Keyword targeting tells Google what someone is searching for. Audience targeting tells Google who is searching. Used together, they’re more precise than either alone. Used separately, you’re either targeting everyone who types your keyword or everyone in a broad demographic category — neither of which is particularly efficient.
The Two Modes: Observation vs. Targeting
Before choosing any audience, understand the mode:
Observation mode adds an audience to your campaign without restricting who sees your ads. You continue showing to everyone who matches your keywords. But now you can see how that audience segment performs — their CTR, CPA, conversion rate — and apply bid adjustments specifically for them.
Targeting mode restricts your ads to only show to people who match both your keyword and the audience criteria. This narrows reach but improves relevance.
Start with Observation. Run it for 2–4 weeks. Look at the audience performance data. Then decide which audiences warrant bid increases (they’re converting at a lower CPA than average) or bid decreases (they’re converting at a higher CPA or not at all). Only switch high-performing audiences to Targeting mode if you want to focus budget exclusively on them.
Remarketing: Targeting Your Own Past Visitors
Remarketing lets you show ads to people who have already visited your website, used your app, or interacted with your content. These audiences have pre-existing awareness of your brand — they convert at a higher rate and often at a lower CPA than cold traffic.
Common remarketing segments:
- All website visitors — broad, useful for brand reinforcement
- Page-specific visitors — people who visited your pricing page but didn’t contact you; high purchase intent
- Time-based segments — visitors in the last 7 days vs. 30 days vs. 90 days; recency signals intent
- Converted users — people who already converted; useful for upsell campaigns or exclusion (don’t keep spending on already-acquired customers)
Set up remarketing audiences before you need them. Google requires users to be added to the list before you can target them — you can’t retroactively populate a remarketing list. A list of “pricing page visitors” with 30 days of history is ready to target immediately. Starting the list today means waiting 30 days before it’s usable.
For B2B or high-consideration purchases, remarketing is often the highest-ROI audience type. A prospect who visited your Google Ads management pricing page but didn’t contact you is a much warmer lead than someone seeing your ad cold.
Customer Match: Upload Your Own Data
Customer Match lets you upload a list of email addresses, phone numbers, or mailing addresses. Google matches them to signed-in Google users and creates a targetable audience.
The match rate is typically 30–60% — not every email on your list has a matching Google account. But the matched users are people you already have a relationship with: existing customers, newsletter subscribers, or leads who haven’t converted yet.
Use Customer Match for:
- Re-engaging lapsed customers with a specific offer
- Targeting unconverted leads with a different message than you’d show cold traffic
- Suppressing existing customers from acquisition campaigns (stop spending money to re-acquire someone who already bought)
Customer Match requires your account to have a good payment history and comply with Google’s customer data policies. The uploaded data must be collected with appropriate consent.
Similar Audiences: Expand Beyond Your Lists
Similar Audiences (also called “Similar Segments”) are Google-generated audiences that share behavioral characteristics with your remarketing or Customer Match lists. If your customer list has certain browsing patterns, purchase histories, and demographics, Google identifies other users who match those signals and builds a similar segment.
These are useful for expanding reach while maintaining some relevance signal. They’re less precise than your own remarketing lists but more targeted than broad in-market or interest audiences.
Similar Audiences work best when your source list is large (500+ users minimum, 1,000+ is better) and your source list is specific (converters or qualified leads, not all website visitors).
In-Market Audiences: Users Actively Researching Purchases
In-Market Audiences are people Google has identified as actively researching a product or service category. Google classifies users into in-market segments based on recent search history, page visits, and content engagement.
Categories include segments like “In-Market for Business Services,” “In-Market for CRM Software,” “In-Market for Home Improvement,” and hundreds of others.
The value of in-market audiences: they represent current purchase intent, not just demographic membership. Someone in the “In-Market for Legal Services” segment has been actively searching and researching legal services recently — not just someone who is 35–55, has a high income, and might theoretically need legal services.
Layer in-market audiences on your Search campaigns in Observation mode. If users in a specific in-market segment convert at 40% lower CPA than non-members, apply a +25–30% bid adjustment for that segment.
