What is Segmentation in Advertising? How to Use Data to Get Better ROI from Ads

Ecommerce, SaaS, B2B or B2C, it doesn’t matter; if you’re selling something, you need to invest in online advertising to build brand awareness and attract leads. That said, advertising your business on search engines and social media is much more than simply buying ad space. 


There is a lot that goes into a powerful advertising strategy, especially if you’re trying to boost sales during the holidays and you’re in a particularly competitive field. One of the key elements of a winning ad campaign is, of course, customer segmentation.


After all, if you want to create copy, content, visuals, and CTAs that not only attract leads but also inspire them to buy, then you need to first segment them properly. With that in mind, here are the customer segmentation tips you should use to take your business forward now and in the new year.

What is Customer Segmentation?

Customer segmentation (or audience segmentation) is the process of dividing your audience and potential customers into groups, according to the numerous variables and characteristics they may share. 






In the image above, you can see that these common characteristics are divided into four major groups, each providing crucial insight into the personality, habits, and lifestyle of your customers. 


It’s important to keep in mind that not a single business has only one customer group. While you may have your ideal customers, you also have different segments of similar if not equal value, which means that you need to align your marketing, sales, and support efforts to convert them as well.


That’s why it’s so important to invest in audience segmentation in a competitive industry. There are numerous other benefits to keep in mind as well. Let’s take a look at some of the key benefits before we get into the concrete tips for better segmentation.

Benefits of Customer Segmentation

Better Brand Building and Positioning

Audience segmentation is the foundational pillar of all sales, marketing, and support strategies, but many business leaders forget that it’s crucial for brand building as well. Because it produces so much useful data and allows you to get a better understanding of all your customer groups, segmentation helps branding experts align the brand’s identity, vision, and values with the needs, goals, and desires of your target demographic.

Better Ad and Content Optimization

Not all ads are created equal, especially if you have numerous customer segments that you’re targeting; the same goes for your content strategy. It’s important to segment your audience to uncover the kind of messaging that best resonates with different groups. Then, align the copy and content to inspire people to take action, complemented by personalized offers and deals.


Demand Sensing and Forecasting

Demand sensing is crucial for inventory management in order to make sure that the in-demand items are in stock at the right time. But it’s also important for innovation and expansion, as you need to know the direction the market is taking in order to anticipate the needs of your customers. Segmentation allows you to do that by providing crucial insights into the behavioral and lifestyle habits of your audience. 

Better Targeting

Segmentation is all about empowering your sales and marketing teams to better target the right people, at the right time, with the right messaging. With proper segmentation, sales and marketing can work together to craft advertising campaigns that lead potential customers down the funnel and towards conversion.


Higher Conversions and Business Growth

Speaking of conversions, segmentation boosts sales through better personalization across the board. In advertising, segmentation is an essential tool you need to use to personalize ad copy and product selections, as well as to better optimize your landing pages for faster conversion.


5 Tips for Better Customer Segmentation

Now that you know what it is and why it’s so important for business success, here are the customer segmentation tips you need to follow.

  1. Set Segmentation Goals for Advertising

Clear goals allow for efficient and effective ad optimization, and more importantly, reverse engineering. In other words, when you set clear advertising goals and OKRs (objectives and key results), you can work your way back through the tactics and processes necessary to achieve them.



Keep in mind that your goals for ad campaigns need to be specific and measurable. Make sure you’re working with clear target percentages and growth metrics. If you are focused on product-led growth and you want to emphasize the value of your products, for example, then you need to align your goals with what your products can realistically achieve in a specific time frame.


Here’s a quick example of a SMART goal for your ad campaign that focuses on the core product offering:

  • Increase qualified traffic generation by 7% with targeted ads on social networks in the next four weeks using a curated product selection for each segment.


  1. Leverage Ad Data for Better Customer Segmentation

The good thing about advertising online is that all ads and ad campaigns produce vast amounts of data that you can use to optimize not only subsequent campaigns, but your entire marketing approach. This data also lends itself to better long-term segmentation; remember, you need to revise your segments regularly and plug in the new data and insights to remain relevant.



Using an advertising platform and the right analytics tools allows you to automate data collection and reporting. You can integrate segmentation in marketing automation by letting the tool automatically put people in the right segments based on their behavior and interactions with your ads.


You can completement that data with your ad analytics and performance metrics to get a comprehensive overview of your ad campaigns across all segments. This will not only facilitate further segmentation, it will allow you to automatically start optimizing subsequent campaigns.

  1. Identify and Build Your Key Segments

When you dive deep into customer segmentation, pretty soon you will come up with a lot of segments that you simply can’t target all at once. It is important to note that even if you could target all of these segments at once, you wouldn’t be able to handle all the purchase orders effectively. What you need to do is to start prioritizing segments using the SCALE method.


  • Size. Targeting the largest customer segments first is a great idea, but you also need to prioritize the less competitive ones.
  • Currency. No matter how important a segment is, there’s no need to target it if people can’t afford your products. 
  • Access. Make sure that you have the resources to make your ads accessible on the platforms your customers use.
  • Love. Invest in the segments you’re passionate about. This will ensure your messaging is honest, transparent, and effective.
  • Early adopters. Prioritize the early adopters and the people who are already familiar with your brand.



To build and prioritize segments effectively, it’s important to use the right CRM and email marketing tactics to allow sales experts and marketers to collaborate on converting new leads. Your ads might be optimized properly, but they won’t be effective if you don’t follow up or if the landing pages are not optimized as well.

  1. Create Personalized Ad Copy and Visuals

One of the key objectives of customer segmentation in advertising and marketing in general is to allow marketers to align the content and visual strategies to the exact needs of your audience. In other words, customer segmentation equals personalization, ensuring your ads are more relevant and that they deliver more value to the potential customer.




Based on your segments and the way you have prioritized them, you can create personalized messaging and curate your product selection to put in your ads and on your landing pages. The good thing is that modern social platforms and search engines can do this automatically through machine learning methodologies, but it does require you to plug in the data from your customer segments.

  1. Analyze the Results to Improve Your Subsequent Campaigns

Lastly, you have to keep analyzing your ad performance in order to improve subsequent campaigns, but also to keep updating your customer segments. It should go without saying that this will facilitate financial savings as well, allowing you to allocate resources towards different internal and external processes.



This is because the data you collect helps boost the performance and relevance of new ad campaigns, maximizing the potential of every click. You can then allocate resources towards better cloud cost management or towards customer support, or other marketing tactics that you would otherwise need to put on the back burner to finance your advertising efforts.


Combine the data from your analytics tools, for search engines, and social platforms, and use it to gain new insights about your segments. Note the segments that performed well, the ones that have the highest growth potential, and the ones you may need to abandon in order to cut financial waste.

Over to You

Online advertising is an important part of business growth nowadays, but it can be a huge waste of time and money if you don’t take the necessary steps. One of these crucial steps is to properly segment your audience to improve targeting and personalization, and also to ensure your brand’s advertisements stand out in an oversaturated online marketplace.


Be sure to use these customer segmentation tips to better understand your audience, craft winning ads, and minimize financial waste while improving ad performance in 2023.  


About the Author:

Sara Novicic

A seasoned writer and storyteller, Sara does her best to share her experience with the world and help brands and entrepreneurs find their voice. She loves the learning curve that comes with writing, so she gladly takes on new topics that will expand her own knowledge and expertise. The only thing Sara steers clear of? Anything resembling a comfort zone in life, as well as writing.