Optimizing Google Ads Audience Targeting in 2025

Google Ads (formerly Google Adwords) is a boon to eCommerce merchants and advertisers. Its advanced and varied tools look after every nook and cranny of your ad performance, and work towards the best possible result.

However, everyone runs Google Ads, but not everyone is successful — sometimes due to targeting the wrong audience or even common Google Ads errors that hinder performance. 

One such feature that combats this issue and helps reach the ideal audience by leveraging your data is Google Ads Audience Targeting. It tracks and finds the relevant target audience by utilizing the following: 

• Demographics
• Interests and habits
• Online behaviour 
• Interaction with your business and brand 

It works on the basis of different types of segments, which include: 

• Custom segments
• Affinity segments
• Detailed demographics (in-market and life events)
• Remarketing segments
• Your data segments (website & app visitors, customer match & lookalike segments)
• Google engaged audiences

These segments help improve ad relevance, efficiency, and performance by ensuring ads are shown to high-intent individuals whose actions align with your goals. You can use them independently or combine segments. 

To gain a deeper understanding of these concepts, this guide will delve into Google Ads audience targeting, including the meaning of the aforementioned segments, how to create and target an audience, and how the audience-targeting tools can assist you.

Let’s get started.

What is Google Ads Audience Targeting? 

Audience targeting in Google Ads enables advertisers to reach the right audience based on their interests, online behaviour, past search history, demographics, and more. It prevents displaying ads to irrelevant audiences who have a low chance of conversion. Instead, it focuses on delivering ads to those with higher engagement or buying intent. 

Here is an example: 

An online shoe store wants to reach a specific group that has interacted with their business in the past. For this, they decide to use remarketing, in-market, and custom segments. Let’s expand why: 

1. Through remarketing segments, the online business can retarget its ads to the same set of individuals who viewed or visited their site but did not make or complete a purchase.
   
2. They also use in-market segments to target individuals who are actively searching for keywords that match the intent of their ads. For example, “athletic shoes” or “runner shoes for beginners.”
   
3. Lastly, they incorporate a custom segment built around a particular keyword, such as “best shoes for running in New York.” 

Notice that, in the example, the advertisers are “segmenting” the shoppers into different categories based on their requirements.

The purpose of running such segmented campaigns is to boost efficiency by sending the right message to the right audience at the right time. 

With that, we shall now delve into the technicalities and functions in order to use it to your advantage: 

Importance of Optimizing Audience Targeting in Google Ads

When you spend your ad budget without direction, without knowing who you’re targeting, what interests they have, or what your ad aims to achieve, you end up missing the right audience.

Optimized targeting ensures your ads reach those who are more likely to engage, convert, and become loyal customers. It helps you cut through the noise and focus on individuals who actually matter to your business.

It is evident that the most important element in audience targeting is “precision.” If you do not focus on precision, you will not be able to get the desired outcome. In a nutshell: 

Strategic Targeting = Enhanced Precision 

Keeping that in mind, let’s look at the importance of optimizing targeting: 

1. Reduce Wasted Ad Spend
   When you target a broad, low-intent audience, you are subjected to wasted ad spend. However, when you use data-driven segments, your budget is shifted to focusing on high-intent users who are highly likely to engage, thereby improving conversion rates.
   
   This reduces wasted ad spend as your money is channelled to the correct targeting strategy, which is to use the segments. This way, you lower CPA (cost per acquisition), and maintain a better budget.
   
2. Precision Drives Relevance, Relevance Drives ROI
   That’s true. When you target the right audience, your click-through rates and conversion rates can potentially increase. Not only that, you also witness an improved Quality Score, which means that your ads are more relevant compared to your competitors’ ad campaigns.
   
   A better Quality Score means lower cost-per-click (CPC), improved ad position on the search results page, and increased overall ad visibility and return on ad spend (ROAS).
   
3. Supports Full Funnel Strategies
   Many shoppers are at different stages of their customer journey. Some may be casually exploring products, while others are ready to make a purchase. 

Google Ads allows you to target audiences based on the different funnel stages: 

• Awareness stage (Using Custom or Affinity segments)
• Consideration stage (via Remarketing/Your Data or In-market segments)
• Conversion stage (using Customer Match).

4. Effectively Narrow Targeting
   When you combine Google’s data and your collected customer data, you can narrow down targeting and provide more effective results. 

Before we dive into the optimization, it’s essential to understand the various audience segments. 

Also Read: What Are Google Ads Callout Extensions and Why Use Them? How To Fix No Google Ads Account Linked?