Affinity Audiences: Interest and Lifestyle Segments
Affinity Audiences are based on long-term interests and lifestyle patterns — not necessarily immediate purchase intent. Google segments users by categories like “Avid Investors,” “Small Business Owners,” “Technology Enthusiasts,” or “Frequent Travelers.”
Affinity audiences are more appropriate for Display and YouTube campaigns where you’re building brand awareness. For Search campaigns, in-market audiences (current intent) are almost always more relevant than affinity audiences (general lifestyle match).
The exception: if your product or service is a natural fit for a specific lifestyle category, layering an affinity audience on Search in Observation mode can reveal useful bid adjustment data without restricting reach.
Demographic Targeting: Age, Gender, Income, and More
Google lets you target (or observe) by age, gender, parental status, and household income. These are blunt instruments on Search — the vast majority of variation in conversion rate is driven by keyword and intent, not demographics alone.
Use demographic data to identify segments that are wasting budget. If your ad is showing to users 18–24 who never convert (common in B2B campaigns), reduce bids for that age group by 50–70%. If household income brackets below the top 30% rarely convert for a high-priced service, reduce their bids.
Don’t use demographic targeting as your primary targeting layer on Search. Use it as a bid adjustment layer on top of keyword targeting.
Combined Audiences and Audience Layering
The most precise audience targeting combines multiple signals. For example:
- In-market for “Business Software” (current intent)
- AND visited your pricing page in the last 14 days (site engagement)
- AND household income: top 30% (budget qualification)
Google’s combined audiences let you create AND/OR logic for audience conditions. Narrower, combined audiences have lower volume but significantly higher relevance.
For accounts managing significant ad spend on competitive keywords, this level of precision is worth the complexity. For smaller budgets, start with individual audience types in Observation mode before attempting combinations.
Audience Targeting in Performance Max
Performance Max uses your audience signals as starting suggestions — not hard targets. Google will show PMax ads to users outside your signals if it predicts they’ll convert. For this reason, audience signal quality matters more in PMax than audience targeting mode.
Feed PMax your best audience signals: Customer Match lists of converters, remarketing lists of qualified visitors, custom intent audiences built from your converting search terms. Weak signals mean the algorithm starts from a cold start and spends more of your budget in an inefficient learning phase.
Read more on PMax in our Performance Max campaigns guide.
FAQ
What is the difference between remarketing and retargeting? They’re the same thing with different names. Google uses “remarketing.” The broader ad industry uses “retargeting.” Both refer to showing ads to people who previously interacted with your website or content.
How large does a remarketing list need to be to use it for targeting? Google requires a minimum of 1,000 active users in a Search remarketing list before it can be used for targeting. Display remarketing lists require 100 users. If your site doesn’t get enough traffic to build lists of that size, focus on in-market and Customer Match audiences instead.
Can I target competitors’ customers with Google Ads audiences? Not directly. Google doesn’t allow audience targeting based on visits to competitor websites. You can create custom intent audiences based on competitor-related search terms (people who searched for competitor names), which is an indirect approximation.
What is a custom intent audience? A custom audience built from a list of keywords or URLs. Google targets users who have searched for those keywords or visited those URLs recently. Custom intent audiences built from your converting search terms are one of the most effective audience types for Search and YouTube campaigns.
Do audience bid adjustments stack? Yes. If you have a +20% bid adjustment for an in-market audience and a +30% bid adjustment for remarketing visitors, a user who is in both audiences gets a combined adjustment. Set adjustments at appropriate levels for the most specific audience; don’t let stacking push bids to irrational levels.
Should I exclude converted users from acquisition campaigns? Generally yes, unless your product has a short repurchase cycle. Excluding recent converters prevents you from paying to re-acquire customers you’ve already won. Create a “30-day converters” or “90-day converters” exclusion list and apply it to acquisition campaigns.
Our Google Ads management includes audience strategy setup — remarketing lists, Customer Match configuration, and in-market layering — as part of every campaign build. See our fixed-price packages or run a quick account check at Honest.