads with a broad or generic statement can make them less likely to appeal to customers. Narrowing down the focus of ads and campaigns can help differentiate between your focus points and priorities as a brand.
The “market segmentation theory” or hypothesis states that there can be unique benefits of different segments of customers, and of varying lengths or formats of ad campaigns. This can be exemplified with audience segmentation, which can provide different ads to different customers, at different times. Simply put, there is no such thing as the perfect ad; it depends on your audience.
By starting your marketing strategy with audience segmentation at the forefront, your brand can create more relevant ad campaigns. These audiences could then turn into dedicated customers who are likely to make return purchases. Another benefit is that it can also be used as a tool to help pinpoint the pain points in your customer journey map, or the areas where you may see drop-off in engagement or purchases.
One example is regarding sustainable marketing. In a recent study by IBM and the National Retail Federation, 6 in 10 respondents said they’d change their shopping habits to help reduce environmental impact.2 Advertisers should consider this an example to use in their psychographic segmentation, addressing the intent and desires of their customers for their lifestyle.
Another example comes from the Bedding & Pillows category on Amazon. These products are likely to appeal to new-to-category customers, rather than repeat shoppers. We found that from December to March, there was an above-average number of entry points, a detail that could be very useful to household brands looking to promote their products in new locales. This is an example of behavioral segmentation, considering the purchasing habits of audiences and addressing this within campaigns.
An example of geographic segmentation is seen in a collaboration between LG Italy and Amazon Ads. They were aware that sports were especially of interest to their Italian audience, and consequently the marketers used the UEFA Champions League’s matches for a campaign to help boost interest in areas where customers had shown prior interest.
There is no single answer for how to determine what will make your audience segmentation successful. Utilizing surveys with your customers and running A/B tests within ad campaigns can give you great insights into the behaviors and needs of your audience.
Next, you can begin crafting campaigns with the help of Amazon Ads. Amazon Marketing Cloud (AMC) can help you gather audience insights, and Amazon Ads API will help you automate campaigns based on your desired audience segments. Additionally, Amazon Attribution can provide you with details on non-Amazon Ads campaigns. With a sound audience segmentation strategy, your brand can get your products in front of the right audiences at the right time.
1Smith, Wendell R. “Product Differentiation and Market Segmentation as Alternative Marketing Strategies.” Journal of Marketing 21, no. 1 (1956).
2Meet the 2020 consumers driving change, IBM and the National Retail Federation, US, 2020