What Most Think Ad Optimization and Targeting Means
What comes to mind when you think of ad optimization and targeting? For most ecommerce brands it means some demographic filters, lookalike audiences, a few content and message variations farther down the funnel, and a lot of hope that the platform’s algorithm does a good job of combining it all.
Sound familiar?
Here’s what happens when that’s the extent of your ad optimization.
- Targeting becomes mechanical, not strategic. You end up focusing targeting activities more on choosing your target audience and less on the content and messaging tailored to specific segments of your audience. You choose your audience, upload a bunch of pictures and headlines, and let Meta or Google decide best how and when to serve them.
- Ignoring the top of your funnel. For many, the top of the funnel is one big Olympic-size brand awareness pool. Segmenting only happens farther down the line. It is important to build awareness, but you can get a higher ROI if you take a more strategic approach right from the very top.
- Poor data quality. You might think that once your campaign is live, the data takes care of itself. But what if the data isn’t complete or even accurate? What if data isn’t even flowing where it should? This affects the quality of your targeting and your ability to measure results for future strategic adjustments.
Ask Yourself: What does ad optimization and targeting currently mean for our company? Ask a member of your team. What do they say?
So if that’s not what high-profit ecommerce ad optimization should look like, what is it?
That’s where we can learn a lesson from schools.
What Optimized Ecommerce Advertising Should Look Like and Why
It’s widely accepted that students get a better education in schools with lower student-to-teacher ratios. Why?
“The more one-on-one attention and individualized teaching students can glean, the higher the quality and personalization of their learning. While there’s no magic number for this ratio, you’ll find that a lower ratio tends to indicate a more positive and tailored teaching approach.” – The Hun School of Princeton
“Individualized”, “personalization”, “tailored approach” — with smaller classes, teachers can be more specific with their messaging which in turn has a greater impact on their students.
Why not do the same with your advertising?
You can. That’s why high ROI ecommerce advertising looks more like this:
- Strategic targeting. In addition to understanding and finding your target audience, you focus on tailoring your content to appeal to their specific needs and preferences. The best way to do this is by strategically dividing your customers into specific segments that you then map to advertising audiences. Then adjust your messaging, offer, product, landing page, etc. to that specific audience.
- Start at the top. Don’t wait to segment your audience until farther down the funnel. You’ll get better results by targeting specific segments starting with the awareness step.
- Augment targeting with quality data. Instead of assuming you have enough data and it is all accurate and being tracked, you get help to augment your targeting with enrichment and tracking services. And instead of only tracking purchase conversions, you track earlier conversions throughout the funnel to better understand audience behavior.
Key Takeaway: Don’t do large classroom advertising — serving up generic funnels to large audiences while letting the algorithm take care of “strategy”. Do small classroom advertising — use strategic segmenting to create specific audiences and then target them with tailor-made funnels starting from the very top.
Remember it’s okay to let the channel handle its own testing & serving. Your job is to have it do that in smaller circles with better data.
Unsure where to start?
In the next section, we’ll cover the 4 steps you as an ecommerce leader should take to optimize your ecommerce ads for maximum profits.
How to Maximize Advertising ROI with Smarter Targeting
Get out a pen and paper (or napkin) and get ready to make some notes.
Start With Segment Strategy
As is the case with most of our profit maximization guide articles, it all starts with strategy.
It’s easy to leave your targeting strategy completely up to Meta or Google or whichever ad network you’re using. Or you might leave it up to your agency. They can help refine your targeting, but you need to have an overall targeting strategy first.
Start by dividing all of your potential customers into a few key segments.
How many segments? And how do you define segments? That will all depend on your prospective customers and what you sell. But here are some ideas that will get you started.
Start small: Make it a goal to start with at least 3 segments — two with specific targeting and one miscellaneous group with the rest. Start with those three. Gradually add more until you reach a point of diminishing returns.
Look for groups of customers who think differently: Many ecommerce businesses segment people by active users vs. inactive customers. Targeting inactive customers with a “Hey, remember us?” message doesn’t really address that person’s specific needs or preferences.
The smarter way is to create segments based on thinking and motives.
Ask yourself…Which groups of people within my audience have the biggest differences in thinking?
Here are three examples:
- A musical instrument brand might segment target customers into professional musicians and amateur musicians. The messaging, content, and even acquisition costs are drastically different between those two groups.
- Another ecommerce company might segment customers as gift-givers or self-purchasers. The reasons for buying are drastically different between the two groups. That means the entire funnel should be tailored for each group.
- You can also use customer behavior data to help create segments based on thinking. For example, if you identify customers who always purchase full-price items or ones who only ever purchase items on sale, you can create segments based on price sensitivity.
Key Takeaway: You need to define your own targeting strategy. That strategy starts with identifying a few key customer segments to target. Look for segments with the biggest differences in thinking.
Do This Now: If you could divide your entire audience into two or three main groups with the greatest differences in thinking, what would they be? Write them down. Then head to the next step.
Tailor-Made Messaging
Having small class sizes doesn’t automatically mean children in those classes will get a better education. It’s up to each teacher to take advantage of the situation to provide individualized attention and a tailored teaching experience.
