How you should really be doing: E-commerce Audience Segmentation (Intermediate)

E-commerce audience segmentation is often underutilised and marketers really have a great opportunity to put in the effort to create audiences that allow for real management of the budget.

Recently at CUBED, we have had some clients where there has been an opportunity for them to invest incremental budget in their e-commerce operations. Obviously, this is a fantastic position to be in. However, as a marketer, you’ve been optimising your campaigns and multi-channel approach to your available budget. The novel concept of having an influx of available media spend poses a number of questions on how to do this at an acceptable return on investment. It is not hard to spend money. The hard part is ensuring that any incremental investment is done efficiently and not to the detriment to BAU (business as usual) or existing marketing campaigns.

At CUBED we support brands to help them think outside of the silo of a singular channel by showing the impact that channels have on each other. (see contribution analysis). The next iterative step above multichannel is to consider audience segmentation and targeting across all marketing activity. The important thing when talking about audiences is the distinction away from personas. Audiences in a digital marketing space are definable entities that can be captured and then targeted to.

Many brands have a basic approach to audiences that they use for remarketing or lookalikes for prospecting. However, often there are a lot of opportunities to add a few “simple” levels of complexity and create a significant jump in value and return.

1: Previous Conversions

The first step in this process is to define the level of segmentation. One of the overlooked factors in e-commerce is how many conversions a visitor has previously made. We have seen a significant difference in both conversion rate, average revenue per basket and cost per acquisition (CPA) based on the number of times a person has converted with the brand.

2: Recency of Visit

Another level of segmentation is recency of visit. This is very simple to set up and there are a number of different ways to segment visitors. Analysis of each brand’s lag between visit and purchase will define the level of segmentation. As an example, you could have (all in days); 90+, 30-90, 14-30, 7-14, 1-7, 1. This segmentation may be too precise, however, you easily can increase or decrease the level based on your specification for complexity.  

3: Site Depth Categorisation

The final element in what we would class as an intermediate audience segmentation approach is site depth categorisation. As a visitor progresses and navigates around the site, they would fall into certain categories if that person puts an item into the basket or even starts the booking flow, we would want to segment them differently to someone who has only visited the homepage.

Combining all of these segments together creates quite an in-depth audience profile and in the example above we can see that 76 different audiences are created to enable the marketer to adjust their strategy for each separate audience. This approach allows the marketer to adjust bid multipliers in PPC, segmented creative, ad copy and many more tactical deployments at a channel level. 

As an example, if we just focus on bid adjustments, the audience segmentation logic can be overlaid to all generic campaigns and the multiplier would then increase the brand’s willingness to spend for a particular term. A blended CPA for this specific term would not necessarily have a return on investment, but for specific audiences based on the intent shown, it now could.

Initially, this is an admin intense task with a lot of effort required in the short term. The long-term benefits of this allow for a framework that sits outside of a singular channel. This enables marketers an increased level of management and insight, which, in the scenario where there is incremental spend or even budget reductions, blended CPA does not hide opportunities.

E-commerce Audience Segmentation: Plan

The image below is a one-pager to explain how using segmentation in e-commerce you could adjust bids, creative and copy based on audience. Each red dot is a different audience and in total (when replicated in the green and yellow areas) there are 76 different audiences.

The key thing here is to have the ability to spend more on generic PPC terms, retargeting in PPC, social and display; where when viewed in a blended way you cannot get an ROI.

Overlaying attributed performance onto this segmentation allows you to understand how much you should be spending for each of these segments and allows you to have a real grasp of your CPA and therefore ROI to drive incrementality!

Keep a look out for a blog post to follow this, around what we would consider advanced audience segmentation, but in the meantime please get in touch if you have any questions.