Types of Audience Segments

Audience segments work like a list that consists of different individuals with niche interests, demographics, and buying intent, as estimated by Google. Think of them as different groups of people interacting with your business. These people are your website visitors, app users, or YouTube viewers.

They are organized inside “Audience, Keywords & Content” in your Google Ads account so you can decide and manage who sees your ads.

Let’s explore the different types of segments: 

Custom Segments

Custom segments are easy to use. They help you reach your ideal audience more effectively. Just add relevant keywords, URLs, or apps (mobile apps that help target customers who’re likely to use them) related to your product or service. This allows you to tailor your targeting across Display, Discovery, Gmail, and Video campaigns.

These segments help you automatically find the right audience for your campaign. 

Depending on your goal, your audience will be optimized for one of three key objectives: reach, consideration, and performance.

For example: You want to sell vegan protein powder. You create a custom segment that targets users who:

• Search for “best vegan protein powder”
• Visit websites associated with veganism
• Use health/fitness tracking apps
• Go to the gym

Custom Intent Segments: Google’s auto-created Custom Intent segments help you easily reach the right audience for your Display campaigns. They’re designed to match your ads with people interested in specific topics, products, or pages. These segments are currently available in English, German, Japanese, Spanish, Russian, Portuguese, French, and Italian, with more languages coming soon.

Detailed Demographics 

Detailed demographic targeting lets you reach people based on where they are in their life or career journey.

This approach to audience targeting goes a step further than just age, gender, or parental status. 

It usually targets users based on:

Life Events

Reach people during their big life changes, right when they’re most open to new products and services.

This mainly targets people based on their:

• Parental status
• Marital status
• Education level
• Homeownership status

For example: You sell affordable student laptops. You target users who are:

• “College students”
• Recently moved out (homeownership status: renters)
• Unmarried 

In-market segments

In-market segments sort people in a list based on in-market audience targeting. In this, the advertisers look to boost awareness and consideration amongst the audience who are likely “in-market”. This audience is actively looking for a particular type of product or service on Google. 

This targeting also helps you reach customers actively researching and comparing products or services, such as reading reviews, checking prices, or exploring options. It’s ideal for Display and Video 360.

For example: For a car insurance business, show ads to people in the “Auto & Vehicle” in-market segment who are:

• Comparing insurance quotes
• Searching for “cheapest car insurance in Arizona”

Affinity Segments

Affinity segments enable you to target individuals based on their passions, interests, and everyday habits. It focuses on individuals who have consistently shown an interest in specific products, services, categories, topics, and so on.

This segment helps advertisers find customers who are highly likely to engage with their ads. 

Affinity segments are mainly used for top-of-the-funnel campaigns (like brand awareness or consideration) because they focus on general interests rather than immediate purchase intent. 

For example: If you are an online bookstore business, you target users in the “Book Lovers” affinity segment, who:

• Frequently read reviews on Goodreads
• Follow book-related YouTube channels
• Browse reading blogs regularly

Your Data Segments (Remarketing)

“Remarketing” has now become “Your Data” segments. However, its functioning remains the same. Your data re-engages customers based on their previous interactions with your business on desktop or mobile, based on first-party data. Your ads are displayed to these specific customers across the Google Display Network. 

Your Data segments rely on the retargeting pixel to gather first-party user data. The pixel tracks events (actions) such as page views, add to cart, and purchase. Google uses this data to create a remarketing list to tailor retargeted ads to its existing customer base. 

Target users who have already interacted with your business include:

• Website/app visitors
• Customer match
• Lookalike segments

For example: If you run an online shoe store, “Your Data” segments could include:

• Website visitors who browsed your “Sneakers” page but didn’t buy.
• Customers who bought running shoes last month. They can see an ad for new running socks.

Google-engaged Audiences

With Google-engaged audiences, you can target high-intent users who previously visited your eCommerce site through Google Search, YouTube, or other Google properties.

Google automatically builds these audience lists based on clicks from your ads or organic search results, allowing you to re-engage shoppers who have already shown interest in your products.

For example: You own an online store selling minimalist home decor.

Google builds segments like:

• People who clicked your Shopping ad for “wooden wall shelves”
• Users who visited your site after finding you via Google Search
• Viewers who clicked your YouTube ad showing how to style a living room with your products. 

Further Reading: Is It Worth Upgrading Dynamic Search Ads to Performance Max?

Combined Segments

Combined segments allow you to build audiences by using multiple targeting options, such as interests, behaviours, and demographics. It is a way to mix different audience types in order to reach a more targeted audience.

