Utilizing Customer Segmentation Techniques to Create Successful Online Advertising Campaigns
Advisor: Mr. Mike Lee
Internship Location: DigiCom
Onsite Mentor: John Tsiknas
For non-profits, businesses, and even political campaigns, online marketing is crucial for reaching both new and existing audiences. Why invest in billboard ads when online advertising offers targeted reach and measurable results? There is a reason why Google and Meta are two of the largest companies in the world. These platforms have billions of users. But how do advertisers find the right users to advertise to? During my senior project, I have been exploring audience-targeting strategies that organizations can implement across advertising platforms. By having interviews with employees who work for companies such as Meta and LinkedIn, I have been gaining a greater understanding of the marketing platform industry. Additionally, throughout my onsite experience with Digicom, a growth marketing agency based in New York, I have been conducting campaign data analysis for a variety of their clients. During this experience, I have been learning various audience targeting strategies that businesses can employ to maximize the effectiveness of their advertising campaigns.
Project Blog
Week 0: Introduction
Hi, my name is Lucas Stein and I am very excited to start my senior project. Online advertising has always piqued my interest. Back in middle school, as I looked on Amazon for a new video game, I found myself seeing the same product on YouTube and various websites. I didn't understand how that could happen and wanted to learn why.
In 10th grade, during my internship with Kadima Careers, I delved into the world of online advertising. During my internship, I ran Facebook and Instagram ads where I created many different advertising campaigns through Meta Ads Manager (the software that is used to formulate Facebook and Instagram ads).
Discovering that ads could traverse platforms fascinated me. The ability to tailor ads based on audience engagement levels, such as choosing to advertise to people who already viewed 75% of an Instagram Reel, opened up new dimensions of advertising strategy. Furthermore, obtaining a user's email meant extending the reach of advertisements across many platforms.
Although I learned a lot, I had many unanswered questions and I wanted to dip my toes deeper into the world of online advertising. During my Senior Project I will be working at Digicom which is a growth marketing agency. Digicom focuses on “data driven and results focused marketing”(digicom.io). While at Digicom I will conduct Data Analysis and implement audience targeting strategies to create successful advertising campaigns.
But what is audience targeting? Why is it important? And what makes a successful advertising campaign? Well, that is why I am excited to begin my journey on my senior project and I am looking forward to answering all these questions in the coming weeks.
Week 1: Audience Targeting Strategies
Hi, everyone. This week, I explored customer segmentation (audience targeting). Marketers utilize customer segmentation to ensure that an advertisement is shown to the right audience. After all, if an advertisement is not shown to the correct audience, then the effectiveness of the advertising campaign will be diminished. There are many customer segmentation techniques that companies can utilize, and throughout this past week I have dove into many prominent audience targeting strategies.
Retargeting is a proven and powerful tool for identifying and engaging a narrow audience already predisposed to the advertised product or service. This technique leverages user behavior data, such as website visits or past interactions, to re-engage potential customers. Although this tool can be effective, it varies across industries.
Another method of customer segmentation is detailed targeting. Although Meta Ads Manager coined this term, other platforms like LinkedIn utilize this method of customer segmentation under a different name. These companies create audience lists, enabling advertisers to connect with users who have demonstrated an interest in a specific subject. For example, advertisers on Facebook could choose the health and wellness target audience to advertise to. Facebook would compile this list through the users that follow pages and people related to this topic.
Another part of customer segmentation is lookalike audiences. This method involves creating a new audience based on the shared attributes of an existing customer base. During my internship with Kadima Careers, I was able to create lookalike audiences within Meta Ads Manager. Not only did this allow me to expand the audience to advertise to, but I was also able to keep relevance to the original audience.
With all the different audience targeting strategies, how do marketers know which techniques or combinations of strategies to utilize? With my onsite experience at Digicom, I am excited to answer this question. In the coming weeks, I will begin analyzing Digicom’s campaign data to find the answers to my question.
Week 2: Advertising Campaign Goals
Hi everyone, If you were not here last week, I covered audience-targeting strategies that businesses could utilize to create a successful advertising campaign. But what exactly makes a successful advertising campaign? Well, this depends on the goal of the advertisement. In digital marketing, there are four main goals of an advertisement: awareness, traffic, leads, or conversions.
Some businesses run advertisements to maximize awareness. For example, when Coke-a-Cola advertises on Instagram, they are not optimizing for people to go to their website to order Coke. They are optimizing for their ad to be shown to the most people, so when a person walks down the beverage section at a deli, they choose to buy Coke over Pepsi.
