In an increasingly digital-dominated landscape, Joel Vincent explains where most marketers get segmentation wrong and how to do it with the customer in mind.

This year, for the first time in history, digital advertising will surpass TV and print, according to the Washington Post; on its way to absorbing the majority of all global ad spend within the next two years.

The new figures published by eMarketer show that global digital ad spend will soon top the $300 billion threshold, and is predicted to reach $420 billion by 2022. In response to such a saturated landscape, it’s imperative to understand what resonates with your audiences, present relevant offers and avoid ads that don’t provide any real value. Segmentation remains a powerful and effective way to ensure relevant and practical communication with consumers.

With so much data at our fingertips and advancing technical capability making its application relatively easy, properly segmented consumer communication should be the norm. But practicing caution shouldn’t be underrated – the true value of segmentation is only realised when it is implemented in the right way. Marketers need to stop and consider whether it is appropriate for their business, and ask if it is the most effective way to use their data.

When you segment consider these questions first

When applied properly and appropriately, segmentation can enhance a consumer’s experience with a brand, ensuring they receive powerful and useful communication that is tailored for them. But to meet the real needs of consumers, segmentation should rely on what your audience actually needs.  

To determine if this is the path for you, ask yourself this: does your product actually require targeted marketing? Are there diverse (and potentially opposing) customer groups that would respond to different advertising treatments? Will you be able to tailor effective solutions for your customers? Which channels will actually enhance the impact of your message within each segment?

We need to be asking if and how targeting benefits consumers before we dive into a complex data-driven segmentation solution.

It is important to remember that consumer segmentation should not just be about advertising. As consumers become accustomed to personalisation, they will expect companies to better use their data to deliver valuable propositions across all their interactions.

Good consumer segments can be used to differentiate service offerings or optimise delivery and logistics based on location and demographics. Organisations can improve resource allocation for optimised outcomes and enhanced market intelligence informs the development of branding and marketing strategies – well before any actual advertising takes place.

How do we do segment successfully?

Regardless of the segmentation application or how you’re executing it, there are four principles of an effective segmentation strategy that will always remain:

 

Be relevant

People will quite rightly recoil at something that feels like an intrusion. But a message that is appealing, helpful and received in the right context is a positive experience.

Experian worked with Fire Rescue NSW to discover where urban fires were occurring and their causes, as it wanted to prioritise and address risk on a house-by-house basis to reach the most at-risk segments of the community.

Fire Rescue NSW shared targeted safety messages and resources to relevant households – for example, education around reducing injuries in a fire to one household and advice around property protection to others.

Resultant spikes in website traffic indicated that Fire Rescue NSW’s messages were being effectively communicated to the right people. Not only did it help improve the people of NSW’s fire safety knowledge, it was also a lot more cost effective compared to a ‘one-size-fits-all’ TV ad.  

Be attractive

Consumers are exposed to around 4000 to 10,000 ads every single day. That’s a lot of competition for the average consumer’s attention, but tailoring your creative to attract a segment of consumers helps cut through the digital noise.

For example, in Experian’s segmentation work with ActiveXChange, we found that Australia’s community sports infrastructure has long lacked up-to-date market intelligence. Segmenting ActiveXChange’s data helped it to understand why some people are likely to be more active than others, and why one facility is better at attracting different types of people than another facility.

ActiveXChange is now applying these segmented learnings to help other fitness organisations invest in facilities and programs that attract their diverse local communities.

Be in the right place (at the right time)

The internet is a vast and complex place. By understanding your audience, you can determine where they’re likely to find and respond to your ad. Using segmentation to identify the digital spaces that resonate most with your target audience puts you on the path to achieving great results for your next campaign.

Be prepared to adapt

While segmentation will provide the most effective ways to communicate with your target audience, it doesn’t mean you can ‘set and forget’. Learning about your consumers, how they respond to content and the results you are achieving should all be utilised to constantly power and update your segmentation.

One size does not fit all, and continually enhancing and refining your understanding of the consumer is critical in ensuring your business continues to maximise the benefits it receives from consumer segmentation.

Your customer strategy is more important than your marketing channel strategy

Enhancing your understanding of your consumers is one of the most important investments your business can make. Truly understanding their needs and wants not only allows you to communicate with them better, but should allow you to anticipate their future demands and adapt to maintain your success.

A comprehensive customer strategy backed by powerful segmentation helps ensure your business can evolve in the constantly changing media landscape and meet the demands of the informed and demanding consumer.

But poor or unnecessary targeting consumers can be detrimental.  In this age of increasing consumer power and where data is the new oil, consumers’ experience must be first priority; and presenting relevant marketing that knows its audience is vital in maintaining a positive brand image.

As Geoffrey Colon, head of brand studio at Microsoft Advertising said in an interview with Jim Rossi, “power is no longer about mass, it’s about niche.”

Joel Vincent is market insights manager at Experian Marketing Services

 

Further Reading:

• Senate reverses tax-backed political ads on TV and radio | Facebook braces for election »
• TV and online video to take up half of global ad spend – Zenith forecast »
• Australia’s TV broadcasting technologies are lagging behind, new trials to test out DVB-T2 »

 

 

Image credit:Charles