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How to Grow your ROI on Facebook through Custom & Lookalike Audiences.


Online advertising spending around the world is projected to grow by 13.4% to reach US $113.6 billion this year, according to a recent forecast issued by Magna Global[i]. Despite this growth, many brands and direct marketers are still unsure how to achieve Return On Investment (ROI) by finding the right audiences on social networks, particularly Facebook.

Facebook recently enhanced its audience targeting options by offering the ability for marketers to target specific users based on information the marketer already has, describing their current and potential new audiences as Custom, and Lookalike Audiences.
Custom Audiences are the exact people you want to talk to; and are defined by what you already know about your own offline audiences. The Custom Audience feature allows you to:
  • Upload your existing customer or prospect database, and then have your ads displayed to those people on Facebook.
  • Segment your customer or marketing database into meaningful groups of individuals that you would like to find on Facebook and target with specific advertising messages.
  • Upload the list(s) into Power Editor, Facebook’s browser-based ad management tool. The tool then hashes the list, transforming it into a set of encoded data; to ensure privacy protection. Facebook uploads this encoded (and protected) data to their servers, rather than the actual email addresses or phone numbers.
Facebook compares the encoded or hashed list to its own hashed user database, adding any matches to your Custom Audience as Facebook user IDs. After completing the matching process and creating the Custom Audience, Facebook deletes all the matched and unmatched data from your computer and their servers, storing the Custom Audience file in your account and making it available for targeting or exclusion during the ad creation process.

The campaign reach can be extended to target additional Facebook users with similar characteristics to the members of the Custom Audience through another Facebook feature called Lookalike Audiences.

Lookalike Audiences are the new people you can reach who are similar to your current customer list. This audience is likely to be interested in your business because they are similar to your existing customers and your Custom Audience.

Facebook recommends that the Custom Audience, used as a base for the Lookalike Audience, includes at least 500 people; the larger the list, the more information Facebook’s algorithms will have to find similar users.

You can choose to create a Lookalike Audience that is optimised toward similarity or greater reach. Similarity will create a Lookalike Audience that includes the top 1% of the people in the selected country who are most similar to the Custom Audience, based on interests and demographics. Greater reach generates an audience of the top 5% of people most similar to the Custom Audience. Lookalike Audiences may also be combined with other demographic and interest targeting options, offering a tremendous degree of granularity and precision.

Tiger Pistol Co-founder & Chief Executive Officer, Steve Hibberd succinctly sums up the 3 key points about how businesses can benefit through using Facebook’s Custom and Lookalike audiences:[ii],
  1. Improve Fan Base Quality
    Custom and Lookalike audiences allow you to target and connect with your existing and those similar to your existing customers/potential customers on Facebook. The growth of your target audience then allows for what Hibberd describes as ‘an improved fan base’. This also heightens your chances of driving maximum engagement, direct response, and overall Facebook ROI.
  1. Grow ROI
    It is being found that Custom and Lookalike audiences are delivering a higher rate of engagement, increased fan base, and CTR’s that outperform past targeting techniques such as general targeting.  More specifically, ROI is 25X greater from Custom Audience brand advertisements compared to brand advertisements using general targeting.
  2. Achieve Scale
    Lookalike audiences let you reach more people on Facebook who are just like your existing customers; this allows you to optimise reach, or accuracy. You can select to optimise for Similarity and reach the top 1% of people in your selected country who are most similar to your Custom Audience, or you can optimise Greater Reach which reaches the top 5%, with less accuracy. The introduction of Lookalike audiences means that the value you create from your Custom Audience is only limited by budget.
Facebook increasingly knows who your audience are, who they know, and what they like. As marketers we can take advantage of this and use Facebook, and it’s latest features: Custom and Lookalike Audiences to reach the right people for your brand message.

Keeping up to date with the latest changes to social media advertising and implementing these changes effectively will benefit your brand beyond increased levels of engagement and recognition; with a widened but equally granular target market you can optimise reach. In other words, more bang for your buck with measurable effects that deliver ROI.

Want to learn more about Facebook advertising and how you can use targeted advertising to reach your market, contact your local Adcorp office, today.

Ellie Sullivan, Account Executive






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