In simple terms, you can use two or more audience segments together. Such as, you can combine in-market and affinity segments, or create a combination of remarketing, custom, and affinity segments. 

For example: Let’s say you are targeting your ad to fitness enthusiasts (affinity segment) or people actively researching running shoes (in-market segment). With combined segments, you can apply the affinity segment to the in-market segment and target your ad specifically for high-performance running shoes to fitness enthusiasts who are also in-market for running shoes.

Using combined segments narrows your audience search and helps you target the exact audience according to your goals. 

Note: Similar Audiences were deprecated in 2023.

How to Optimize Audience Targeting in Google Ads?

Now that you have a grasp of what audience targeting in Google Ads looks like, we shall dive into different optimization strategies that you must include in your targeting plan:

In order to reach the Audiences section in your Google Ads, go to Tools > Audience, keywords, and content > Audiences.

Understanding When to Apply “Targeting” and “Observation”

These two options are campaign and ad group targeting methods that help you find the right customers. In some cases, you may want to narrow your search or observe how an ad performs. 

When it comes to targeting mode, you need to know the following: 

• “Targeting” mode tells Google who sees your ads and where they should appear, such as specific audiences, websites, or apps. In short, it only shows ads to users within the chosen audience segment or audience list.
  
• Without targeting, your ads could appear to anyone on a broader scale. This leads to wasted ad spend, impressions, and a lower chance of conversion. These ads appear anywhere on the Google Network, where your target audience is potentially not that active.
  
• The data is collected from the target audience only.
  
• With this mode, you are basically limiting your ads to a certain audience. In this, bid adjustments apply only to the targeted audience.
  
• Targeting mode can be applied when you are focusing on a specific audience group, such as remarketing.
  
• Highly recommended for Display campaigns to improve relevance and performance.

And when it comes to observation mode:

• “Observation” mode will display ads to everyone regardless of who your target audience is. Google processes the data tracked in this mode, helping you make informed decisions before targeting or bidding.
  
• The data is collected from the target audience and users outside the target audience.
  
• It helps you monitor performance. You can see how certain audiences, topics, or placements perform without restricting your targeting. You can apply bid adjustments for audiences while still reaching others.
  
• Use the data to optimize. You can adjust bids or create new ad groups with refined targeting based on what you observe.
  
• Observation mode can be applied when you want to collect data and analyse the performance of different audience groups before targeting. For instance, those using in-market segments can apply the observation mode.
  
• Recommended for all Search campaigns and advanced Display campaigns.

Further Reading: 15+ Google Ads Examples That Actually Deliver Results Google Discovery Ads vs. Display Ads: The Complete Guide

Use Exclusions to Avoid Wasting Budget

Another way to effectively search the right audience involves excluding segments that no longer serve any purpose from a campaign or ad group. This means you can remove any segment (Affinity, Custom, Your Data, etc.) from your campaigns at any time you want.

This case may arise when you are not getting the right outcome from the selected segments and wish to make changes to how you target audiences.

These exclusions help you keep relevant segments and exclude the ones you do not want to keep in your campaigns.  Exclusions are supported across Search, Display, Demand Gen, and Video campaigns.

Keep in mind that audience exclusions can’t be set during campaign creation. They can only be added afterwards. It’s a good idea to monitor how different segments perform before deciding to exclude them.

For example, you can exclude segments like this: 

• Exclude past purchasers when you’re running acquisition campaigns.
• Remove low-engagement users with a bounce rate of >90%.
• Shoppers who did not convert in the previous holiday campaigns.

Segment Audiences by Funnel Stage

A good strategy would be to apply segments based on an individual’s customer journey. Applying the full-funnel framework helps individuals from finding your business to becoming a buyer. In Google Ads, using segments helps you align your advertising goal to each stage of the customer’s journey.

There are four main stages: 

1. Awareness (Top of Funnel)
   
2. Consideration (Middle of Funnel)
   
3. Conversion (Bottom of Funnel)
   
4. Loyalty/Retention (Post-Purchase)

In practice, the segments are not rigid and can overlap across funnels. Based on our research, here is how you can apply the segments according to the funnels: 

Awareness Stage (Top of the Funnel)

This is ideal for: Display, YouTube, Discovery, and upper-funnel Performance Max.

This stage is used for building brand awareness and reaching new customers. The focus is on garnering impressions, reach, and video views. The best audience segments for the awareness stage are as follows:

• Affinity Segments: Audiences with strong interests, passions, habits, or lifestyles. For example, “Tech Enthusiasts,” or “Health & Fitness Buffs.”
  
