When it comes to setting audience strategy in PPC, there are two key components:
What is the difference between targeting and Observation settings?
You can use targeting to specify audiences you’d like to reach or content you’d like your ads to appear on. In addition, you can use observations to get reports on certain criteria without restricting the reach of your campaign (for campaign-level targeting) or ad group.
Over on Search Engine Journal, Brooke Osmundson wrote a guide that takes us through the key differences in Targeting and Observation settings, and where they can be found in both Google Ads and Microsoft Ads.