Another business could run paid ads to maximize website traffic. The goal of website traffic is for people to go to the website of the advertiser. A company might want website traffic to be their goal so future customers can learn more about their products. After the customer learned about the product, the company could retarget them with advertisements that optimize for a different goal. The goal would be conversions. This advertisement's goal is very straightforward, which is to have the customer actually buy the product or service.
Finally, the fourth goal of an advertisement is to generate leads. In this advertising strategy, a business is trying to compile information about potential customers. For example, a local gym could be advertising a free gym membership giveaway. After an interested person clicks on the ad, they will then be asked to submit their email to join the giveaway. Advertising to gain leads can be a powerful tool to gain potential future customers for subscription services or expensive products.
Thanks to everyone for reading my blog this week. I hope you tune in next week where I will start delving into the more technical side of online advertising now that the basics are out of the way.
Week 3: Advertising Metrics
Hey everyone, If you were not here last week, I delved into the different advertising campaign objectives: awareness, website traffic, leads, and conversions. When an advertiser chooses a goal, they then need to analyze data to make sure their campaign is moving in the right direction. But depending on the campaign objectives, there are certain metrics that should be optimized for. What are these metrics, and which of these metrics should an advertiser optimize for to successfully carry out their campaign’s goal?
CPM, or cost per mille, shows the amount an advertiser pays for every 1,000 impressions of their ad. This metric is very important for campaigns focused on brand awareness, where the goal is to reach as many people as possible. An advertiser can optimize for this by using open targeting. This is a strategy where an advertiser puts little to no restraints on targeting who sees the ad. This allows an advertiser to have a campaign with a lower CPM because a platform like Facebook won't be charging them a premium to target a narrow audience.
CTR, or click-through rate, measures the percentage of people who click on an ad after seeing it. It's a crucial metric for advertising campaigns with the goal of increasing website traffic. If a campaign's goal is to drive traffic, an advertiser focuses on increasing the CTR by having engaging creatives and effective audience targeting.
CPL is a metric that measures the cost per lead. This metric is essential for campaigns focused on lead generation, such as email sign-ups or form submissions. Additionally, CPA, or cost per acquisition, determines the cost of acquiring a customer or completing a specific action, such as a purchase. It's an important metric for measuring the profitability of a campaign, particularly in conversion-focused initiatives. Similar to other metrics, an advertiser can optimize both CPL and CPA by having effective creatives and audience targeting.
But how can an advertiser have effective creatives? Well I will cover that in next weeks blog. Thanks for tuning in!
Week 4: Creative Testing
Thanks to everyone for tuning back in for another week of the blog. If you were not here last week, I covered key metrics that advertisers look for in determining the success of their advertising campaigns depending on their goal (traffic, leads, conversions, or awareness). The key metrics that I covered were CPM (cost per 1,000 impressions), CTR (click-through rate), and CPL/CPA/CPL (cost per lead, acquisition, or conversion). A key factor for advertisers to maximize these metrics is having an effective ad. But with all the possible creatives that an advertiser can choose from, how can someone find the best advertisement to use in their digital campaign?
Over the past few weeks, I have gained a lot of insight into answering this question through my onsite placement at Digicom. Digicom is a New York-based growth marketing agency. They work with businesses to launch, manage, and grow advertising campaigns across platforms like Google, Meta (Facebook and Instagram), and Tik Tok.
This week at Digicom, I analyzed Pinterest campaign data for a makeup brand to determine which advertisements were most effective. After exporting the data into a spreadsheet, I created a pivot table to separate each ad by name and show metrics such as CPA, CTR, and ROAS (Return on Ad Spend). Advertisements with a higher CPA had a lower ROAS, while ads with a higher CTR had a greater return on ad spend. After analyzing the data, I was able to pick five ads that stood out in terms of performance.
What I learned from this experience is the importance of testing different creatives. Because of the data analysis I conducted, the makeup brand can now increase their advertising budget on the advertisements that had the best results and either lower or completely stop ad spend on the inferior creatives. For a successful long-term advertising campaign, it is necessary to continually test different creatives. As always, thanks for tuning in for another one of my blogs, and I hope you all come back next week!
Week 5: Paid Advertising Platforms
Welcome to another week of my blog. If you were not here last week, I covered the importance of testing creatives for a long-term successful advertising campaign. Today I am going to take a look at the platform side. What are the different types of platforms where digital advertisers choose to spend their budget?
