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What is market segmentation?

Guide to targeting the right B2B audience for digital ads

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Lead generation, conversion-based, and brand advertising success comes from targeting the most likely customers to buy a product or service. That’s why digital advertisers rely on market segmentation analysis as a crucial element of their ad campaign planning process.

 

In this guide, we’ll explain the meaning of marketing segmentation and how it helps marketers maximize their online advertising spend. We’ll also outline strategies for researching and identifying the right B2B target segments to plan, launch, and optimize paid advertising or email marketing campaigns.

What is market segmentation?

The market segmentation process involves researching, profiling, and planning how to reach different target audiences for a product or service. For example, a B2B marketer may discover that IT professionals and/or chief technology officers (CTOs) are their ideal market segments. Using market research into where these target audiences spend the most time online, they can develop paid advertising and email marketing campaigns to reach key segments using creative and messaging that speaks to their professional needs and pain points.

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Illustration representing marketing segmentation

Why is B2B market segmentation important for advertisers?

B2B advertisers who use a market segmentation strategy effectively can create and customize highly relevant campaigns that reach and convert new leads that fit the profile of their ideal customer profiles or buyer personas. Benefits of market segmentation include reduced acquisition costs, better campaign ROI, and increased direct sales and ad revenue.

In turn, marketers can improve customer relationships and loyalty by understanding their target audiences and the challenges they will likely face in their roles and buying journey. This knowledge helps businesses enhance customer support, product development, and marketing strategies.

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The case study video below explains how Salesforce was better able to personalize its digital marketing strategies by segmenting and reaching the ideal B2B audiences for their sponsored content. 

 

As a result, they increased engagement rates by 45% year-over-year by setting up the right ad campaign targeting criteria using the LinkedIn Advertising platform.

 

Types of market segmentation

 

Below are the most common ways B2B marketers can segment their audiences online.

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Geographic market segmentation

Geographic segmentation is one of the simplest ways to target ideal customers in an ad or email marketing campaign. 

B2B advertisers can select a country, specific region (e.g., a state or province), city, and even postal codes of the prospects they wish to target online. In many cases, ad platforms like LinkedIn will prompt them to do this before selecting demographic and psychographic targeting, which we’ll discuss shortly.

When targeting campaigns to geographic segments, marketers must consider using different languages for various creative executions. They might also need to research cultural differences to ensure that an ad’s design, imagery, and messaging are appropriate for each country or region that they wish to target.

Illustration representing geographic market segmentation

Demographic market segmentation

Demographic segmentation is one of the most common ways to split audiences based on their personal information, such as age range, gender identity, annual income, location, education level, religious affiliation, and role or job title within an organization.

B2B marketers will often create a separate campaign that speaks to smaller budgets or payment plans for SMB owners and one for larger budgets and contract or subscription thresholds for enterprise organizations. Each target segment’s business challenges would also differ. That’s why B2B marketers should research and profile their professional challenges and needs, which fall under the psychographic segmentation umbrella that is covered next.

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Psychographic market segmentation

Using market research, advertisers should identify their customers’ psychographic traits that help them segment target audiences by their professional roles and challenges, career aspirations, special interests (e.g., industry association memberships or topics related to their job), hobbies (e.g., sailing or basketball), opinions, social status, and even political beliefs. 

For instance, an advertiser might research C-Suite executives to determine their needs and pain points versus those of small business owners. They’ll also use their psychographic research data to complete a buyer persona or ideal customer profile that provides the information they need to develop creative, messaging, and media plans to launch a digital ad campaign.

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To learn more about LinkedIn Matched Audiences, watch the video below.

Matched audience targeting also offers unique targeting options that are interconnected with firmographic segmentation, such as contact and company-based targeting.

Behavioral market segmentation

Behavioral segmentation allows B2B marketers to group their target customers based on past interactions with their website and ads. This strategy is used when businesses want to retarget their ideal customers after viewing or clicking on an ad to help accelerate the buyer’s journey from brand awareness to sales lead conversion.

 

LinkedIn retargeting lets B2B marketers personalize sponsored content to their target audience based on actions they’ve taken with a brand or when they’ve engaged an audience before, during, and after an event.

 

This strategy can be complemented with a LinkedIn feature called Matched Audiences, which allows B2B marketers to create “lookalike” audiences that match the profile of their existing target customers. These are LinkedIn users who have previously interacted with a website or ad.

To learn more about LinkedIn Matched Audiences, watch the video below.

Matched audience targeting also offers unique targeting options that are interconnected with firmographic segmentation, such as contact and company-based targeting.

