Finding Your User Segmentation Sweet Spot

September 17, 2018

By Alexei Chemenda

Courtesy of Adikteev

Effective segmentation of your audience is a very important component of a mobile marketing strategy. However, even the most experienced marketers often make mistakes and assumptions regarding their target audience. Finding that user segmentation sweet spot and applying it to a retargeting campaign can pose a challenge — but without getting it right, mobile strategies will break down and churn will occur.

For marketers looking to optimize their retargeting campaigns, here are answers to some of the most pressing questions we’ve received from app developers and brands:

Q. In a mobile retargeting campaign, what is the first thing a marketer should consider/look at?

A marketer should first look at messaging and creative because those are the low hanging fruits that marketers often ignore when starting with a retargeting campaign.

Q. What is the number one mistake marketers make in their mobile retargeting strategies?

The main pitfall with a retargeting campaign is that marketers look at ROAS versus measuring incrementality. Using ROAS as a benchmark can be problematic because if a marketer is targeting active mobile users to drive more engagement, they could be wasting impressions on customers who would have converted anyway.

Incrementality looks at revenue lift provided by advertising spend and can deliver more value for customers and potentially introduce a marketer to a new audience group.

Q. How long should you wait before you retarget a user?

Exactly zero minutes. The longer you wait, the higher likelihood of that user to be gone forever.

Q. What is user segmentation?

User segmentation defines the way that you decide to divide your entire audience into groups, and how you decide to group users together. Segmentation is usually based on in-app activity. For instance, you could decide to create a segment of users defined by "all users that installed three days ago or less, but haven't purchased."

Based on these rules, audiences are created and then targeted.

Q. Why is user segmentation important in a retargeting campaign?

Since you're targeting existing users, you should reference their past in-app actions to serve them tailored messages. Segmenting your audience properly allows you to do this.

It also allows you to be more aggressive with your bidding strategy (i.e., if one segment performs very well, you will be able to bid a lot higher).

Q. How do you find your segmentation "sweet spot?"

It's what we call a min-max approach internally.

You first have to ensure your segments are as small as possible (fewer users, "min") so that your messaging is as relevant as it can be for every user.

Then, you also have to ensure your segments are as large as possible (more users, "max") so that each segment gets enough data to be optimized properly. However, keep in mind that if you have a segment with 100 users, performance won't be statistically significant.

Finding your segmentation "sweet spot" requires some iterations for each app, but over a few weeks, you will eventually find it. The main question to ask yourself is, "Can I divide this segment in half and still have enough users in one of the resulting segments?" If so: cut it, adapt the messaging and start over.

Q. If you focus on the active users, should you totally discount churned users? What strategies should be employed if you are interested in trying to get churned users back?

Strategies for churned users differ based on verticals. There are multiple verticals that can be looked at, but gaming, travel, and on demand show the subtle, but large differences in strategies.

  • Gaming: A churned user, even somebody who lapsed 10 days, is hard to bring back. These usually require in-ad incentives, new features, and an understanding of what their expected n months (n is often six) LTV [loan-to-value ratio] is. This will be your goal for a cost per reopen campaign.
  • Travel: As people don't buy plane tickets every day, if a customer doesn't come back to the app in 30 days, it's not as big of a deal as it is for, say, gaming. In travel, churned users are usually looked at through a different and longer window of time.
  • On Demand (i.e., Food Delivery): Marketers simply have to continue pushing to make sure lapsed users remember to use their app and not a competitor's.

Q. If there was one piece of advice that you'd want a marketer to take away from this interview about user segmentation, what would it be?

Don't be afraid to roll up your sleeves and dig into segmentation. A min-max approach with specific messaging is ideal and will yield great results.

 

Alexei Chemenda (@alexeichemenda) is the CRO for apps and the managing director for the U.S. at Adikteev, where he leads the company's U.S. expansion for its app retargeting product.

 


The views and opinions expressed in Marketing Maestros are solely those of the contributor and do not necessarily reflect the official position of the ANA or imply endorsement from the ANA.


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