• Detailed Demographics: Reach users by their characteristics, such as parental status, education level, homeownership, or employment status.
  
• Combined segment: A way to target new potential customers to boost awareness. For instance, reach users interested in fitness (affinity) and those actively researching gym memberships (detailed demographic) to maximise both awareness and early interest. 

Real-life use case: A new sustainable fashion brand could target “Green Living Enthusiasts” or a custom affinity segment for users interested in eco-friendly products. The ad uses storytelling, “Sustainable fashion for a greener planet,” to make potential customers aware. This campaign’s focus is not to produce direct sales.

Consideration Stage (Middle of the Funnel)

This is ideal for: Search, Display, Discovery, YouTube, and Performance Max.

This stage is when people are aware of your brand and are at that point where they are researching and considering your products. It’s ideal if your goals are to increase click-through rate, engagement, etc. The best audience segments for the consideration stage are as follows:

• Your Data Segments (YouTube Viewers / Website Visitors): People who have interacted with your video or visited product pages but haven’t converted on your products.
  
• In-Market Audiences: Users actively researching or planning to purchase within your product category. For example, “In-market for running shoes” or “In-market for laptops.”
  
• Custom Segments (Intent-based): Build audiences from search keywords, competitor URLs, or apps relevant to your niche.
  
• Combined Segments: Mixing segments to achieve high-intent audiences. For example, applying affinity for product views and in-market for a specific product.

Real-life use case: An online laptop seller could create a custom segment targeting users who search for “best laptops for students” or visit competitors, such as apple.com. The ad highlights value and also uses comparison keywords, for example, “Powerful laptops for every budget.”

Further Reading: The Ultimate Guide to Google Ads A/B Testing

Conversion Stage (Bottom of the Funnel)

This is ideal for: Search (branded and high-intent), Performance Max, Shopping, and dynamic remarketing. 

The conversion stage is the last stage of the funnel, where the customer turns into a buyer and makes a purchase, signs up, or takes any desirable action that leads to a conversion.  The best audience segments for the conversion stage are as follows:

• Customer Match: Upload your customer data, like email addresses or phone numbers, to re-engage existing customers or upsell to them.
  
• Your Data Segments (Remarketing): This segment targets users who have visited your online store, added items to their cart, or engaged with your content but did not make a purchase.
  
• Combined Segments: You use two or more segments to target audiences who have a higher likelihood of conversion. For instance, you can use in-market targeting to reach customers actively searching for “toys for 1-year-old infants” and utilise Your Data segments to target parents who have abandoned their carts. 

Real-life use case: An online shoe store can retarget users who added items to their cart but did not complete checkout with “Still thinking? Get 15% off your order now!”

Tips for Maximum Funnel Utilization: 1. While running a top-of-the-funnel campaign with custom segments (people searching for “best eco-friendly skincare”), you can also have a bottom-of-the-funnel remarketing campaign targeting those who visited your site but didn’t make a purchase. 2. In-market and remarketing can work well together because they target different intent levels even within the same funnel. In-market reaches new users actively researching products, while remarketing re-engages those who already showed interest. Running both ensures you capture the attention of new customers while converting the existing ones.

Loyalty & Retention Stage (Post-Purchase)

This is ideal for: Display remarketing, YouTube, Performance Max, and Shopping.

This comes after the customer has made their purchase, and your goal is to retain them as a loyal customer. Its main focus is to encourage repeat purchases, enhance customer lifetime value, and increase return on ad spend (ROAS). You can use the following segments for this purpose: 

• Customer Match: Re-engage previous buyers using CRM or email data to drive repeat business.
  
• Your Data Segments (Remarketing & Lookalike Segments): Target those who purchased before with cross-sell or upsell offers. Also, use lookalike segments to find new potential customers who resemble your loyal ones.

Real-life use case: A skincare brand targets past customers who purchased moisturiser with ads for complementary products, such as serums or product bundles. 

Notice how each funnel stage feeds and supports the next one. Top-funnel campaigns attract new, high-intent visitors who are added to remarketing lists for middle and bottom-funnel ads. Using multiple audience segments together keeps your brand visible and your message consistent, helping boost conversions across the funnel. 

Avoid Over-Audience Segmentation 

Avoid adding too many audience segments at once. It can make it harder for you to track and analyze what is driving results and what needs improvement.

Start broad by testing 2–3 distinct segment types that align with your ideal customer persona.

