How to use Audience Segmentation (Increase ROAS)
Unlock higher ROAS with smarter Facebook ad targeting! Learn tactics for audience segmentation, incrementality, and spend efficiency. Drop your thoughts below!
Facebook Ads: How to Use Audience Segmentation to Increase ROAS (and Stop Wasting Money)
Are you excited about your Facebook ads? ROAS is up, cost per result looks solid, and you’re ready to call in the team for a round of high-fives. But before you celebrate your ad performance, let's take a step back. There’s a big blind spot most advertisers and brand owners completely miss—and it could be quietly burning your budget.
Just because Meta (a.k.a. Facebook) reports that your campaign generated sales doesn’t mean those sales happened because of your ads. In fact, you might be paying to reach people who would have bought anyway, even if they never saw your ad! If you’re not actively tracking everything or setting up audience segments, you could be missing the real story behind your numbers.
Let’s fix that, step-by-step.
Table of Contents
Who Is This For?
If you’re running Facebook (Meta) ads for your e-commerce or DTC brand, or you’re an agency managing campaigns, this deep dive is for you. Particularly if you care about:
Scaling profitably and predictably
Actually knowing which ads or creatives work (no more guesswork)
Making sure every ad dollar counts
You don’t have to be a tech wizard, but you should be at least familiar with Ads Manager.
What You’ll Learn
What incrementality actually means (and why it’s so crucial)
How to set up audience segmentation for accurate reporting
How to read data and figure out if you’re wasting budget
How to take action if engagement and retargeting aren’t working for your brand
Pro tips and examples straight from experience
Lots of screenshots and diagrams!
The Real Cost of Facebook Ad "Success"
Let’s start with what almost everyone does:
You open up Ad Manager, see ROAS is up, cost per acquisition is down, and you assume the campaign is a winner.
But is it really? Here’s the thing: those results aren’t always what they seem. Meta’s ad reports show numbers of purchases, cost per acquisition, ROAS, and more—but that doesn’t mean every reported sale happened just because of your ad.
Meta will often take credit for sales that were going to happen anyway. Think about it:
“You could compare this to someone who is already heading into a store—while on the corner someone is spinning a sign. Was it the sign spinner that really made the sale? Or was the customer already planning to buy?”
That’s not a bug; it’s how attribution works. Meta’s main goal is to prove its value so you’ll open your wallet and spend more. And if someone sees your ad and then buys later (even if they already decided to), Meta might count it as a conversion.
Why Meta Attribution Isn’t Telling the Whole Story
This comes down to one big concept: incrementality.
Incrementality: Did THIS ad campaign CAUSE the sale, or did Meta just take credit for it?
If your ads primarily reach people who would’ve bought anyway, like loyal existing customers or warm leads close to conversion, then you’re just giving Meta easy credit. Even worse, you’re wasting budget on results that would have happened anyway.
Our job as marketers and brand owners isn’t to chase vanity metrics—it’s to drive truly incremental sales. Sales that ONLY happen because the right person saw and clicked your ad.
Ask Yourself:
Are your ads really making a difference?
Or are you just spending money to claim credit for sales you were going to get anyway?
“If your ads are being shown to people who would have converted regardless, like existing customers or warm leads who were already planning to buy, that’s basically wasted ad spend.”
The Power of Incrementality
So, what exactly is incrementality?
Incrementality: The Simple Definition
Incrementality makes you ask: Did my ad CAUSE this person to buy? Or would they have bought anyway?
Why it matters:
If you’re focusing your spend on incremental sales, you’re only paying for conversions that wouldn’t have happened without your ad. That’s efficient, and it’s how you scale!
How do you measure incrementality?
Track who is actually seeing your ads
Track who is actually buying (and whether those buyers are new or repeat customers)
Filter and break down your reporting to see which segments are driving real growth
Understanding and Setting Up Audience Segments
Thankfully, Meta gives you the tools for audience segmentation. But you have to use them—and know how to read them.
3 Types of Audiences to Tag and Track
New Audiences
People who have never bought from you, maybe never even heard of your brand.Engaged Audiences
People who have interacted in some way (visited your site, clicked an email, added-to-cart) but haven’t purchased yet.Existing Customers
People who have already bought (sometimes called "retargeting audiences" if you’re trying to get repeat purchases).
Why It Matters
Imagine 30% of your ad budget goes to people who already purchased. If those folks are buying again, sure, the numbers look good—but did your ad really cause it? Or would they have come back on their own?
That’s just Meta "claiming" a win, and—you guessed it—burning your money!
Audience Segmentation in Ads Manager: A Step-by-Step Guide
Ready to get hands-on?
Let’s set up audience segments inside Ads Manager so you can see where your spend is really going.