Two of the largest types of advertising platforms are search engines and social media sites. The search engine market size in 2023 in the US was $242.8 billion (ibisworld.com). Advertising on search engines can be an extremely effective strategy. There is a reason Google is one of the largest companies in the world. The beauty of running paid advertisements on Google is that an advertiser can choose certain keywords or phrases to advertise. For example, if someone searches for the best computers, the first things that show up are products for sale from a variety of computer companies. There are other search engines, such as Bing and Yahoo, but these are not nearly as popular advertising platforms. What makes advertisers choose to advertise on search engines is that they can advertise to high-quality potential customers who have already expressed interest in what they actually searched for.
The other main type of advertising platform is social media. The social media market was $219 billion (thebusinessresearchcompany.com). Advertising on social media sites such as Facebook, Pinterest, and TikTok can be an effective way for advertisers to grow their businesses. The reason Meta (Facebook) is one of the largest companies in the world is because of how powerful their platform is for advertisers. Advertisers can target people with certain interests based on their social media usage. Additionally, because there are over 3 billion users on Facebook, the machine learning capabilities are endless. For example, even if an advertiser does not include many targeting options when they launch their Facebook campaign, the meta algorithm will still figure out which types of users are more likely to engage with the advertisement. Meta is the 7th largest company in the world, and Google is the 5th largest company in the world. And the reason for this is because of the power of their advertising platforms. Although there are other search engine platforms (such as Bing and Yahoo) and other social media platforms (Pinterest, LinkedIn, and Twitter), Google and Meta are able to dominate the paid advertising market. Advertisers will choose to advertise on Google and Meta for different reasons, and a lot of the time they will choose to advertise on both platforms. In the next blog, I hope to dive deeper into these two platforms. Thanks, as always, for tuning in!
Week 6: A deeper dive into Meta and Google Ads
Hey everyone, thanks for tuning in for another blog. This week, I have been diving into two of the largest advertising platforms: Google and Facebook. My onsite company, Digicom, is a digital marketing agency. Almost all their clients predominantly advertise on either Google, Facebook, or both.
Last month, I got my certification in Google Ads Search. Through taking the series of courses and taking the test, I gained even more appreciation for the power of Google Ads. Google Ads pricing model is cost per click. When someone searches up “best water bottles” and then clicks on one of the first few websites that appear, most likely Google is making a few dollars. But why would a business want to pay for this? Well, what makes Google advertising so powerful is that the advertiser can decide who they want to advertise to depending on what someone searches up. Advertisers can set up keywords in an ad group so that when a certain search term is used, their advertisement is shown.
Google is a powerful advertising platform, but so is Facebook. This week, I launched some advertisements in Meta Ads Manager. What makes advertisers choose Facebook is the billions of users they have. An advertiser can choose specific attributes such as interests, demographics, and location. Additionally, retargeting is a powerful tool on Meta. An advertiser can upload an email list of interested potential customers to then advertise to. After a campaign is launched, Meta’s algorithm will adapt to optimize for the campaign goal of the advertiser. For example, if the campaign goal is website traffic, over time, Meta will find patterns for which users are more likely to visit the advertiser's website. Both of these platforms are extremely powerful for advertisers, and many times companies use a combination of both paid platforms to drive growth. For example, a business could run an advertisement on Meta to garner interest for their product. Then they could also run ads on Google so that when it is searched for, the website appears at the top of the page. The more experience I get with these platforms, the more I realize why these companies are some of the biggest in the world. Thanks again for reading my blog this week!
Week 7: Conducting Campaign Data Analysis @Digicom
Hi everyone, thanks for tuning in for another blog. I have been learning a lot from my experience at Digicom. Every morning during the week, I begin my day by conducting campaign data analysis for a few of Digicom’s clients. I have taken away a lot of key concepts from doing this. I have started to appreciate the complexity of running digital paid advertising. There is so much data involved in tracking an advertising campaign. In previous blog posts, I have covered some of these metrics, such as CPM, CTR, CPL, CPA, and CTR. If you are interested in learning what these metrics are, please take a look at my Week 3 blog. But those are just some of the metrics. One of the key metrics that I report on when I conduct data analysis is ROAS. ROAS stands for return on ad spend. It is calculated by dividing business revenue by total ad spend. If a business has a ROAS of $2, it means that for every dollar they put into advertising, they will get $2 back. As you can see, measuring the ROAS of a business's advertising budget is important for measuring the success of the campaign.