Firmographic market segmentation

 

Finally, B2B marketers can classify and segment prospects based on company and professional information that helps them narrow down targeting to specific business details such as:

1. Company name to run account-based marketing campaigns

 

2. Company size or number of employees

 

3. Annual revenue to include or exclude businesses of a certain sales revenue size

 

4. Industry (e.g., education, healthcare, or technology)

 

5. Key executive decision-makers (e.g., C-suite or VP-level LinkedIn users)

 

6. Contact names to reach prospects and known contacts by securely uploading a list of contact IDs or connecting to a contact management or CRM platform

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How to create B2B market segments for online advertising

Below are steps B2B marketers can follow to effectively research, profile, and target market segments online through digital ads and email marketing.

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Step 1: Conduct market research

B2B marketers can begin by researching their intended target audience and their needs through in-person focus group sessions, online surveys of existing customers, third-party research reports, and back-end web analytics data.


Work first to uncover their geographic, demographic, psychographic, and firmographic options. When developing a media plan, decide whether to segment target customers based on their behavioral interactions with their online ads. Review LinkedIn’s guide to learn more about how to conduct B2B market research.

 

Other audience research tools

 

Some B2B marketers use real-time, first-party LinkedIn Sales Navigator data to inform future digital advertising content. Marketing teams can review Insights about their target audience to see what kind of content they share or interact with on LinkedIn, what questions they ask their peers online, any comments they share about products and services, and their specific interests or hobbies.

 

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Step 2: Create buyer personas

 

Next, use the research data to identify the most lucrative target market segments and create buyer personas or ideal customer profiles (ICPs) to inform future marketing strategies and online advertising plans.

When profiling these segments, focus on their online user behaviors and B2B buying journeys. This information drives digital media planning, ad-buying strategies, messaging, and creative formats. It will also guide advertising professionals in selecting the right targeting criteria for each campaign when launching ads on digital media platforms.

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Step 3: Develop media plans, messaging, and ad creative

Now it’s time to research, plan and buy the media placements on platforms that target desired B2B audience segments. Ask each ad platform or network about their rates and recommended placements based on the digital ad or email campaign budget, objectives, and segmentation or targeting criteria.

 

Get specifications about what each platform will accept regarding ad creative formats, file sizes, and frame rates for video ads and content, and be sure to share that information with creative teams early.

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If brands already have an advertising account with a platform like LinkedIn, they can review ad targeting capabilities to see what’s possible on the platform. Or watch the video below.

 

Step 4: Target key segments via each ad platform

 

Finally, work with chosen media platforms to launch new ad or email marketing campaigns online. By now, businesses should already understand the potential reach of an ad on their chosen platforms to decide whether they need to go broader or narrow their ad or email audience segment targeting. 

 

Platform targeting options can also influence the content of ads and emails at conception, so it’s again important to get this information as early in the planning stage as possible. LinkedIn Marketing Solutions recommends being as specific as possible in B2B ad targeting. B2B advertisers should select the audience location(s) and two other targeting facets when starting, then learn from their test campaigns.

 

 

 

If brands already have an advertising account with a platform like LinkedIn, they can review ad targeting capabilities to see what’s possible on the platform. Or watch the video below.

 

Step 5: Track and optimize segmented ad performance

After launching an ad campaign targeting ideal market segments, businesses should take steps to measure and optimize the impact. B2B marketers can set up their targeted LinkedIn ad campaigns based on their ideal audience segments and campaign goals in Campaign Manager. 

 

They can also use Demographic reporting to track their audience segments at the account, campaign group, campaign, and ad level. Then, optimize campaigns based on the audiences that resonated most with lead generation or conversion-based ads.

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Step 6: Analyze social media ad engagement

Additionally, marketers running ad campaigns on social media networks should measure target audience engagement to track success. It helps B2B marketers drive further brand consideration and sales conversions through positive audience reactions. Target audience comments, shares, follows, and likes are common metrics to track.

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Marketing segmentation boosts ROI


Target market segmentation helps B2B marketers define and narrow down critical audiences to create better campaign strategies and results.

In turn, it can help to boost social media ad engagement rates and a campaign’s return on ad investment. Additionally, marketing segmentation helps marketers reduce acquisition costs and grow sales revenue over time.

Marketers should research their ideal B2B market segmentation types and develop buyer personas for digital advertising campaign strategies.

Refer to the ad targeting overview page to learn more about reaching and engaging with the right B2B audience segments on LinkedIn.

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Icon representing segmentation boosts

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