Keyword targeting bids on what people type into the search bar; audience targeting works differently. It groups people by who they are, using signals like demographics, browsing behaviour, interests, and your own customer data, then lets you show ads to (or hide ads from) specific groups instead of just specific search terms.
Most Google Ads guides cover that basic idea and stop there. Fewer explain what it actually looks like once you're running a campaign: where it's precise, where it's more of a suggestion to Google's algorithm, and where people waste money without noticing. We asked Pat, Websites That Sell's in-house Google Ads Specialist, to walk through how audience targeting works and how to use this feature more effectively to improve campaign outcomes.
In this article
Section 01
The Core Audience Types
You don't need a full taxonomy to get started. Just know the main categories:
Affinity Audiences
Broad, long-term interest groups, such as people into football, home improvement, or fitness. Good for early-funnel awareness, since they're based on lifestyle rather than immediate intent.
In-Market Audiences
People actively shopping for a specific product or service right now. Someone in-market for running shoes has shown recent buying signals.
Customer Match
You upload your own customer data (emails, phone numbers) so Google can find similar people and let you re-target past buyers directly.
| Audience Type | Best for Awareness | Shows Buying Intent | Uses Your Own Data |
|---|---|---|---|
| Affinity | Yes | No | No |
| In-Market | Limited | Yes | No |
| Customer Match | No | Limited | Yes |
A few more layers exist, such as:
Life events: getting married, moving, graduating. Useful for products tied to major transitions.
Combined segments: stack multiple conditions together. For example, in-market for running shoes and an affinity audience for fitness, minus existing customers.
Custom segments: built from specific search terms, websites, or apps that your ideal customer uses, rather than Google's pre-packaged categories.
These add precision when the standard categories don't fit, but come second to understanding the three main categories; that's where the real magic happens.
Section 02
Retargeting Done Right Using Your Own Data
The most useful application of audience targeting is retargeting your own website visitors. Someone searches for your product, lands on your site, and doesn't buy. You can then serve them a search or display ad the next time they're back on Google. But your messaging needs to match where they actually are. A visitor who's already browsed your site is past the awareness stage. Hitting them with a broad, generic pitch is a wasted chance. They're closer to a decision, so the ad should reflect that. Think a specific offer, not a general one.
Pat's take is that retargeting isn't automatically worth setting up.
Skip Retargeting For Now
If you're a small, local business with little traffic, you might only get a handful of impressions a month. That's not enough volume to justify the effort, and retargeting works best at scale. If you don't have the traffic, spend your setup time elsewhere.
Worth Investing In
High-traffic ecommerce sites and businesses with real visitor numbers get real value from it.
Chrome has backed away from its plan to fully phase out third-party cookies, though Safari and Firefox still block them by default. Regardless of where that settles, first-party data (data you collect directly from your own customers and site visitors) is something only you control. That's a big part of why Customer Match and website remarketing lists are worth investing in.
Section 03
Precision Matters Most on Display
Search gets most of the attention in audience-targeting discussions, but Display is where loose targeting costs you the most. Without precise audience settings, your ads show broadly across the network and rack up junk clicks fast.
This is where Observation vs. Targeting matters:
Observation
Doesn't restrict your reach. It just collects performance data on the audiences you've added (interests, demographics, household income, in-market segments) so you can see who's actually converting.
Targeting
Restricts your ads to show only to the audiences you've picked.
Pat's simple example: say you run a beauty salon and your core audience is women, but the data shows a lot of clicks from men who aren't converting. Observation is how you spot that. Once you see it, you can exclude that segment or dig further. But you can't fix what you haven't observed first.
Automated bidding has gotten good at deciding when to place higher bids on the right audience, good enough that manually trying to out-bid Google rarely pays off anymore. That doesn't mean you hand over full control, though. Your job now is catching when Google's targeting overspends on a bad segment, which still happens, just less often than it used to. Observation data is how you catch it.
Section 04
Performance Max Provides Guardrails, Not Targeting
Performance Max, often called PMax, is a Google Ads campaign type that lets advertisers run ads across multiple Google channels from one campaign. This can include Search, Display, YouTube, Discover, Gmail, Maps and Shopping placements, depending on the assets, goals and setup.
Performance Max is not an audience targeting tool in the same way Search or Display can be.
You can't tell it, "only show ads to these people." Instead, you give Google guardrails. These are signals that help the system understand who your ideal customers are, what they're interested in, what they're likely to buy and what actions matter most to your business.
In other words, you're not manually choosing every person who sees your ads. You're briefing Google's machine learning system and giving it better direction.
What you put into those guardrails matters:
Your customer lists and first-party data, such as Customer Match
Website visitor behaviour, including add-to-carts, checkouts, purchases and non-purchases
Audience signals based on interests, search intent and in-market behaviour
The headlines, descriptions, images and videos used in your ad assets
Product feed data, if you're running an ecommerce campaign
Conversion data, especially high-quality conversions that show what a valuable lead or sale looks like
The more useful data you feed into PMax, the better Google can understand what a buyer, or a high-value buyer, looks like for your business. From there, it can look for similar users across its network instead of wasting budget on people who were never likely to convert.
Think of Performance Max audience signals as a briefing for Google's algorithm, not a fixed targeting list.
Set it up that way from the start.
Section 05
The Biggest Audience Targeting Mistakes
These are the biggest audience targeting mistakes Pat sees again and again in Google Ads accounts that aren't performing as well as they should:
Each of these mistakes on its own can quietly burn through budget. Together, they compound.
Not observing long enough before acting. Skip the data-gathering stage, and you're guessing at your real audience instead of knowing it.
Not excluding poor-fit audiences. If a demographic or income bracket keeps generating low-quality leads rather than actual customers, leaving them in the campaign will only burn through the budget.
Leaving Display wide open. No precise audience settings means junk clicks pile up fast on this network.
Launching PMax with zero first-party signals. This happens more than it should. Accounts run Performance Max with no customer lists, no add-to-cart data, no purchase history. Google is left guessing about your funnel rather than understanding it.
Section 06
Better Audience Targeting Starts With Better Signals
Audience targeting in Google Ads is not something you set once and forget. It works best when you understand the difference between what people search for and who they are. Only bother with retargeting if you've got the traffic to make it worthwhile. Treat Display with more care than Search, since loose targeting there gets expensive fast. Use Observation before switching over to Targeting, and make sure you are excluding poor-fit audiences when the data shows they are not converting. Performance Max also needs strong signals to work from, not just a campaign launch and the hope that Google will figure it out on its own.
The more consistently you review performance, refine your audiences and feed Google better data, the more likely Google's automation is to work with you, rather than around you.
If you would like to better understand how audience targeting fits into a wider campaign strategy, need support with your current Google Ads setup, or want to know whether Google Ads is the right fit for your business, get in touch with Pat, our in-house Google Ads expert at Websites That Sell. We offer Google Ads management backed by experience, expertise and trusted support for businesses across Australia. Give us a call today and we'll help you get on the right track.
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