Another concept that I have taken away from conducting daily campaign data analysis is the importance of updating the campaign. It is crucial for advertisers to set up an advertising campaign with the right creatives and audience targeting. However, after the campaign is launched, the work doesn't just stop there. Certain ads that have a great ROAS one day might change by the next. In order to account for changes in campaign results, it is crucial that advertisers are always testing both new audience-targeting strategies and creatives. If you would like to learn more about the importance of creative testing, please take a look at my Week 4 blog.
Overall, my experience at Digicom has allowed me to learn a lot about digital advertising. I am very thankful to Digicom for giving me the opportunity to carry out my senior project through them. In next week's blog, I will explain more concepts and strategies that I will learn. Thanks, as always, for tuning in for another one of my blogs.
Week 8: Eyes Into a High Quality Marketing Agency
Welcome to another one of my blogs. In the last couple of blogs, I have looked into prominent digital advertising platforms such as Google and Meta. Why would a business invest in billboard ads when digital advertising offers targeted reach and measurable results? But not all businesses have the expertise to run successful online advertising campaigns. That is why marketing agencies exist.
There is a huge demand for marketing agencies. Not only do many businesses hire agencies, but even political candidates do. In the US alone, there are over 54,000 digital advertising agencies (statista.com). Many times, small businesses will hop from one agency to the next because they are not getting sustainable results. It can be difficult to differentiate a high-quality marketing agency from a low-quality one. After all, the business is looking for a service that they have no expertise in.
For an agency to be successful, they need to stand out from their competition. At my onsite job at Digicom, I have learned what differentiates them. Digicom focuses on being data-driven. Many other marketing agencies do not continually adjust their clients campaigns. However, at Digicom, the day starts with the analysts conducting campaign research for all their clients. This has been one of my key responsibilities. Through this process, I have learned a lot. In order for a campaign to be successful for a long period of time, it needs to be continually improved. If I see that click-through rates decrease day over day, then maybe it's time to launch a new creative. If the CPM (cost per thousand impressions) is high, then it could be time to tweak the audience targeting strategy. There are so many variables in a campaign that can quickly change. That is why it is crucial to track campaign performance. I am thankful to have my onsite job at Digicom. Their goals are aligned with their clients, and I have seen the results they achieve. Thanks again for tuning into another one of my blogs!
Week 9: Looking Into the Creative Process at Digicom
Welcome everyone to another week of my blog. My onsite experience at Digicom has taught me that campaigns are ever-changing. Just because an advertisement drives results for a business one week doesn't guarantee that it will perform the same the next week. A long-term successful advertising campaign always needs to test new creatives. In week 4 of my senior project blog, I delved into the analytical side of creative testing, where I covered the important metrics to optimize for, such as CTR (click-through rate), CPM (cost per thousand impressions), CPA (cost per acquisition), and ROAS (return on ad spend). I would recommend reading my week four blogs if you have not gotten the chance yet. But basically, when certain advertisements outperform others, a larger portion of the campaign budget will be allocated to the top-performing ad.
Although in prior weeks I have looked at the analytical side of creative testing, I have started dipping my toes deeper and deeper into the creative side of advertising. Digicom is an advertising agency that focuses on data-driven results, but they still have a creative sector of their business. When the data analysts at Digicom want to test a new creative for one of their clients, they need to write up a creative brief. This brief is then used by Digicom’s creative team to generate the ad. The advertisement is sent back to the analysts, where an additional creative request might be made to adjust the ad. After many back-and-forths between the analysts and creative team, the ad will eventually be finalized. The last step is for the growth marketer at Digicom to review the creative with the client to double-check that the advertisement aligns with the client's brand. After all these steps are completed, the advertisement is launched within a campaign.
Over the last few weeks, I have been responsible for writing multiple creative briefs. During this experience, I have learned to really exercise my creative thinking. I have needed to juggle between which combination of creative formats and advertisement styles to utilize within a creative request. In next week's blog, I will lay out these formats. Thanks as always for tuning in, and see you all next week.
Week 10: Creative Content Strategies
Welcome everyone to another week of my blog. In last week's blog, I dove into the creative process at Digicom. If you have not read last week's blog, I would highly recommend it. At my onsite job at Digicom, one of my key responsibilities has been submitting creative requests to their creative team. Digicom values creative testing and knows that their clients always need to be testing new advertisements within their campaigns. There are many different styles of creatives that can be made for a client. Through my experience interning at Digicom, I have been able to learn about these different creative formats.