For example, suppose you’re running ads for an online beauty store. Instead of starting with a narrow audience like “Women aged 25–30 interested in organic beauty products”, you combine a few broader segments, such as:

• Beauty & Wellness Enthusiasts: Affinity Segments to reach users who are passionate about beauty and wellness. 
• Skincare Product Shoppers: In-Market Segments to target those who are actively researching around this topic. 
• Website Visitors from the Past 30 Days: Your Data Segments to re-engage customers. 

Once your campaigns have generated sufficient data, you can refine them further by creating custom segments using keywords, competitor data, and other relevant criteria, or by narrowing in-market segments.

It is essential to understand that audience targeting is most effective when informed by genuine campaign insights, rather than mere assumptions. 

Monitor Performance by Audience Segment

Tracking audience performance is key to optimizing your Google Ads and driving better outcomes.

In your account, go to a campaign or ad group and choose “Audience, keywords, and content > Audience” to see how each audience is performing.

You’ll get valuable metrics like CTR, CPC, conversion rate, etc., for every segment you’re targeting or observing.

This helps you spot what’s working, like shifting more budget to a strong in-market audience or flag underperformers, like custom segments that get clicks but no conversions. Use these insights to fine-tune your targeting, creative, and bidding for better results. 

Conclusion

Google Ads Audience Targeting is about more than finding the right audience; it is about understanding their intent and matching your ads to where they are in their buying journey. When used correctly, audience targeting helps reduce wasted ad spend, improve campaign relevance, and increase ROI.

With that, here are the key takeaways from the blog:

• Google Ads Audience Targeting refines who sees your ads based on behaviour, demographics, and intent.

• Segmenting audiences increases precision and ensures your budget targets high-intent users.

• Combined segments help reach specific, goal-aligned audiences by layering multiple targeting options.

• Each funnel stage: awareness, consideration, conversion, and retention builds upon the previous one to strengthen results.

• Using “Targeting” and “Observation” modes strategically helps balance data collection with focused reach.

• Excluding irrelevant or low-performing audiences prevents wasted ad spend.

• Monitoring performance by segment provides insights for continuous optimization and better ROI.

• Effective audience targeting relies on ongoing testing, refinement, and real campaign data, and not assumptions.

FAQs

Can I use Google Ads audience targeting for local campaigns?
Currently, Local campaigns have been phased out and upgraded to Performance Max campaigns (PMax). You can use audience signals for PMax campaigns and adjust your targeting strategy using those audience signals. 

What are the different types of audience segments in Google Ads?
The different audience segments are: Affinity segments, custom segments, detailed demographics (covers life events & in-market segments), Your data segments (covers website and app visitors, customer match, and lookalike segments), and Google-engaged audiences.  

What is target frequency?
Target frequency in Google Ads is a setting that lets advertisers control how often their ads are shown to a particular user within a given time frame. It’s mainly for Video and Display campaigns (for brand awarness). It helps ensure your audience isn’t overexposed or underexposed to your ads. Advertisers need to fetch weekly/monthly desired frequency for Google’s system to optimize these ads. 

How to add audience targeting to an ad group or campaign?
In your Google Ads account, go to the Campaigns section > Audiences, keywords, and content dropdown > Audiences. Under the “Audience segments” module, click Edit audience segments. Choose the desired campaign and ad group, or search for them directly. Then, select the audience segments by checking the relevant boxes. Finally, click Save.

What should I do if my audience targeting isn’t performing well?
Ensure your target audience is not too small. If remarketing is not doing well, use affinity or in-market segments. For audience-based campaigns, especially Display, Video, and PMax, smart bidding like Total Cost-per-Action (tCPA) or Maximize Conversions usually outperforms manual bidding. Finally, check if your bid strategy is aligned with your goals.

How does audience targeting for Video campaigns work?
Like any other campaign, audience targeting for video campaigns largely depends on demographics, interests (like in-market and affinity segments), custom segments, life events, remarketing, and Customer Match. Now, depending on your objective, you need to pick which segment and audience you are targeting. For example, for brand awareness, resort to affinity segments and target a broad audience. 

What is audience expansion in Google Ads?
Audience expansion in Google Ads allows your campaigns (especially Display, Discovery, and Video ads) to reach new users who closely resemble your existing audience segments. Using machine learning, Google identifies people with similar interests, behaviours, or intent as those already engaging with your ads. This helps you broaden reach and find new potential customers while maintaining relevance and conversion efficiency, making it easier to scale performance without losing targeting precision.

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