What Do Audience Segments, 8-Track Tapes & Pay Phones Have In Common?

Yup…you guessed it. Audience segments are going the way of the dinosaurs.

This may not come as much of a revelation to search marketers, who wouldn’t dream of running a search campaign where they couldn’t see the performance of each individual search term and vary bids on each search term as needed.

Search marketers know that the ability to optimize their search campaigns at the keyword level is an integral part of making search campaigns successful.

In online display advertising, audience segments are a relic that pre-dates the real time bidding (RTB) era.

Prior to real time bidding, advertisers had to buy blocks of ad impressions at fixed prices. The processes of the day, which included insertion orders being sent by fax, dictated that all targeted users be lumped into audience segments and purchased at a single price.

This practice was carried forth into the RTB era, but really shouldn’t have been. Real time bidding enables advertisers to bid different prices for each impression, based on the attributes of that individual impression and the data associated with the user that will view that impression.

There are several advantages of eliminating audience segments, and instead bidding, reporting, and optimizing using the underlying element level data. These include:

1. Less Work – No need spend the time building out segments. Optimization algorithms do this automatically depending based on the data of each campaign.
2. Better Performance – Targeting is tuned for each campaign, driving better performance to the goals.
3. Deeper Insights – More information is learned about prospects and current customers through more granular data being collected.
4. Flexibility – Each element in a campaign is more adaptable – can be scaled up or down.

These advantages hold true across multiple campaign tactics, including search retargeting, site retargeting, contextual targeting, CRM data targeting, Geographic targeting, and more.

One of our clients recently made the analogy of buying individual stocks vs buying mutual funds. The most sophisticated investors driven to generate returns on their investments don’t buy pre-built mutual funds put together by another entity. They build custom portfolios of individual stocks and bonds to meet their particular needs.

Similarly, sophisticated advertisers who are driven to maximize returns on their advertising spend can do better than buying pre-formatted audience segments. These advertisers understand that data elements vary in their effectiveness and this must be taken into account, for example, some keywords are more effective than others.

So, marketers need the option to adjust campaigns based on performance, among other factors, which is simply not achievable with segments.

As digital advertising advances, it becomes a classic case of survival of the fittest. Marketers must learn to adapt and evolve or become extinct, make the move from pre-built segments or be left behind.