A common creative strategy is a value proposition advertisement. This type of creative might have a checklist or bullet points explaining the benefits of an advertisement. This is a very common type of advertisement for a reason. It works. In order for someone to buy something off of a digital advertisement, they need to either recognize the brand or see how the product will add value to their life. A value proposition ad should highlight why the user needs to buy the product, which is why this style is an effective strategy. Another creative strategy that Digicom utilizes is a UGC advertisement. UGC stands for user-generated content. An example of UGC is a content creator talking in their car about a hair product that has been working wonders on them. User-generated content should seem raw and not be too "salesy." When someone stumbles across this advertisement, they should not even realize it's an ad. This advertising strategy is effective because it can drive more user engagement and garner more trust than a typical ad.
Finally, another advertising format that Digicom employs is article content. Digicom has a blog, which they utilize to write content for their clients. Article advertising is a great advertising strategy when selling expensive items. If someone is going to spend hundreds of dollars on a product, most likely they will want to read reviews and anecdotes about the product. What makes this strategy effective is that when someone stumbles across an article ad on Facebook, they might read the article and then want to buy the product.
There are many advertising formats. I have submitted many creative requests to Digicom's creative team. What I have learned from this experience is that different strategies work for different businesses. Article content might drive the best outcomes for a subscription business, while UGC content might work better for a makeup brand. In order for a business to know which strategy is right for them, they need to conduct creative testing within their campaigns. If you have not read the Week 4 blog, I would highly recommend it to learn about the creative testing process. Thank you, everyone, for tuning in to another one of my blogs. Next week will be my final blog. See you then!
Week 11: Conclusion
Hello everyone, and welcome to my final senior project blog. I hope everyone who has followed me on this journey has learned as much as I have. When I first started my senior project, I thought that audience targeting was the most important aspect of digital advertising campaign success. This might have been the case a few years ago, but audience targeting is becoming less and less important. Platforms like Meta are actually encouraging broad targeting. Broad targeting is when an advertiser institutes little to no customer segmentation constraints. The reason Meta and other advertising platforms are shifting to this is because of their improvements in machine learning. Broad targeting enables Meta to find the perfect audience for an advertisement without the advertiser needing to implement customer segmentation techniques such as interest-based targeting. Sometimes an advertiser doesn't know the best audience to target their advertisement to, and by enabling broad targeting, they can maximize campaign results. Although utilizing customer segmentation strategies such as retargeting and demographic targeting can improve the performance of a campaign, it is not what makes or breaks the success of a campaign.
My onsite experience at Digicom taught me the full picture of the drivers of campaign success. Every day at Digicom, I would start my day by analyzing campaign data for a range of their clients. Through this, I learned how businesses can improve their advertising campaign success by optimizing for key metrics such as CPM, CTR, CPC, CPA, and ROAS. For example, if an advertiser wants to improve their ROAS (return on ad spend), either their CPA (cost per acquisition) needs to be lowered or their AOV (average order value) needs to increase. There are many strategies to lower CPA, such as improving a landing page or testing different audience targeting strategies, but the most important technique is creative testing. Creative testing is so critical to campaign success for a multitude of reasons. What's the point of paying for ads if the advertisement is of low quality? A poor-quality advertisement can tank campaign success. But even if an advertisement performs great one week, that doesn't guarantee that it will perform the same the next week. Social media is fast-paced and ever-changing, so advertisers need to keep up with trends and changes in consumer preferences. Through creative testing, advertisers can experiment with different types of advertisements to see which one drives the best results.
I am very thankful to Digicom for providing me with the resources and guidance to thrive throughout my senior project. Through reflecting on my experience, I have had my largest takeaway. The largest winners in digital advertising are the platforms themselves. There is a reason why Google and Meta are both two of the largest companies in the world. Billions of people use Google Search, Facebook, and Instagram. Millions of businesses compete with each other to run digital advertisements. Hundreds of thousands of digital marketing agencies compete for clients. But there are only so many large social media platforms and search engines. Google and Meta are the market leaders in digital advertising. In 2023, Meta’s revenue was over $130 billion. In 2023, Google's revenue will be over $300 billion. Through pursuing my senior project, I have learned the power of digital advertising. If utilized effectively, it could grow a business exponentially. But in all business, there are winners and losers. Meta and Google are definitely the biggest winners.
Thanks again to everyone for joining me on my senior project journey. This was my last blog, but I will be presenting my senior project at Basis on June 14th. I hope to see you all there, and if not, I will be uploading a recording of my presentation below. I hope you all enjoy my presentation!
Senior Project Presentation, June 14th, 2024: https://drive.google.com/file/d/1QWbB_QMyRUDNA7xKRJPoiU5EhV8vaiyN/view?usp=sharing