Step 1: Build Your Custom Audiences
Let’s flesh out your segments:
a. Engaged Audiences
Best practice presets:
Website visitors from the last 90 days
Non-buyers from your email list
Catalog viewers from the last 90 days
Facebook and Instagram shop viewers
90 days is a sweet spot—keeps people "warm," not stale. Beyond that, engagement drops off sharply.
b. Existing Customers
Website purchases from the last 180 days
Email list buyers
Facebook/Instagram shop purchases
(Note: Meta limits these to 180 days)
This bucket helps you analyze how much you’re spending to win back old buyers.
Step 2: Navigating Ads Manager
Go to Advertising Settings in Ads Manager.
Find the Audience Segments section.
You’ll see:
Engaged Audiences
Existing Customers
(And, of course, New Audiences)
Start building: Examples:
Engaged: Website visitors with Add to Cart in last 30 days
Existing: Purchasers from last 180 days
Step 3: Checking Spend by Segment
Once your segments are set up, it’s time to diagnose where the $$ is going.
In Ads Manager, select your campaigns.
Go to the Breakdown menu.
Choose Audience Segments (or find it under "Demographics").
See spend and conversions by audience type:
New
Engaged
Existing
If spend is mostly going to Existing or Engaged, and not New, you may have a problem.
Diagnosing Your Ad Spend: Reading the Data
Let’s look at a real-world example:
$20k spent on New Audiences
$6.3k on Engaged Audiences
$3.4k on Existing Audiences
Meta usually favors New Audiences by default, which is great if your brand is in growth mode and needs new customers.
But what about performance metrics?
Let’s compare:
Engaged Audience ROAS: 2.3x
New Audience ROAS: 4x
That’s a big difference! At first, you might think your Engaged group should convert better—but it’s actually underperforming.
Pro Tip: If your Engaged or Retargeting audience ISN’T outperforming, you probably need to tighten up your engagement window (try going from 90 to 60 days).
What Does Segment Performance Tell You?
Existing Customers getting you 7–8x ROAS?
They’re responding to retargeting! Consider a dedicated retargeting campaign.Engaged/Existing underperforming?
Low ROAS, low volume = retargeting isn’t working for you right now. Don’t force it.
Case Studies and Real-World Scenarios
Scenario 1: Retargeting is a Goldmine
A brand sees the following:
New Audience ROAS: 2x
Engaged Audience ROAS: 5x
Existing Audience ROAS: 7x
Here’s what’s happening: You’re able to win back lapsed buyers at an exceptionally profitable rate. In this case, consider:
Segmenting retargeting into its own campaign
Allocating more budget to retargeting, but monitoring for diminishing returns
Refreshing creative to keep the message relevant
Scenario 2: Retargeting is a Dead End
A different brand sees:
New Audience ROAS: 4x
Engaged Audience ROAS: 1.1x
Existing Audience ROAS: 1.2x
What’s wrong?
Your customer base maybe doesn’t buy repeatedly, or your offer isn’t compelling for existing buyers.
What to do? Exclude these audiences and triple down on cold acquisition.
What to Do When Segments Underperform
If Engaged or Existing segments are consistently dragging down your overall performance:
Exclude Them Entirely
Let Meta focus on cold acquisition—where your ads are truly moving the needle.Test Different Engagement Windows
Maybe your “warm” audience is too cold (e.g., visitors from over 90 days ago).Change Up Creative
Especially for retargeting, keep offers special and exclusive.
“You’re no longer flying blind or just chasing ROAS at the campaign level. You’re actually evaluating where those conversions are coming from—and why they’re happening.”
Action Steps: How to Avoid Wasting Money
Take just 15 minutes and do the following today:
1. Set Up Your Custom Audiences in Ads Manager
Website visitors
Add-to-carts
Purchasers (last 180 days)
Email subscribers
2. Break Down Your Campaigns by Segment
New
Engaged
Existing
3. Compare Performance Side-by-Side
Where’s your spend going vs where’s the incremental lift?
Are you spending too much on buyers you’d win anyway?
Is cold acquisition really driving growth?
4. Adjust Strategies as Needed
Pull back on underperforming segments
Exclude segments that don’t deliver
Build special campaigns for hot retargeting
Work With an Expert
If you want hands-on help—setting up or auditing your campaigns, or scaling your brand to 6 or 7 figures with high-performing Meta ads—I’m here.
Ready to stop wasting budget and make every ad dollar count? Book a call with me here!
I help EMM brands scale profitably and predictably using our Identity Hooking System—so you never have to guess which ad (or creative) works again.
Final Thoughts
If you’re still running Meta ads and have never looked at audience segments or considered incrementality, you’re almost guaranteed to be leaving money on the table. Or worse: wasting thousands chasing vanity numbers.
Take the reins. Break down your campaigns by segment and finally see what’s driving real results. You’ll save budget, scale smarter, and never let Meta’s nice-looking dashboards fool you again.
“Look at the misalignment between where your spend is going—and what is actually driving new results down the line and helping you grow.”
If you found this helpful, don’t forget to subscribe for more deep dives. And, if you’re ready to get expert help, book a call right here.
