Segmenting your target group based on demographic data such as location can significantly increase your return on investment or ROI. It allows you to create targeted advertising and focus your marketing efforts on the people who are most likely to buy from you. In 2024, it is estimated that 77% of marketing ROI comes from targeted, segmented, and triggered campaigns. The increase in returns on promoted sales following segmentation is in the range of 3-5%.
Demographic data also includes age group, gender, ethnicity, marital status, occupation, and education and income levels. In the past, the sources of demographic data were relatively limited. They included surveys, censuses, and government records. In recent years, the rise of specialized solutions, social media, and search engines has led to significant growth in the volume of demographic information collected on people.
Identifying trends through segmentation
Let’s say a company’s product range is targeted towards teens and young adults. The company could use demographic segmentation to divide its audience into smaller groups based on location, age, and gender. This would enable them to create targeted advertising and marketing campaigns tailored to each group’s specific interests and lifestyles.
For instance, the company could target teens living in big cities with ads on social media networks that draw attention to the latest fashion trends. They could target higher-income young adults through email campaigns focusing on extravagant experiences and luxury products.
Demographic segmentation allows companies to determine trends and understand each group’s unique needs and desires better. Their advertising and marketing campaigns are then more likely to resonate with their audience.
Using heat maps to identify demographic tendencies
A zip code heat map uses appropriate color gradients to represent different levels of demographic metrics. This section explores the process of generating heat maps based on location.
It starts with obtaining data. You can use the US Census Bureau, local government databases, or commercial data providers. Ensure the data includes zip code information for precise mapping.
Select a mapping tool that supports heat maps and demographic data integration. Some popular options include GIS software and online platforms like Google Maps.
Format the data correctly, ensuring that each data point includes a zip code and the demographic metric you are tracking. Remove any inconsistencies or errors.
Import the data into your chosen tool. This usually involves uploading a CSV file or connecting to a data source.
Set zip codes as the geographic variable and choose the demographic metric as the data to visualize.
Select appropriate color gradients to represent different levels of the metric (e.g., shades of grey for lower values, shades of brown for higher ones).
Look for areas with high or low concentrations of the demographic metric and observe how these patterns correlate with geographic features, population, income, infrastructure, or other variables.
Use the insights gained from the heat map to inform decisions. For instance, retailers might choose new locations based on population density and income levels.
Which social media to prioritize in your campaign?
Demographic data reveals which social media your target group is using, and you can prioritize it in your advertising campaign strategy. Young people between 18 and 29 are most often on Snapchat, with 41% listing it as their top choice social network, followed by TikTok with 35% and Instagram with 32%. 29% of people over 50 are on Facebook, while LinkedIn and Pinterest tie for second place with 24%. 35% of millennials in the 30-39-year range are on LinkedIn, followed by X (34%), Snapchat (33%), and Instagram (32%). Finally, a quarter of all people aged 40-49 say their social medium of choice is LinkedIn, and 22% say it’s Facebook.
In 2024, millennials are the most active demographic group on social media, with almost 70% estimated to be using them. However, Gen Z tops the list in terms of the time spent on social media daily, with 35% using them for at least two hours a day.
Valuable insight into customer motivation
On a final note, companies that use demographic segmentation are 130% more likely to understand what motivates their customers and 60% more likely to understand the challenges they face, which has a direct bearing on company revenue. Retailers’ ad campaigns generate higher returns when they are targeted toward specific groups based on location. Demographic segmentation makes it possible for businesses to create more personalized marketing messages as well.