The same is true with your audiences. Segmenting them is a start. Now you have to map each group’s needs, preferences, and thinking to the messaging and products you offer. Essentially you need a unique way of communicating with each segment.
Decide what each segment needs by asking yourself questions such as:
- What specific problem or desire does this segment have that our product solves?
- How does this segment typically make buying decisions?
- What language, tone, and style resonate with this segment?
- Which product features or benefits are most important to this segment?
- What barriers or hesitations does this segment have that prevent them from purchasing?
Then use the answers to tailor every part of that segment’s funnel, starting at the top. Although most brands wait until later in the funnel to segment and tweak messaging, you’ll get better results if you do it from first touch with tailor-made awareness ads.
Continue creating a tailored experience across successive funnel steps, including landing pages. Make sure they’re mapped per segment so you can ensure their structure and content fit the thinking of that segment.
Be detailed with recording the specifics of each step for each segment. You should be able to organize it all in one place, like a spreadsheet.
Key Takeaway: Customers from each segment should be spoken to uniquely across all ads and funnel steps.
Action Item: Take the list of 2-3 audience segments you created in the previous step. Answer the 5 questions mentioned in this step for each of those segments. Then write a short, high-level summary of how those answers should shape the content marketing for each segment.
Augment Targeting with Quality Data
Strategic segmenting works best when it’s fueled by high-quality data. And most brands are sitting on untapped data potential that, if used correctly, could greatly improve the profitability of their advertising.
So don’t settle for the basic data provided by the ad network. And don’t just define conversions as purchases.
Instead, do this:
- Go wide: Get data from a wide variety of sources — CAPI, conversion data, engagement data, etc.
- Go deep: Make sure you have enough quality data from each source.
- Identify conversions earlier than purchase: These could be things like engaging with certain types of content, email opens, specific page visits, form submissions, etc. Feed that data back into middle and upper-funnel ads.
- Invest in data enrichment: Your customer data is likely incomplete. Services like FullContact or Customers.ai help add extra layers and missing info to customer profiles in your CDP or CRM software. Add that to your ad networks for improved targeting.
- Make sure your data is accurate and flowing: Inaccurate data leads to poor targeting and wasted money. Use solutions like Triple Whale and/or Elevar to maintain your data accuracy. And then get help from companies like Data Feed Watch to ensure your data is being served correctly. There’s nothing worse than, because data isn’t tracking correctly, performance-tuning like you’re not getting conversions when you really are.
- Expand with lookalike and purchased audiences: Meta, Google and similar ad networks let you easily expand your audience and tracking using their data. You can also consider purchasing audiences through companies like Go Audience. These help you expand your reach without diluting your targeting.
Key takeaway: Get a higher ROI by augmenting your targeting with high-quality data.
Ask yourself now:
- Am I sure my data is complete and accurate?
- Do I have systems in place to ensure my data is tracking correctly?
- If not, add this right now to your strategic advertising plan to-do list.
Observe. Refine. Repeat.
Set it and forget it doesn’t work with ecommerce advertising. To maximize ROI, your advertising strategy needs to be dynamic, responsive, and always improving.
Follow these steps to do that:
- Create your segments. You never really know if you’ve segmented your audience and used the right language for that audience until you set it all up and test it. Know that you won’t get it perfect the first time.
- Observe the results. Give your funnels time to get enough accurate data.
- Refine content and messaging. Don’t be quick to discard an audience. You may have the correct audience but the wrong messaging, product, or offer.
- Repeat.
- Refine your segmentation. After you’ve given your funnels enough time and have tested variations of language, products and offers, you may need to change how you’ve segmented your audience. Don’t be quick to discard an audience, but at the same time, don’t stubbornly stick to one if you’re absolutely sure it’s not working.
Key takeaway: Know from the beginning that your first segments and funnels they’re mapped to are not the ones you’ll stick with forever. Budget time, effort, and resources for continuous refinement. That’s the only way to maximize ROI.
Stop and ask yourself: When’s the last time we took a serious look at our ad performance and made adjustments to maximize conversion rates across the entire funnel?
Targeted Ecommerce Ads = More Profits
Just as personalized teaching to students in small classes maximizes learning, personalized content tailor-made for specific audience segments maximizes profits. Designing your ads this way does involve an extra level of conviction and intentionality, but it’s worth the effort. So don’t forget…
Key takeaways:
- You need to define your own targeting strategy. Stary by identifying a few key customer segments to target. Look for segments with the biggest differences in thinking.
- Customers from each segment should be spoken to uniquely across all ads and funnel steps.
- Get a higher ROI by augmenting your targeting with high-quality data.
- Your first segments and funnels they’re mapped to are not the ones you’ll stick with forever. Budget time, effort, and resources for continuous refinement.
Questions to answer this coming week:
- What does ad optimization and targeting currently mean for our company?
- Is the top of our funnel one big awareness group?
- Which groups of people within my audience have the biggest differences in thinking?
- How do I know our data is complete, accurate, and tracking correctly?
- When’s the last time we made adjustments to refine our ad funnels?
