Lookalike audiences are one of the most useful tools in your marketing arsenal. Never heard of them? Let me explain.
Simply put, lookalike audiences are a way to target new customers who are similar to your existing customers and are therefore more likely to be interested in your business. This, in turn, means they are also more likely to convert. Although originally a Facebook creation, lookalike audiences are now also available on other advertising platforms under different names (eg. similar audiences on Google). If you’re looking to expand your audience beyond your email list, a lookalike audience is a good choice; they save you time and money and are one of the most effective ways to find high-converting users.
For clarity, this article refers to Facebook lookalike audiences; although the mechanics might be slightly different when working with Google or LinkedIn, the overarching principles are the same.
How are lookalike audiences created?
The behemoth that is Facebook not only has such a huge amount of data on their users, but also the ability to make connections through that data. When creating a lookalike audience on the platform, Facebook takes information on current customers – called ‘lookalike seeds’ – from the source audience and uses this to ‘grow’ a lookalike audience. This information can be taken from a range of places, for example, from website traffic anywhere you have placed a Facebook pixel or from a list of people who have interacted with your Facebook page.
These seeds generally fall under three categories:
- CRM based – a list of customers, maybe from your CRM or email list
- Conversion based – a list of people who have purchased from your business or completed a lead form on your website
- Engagement based – a list of people who have taken specific actions on your site (eg. watching 50% of a video or visiting 3 or more pages)
This data not only includes your customers personal details but also their demographic information, interests and behaviours.
Facebook requires a minimum of 100 people from the same country within the source audience in order to use it to create a lookalike audience, although this doesn’t have to be the country you wish to advertise within. In relation to audience numbers generally, Facebook recommends at least 1000 to make the lookalike audience more accurate. You then choose which location – a region or country – you want to find a similar audience in.
Next, you can select your audience size. A smaller lookalike audience is more targeted, meaning that while your ads will be shown to fewer people, the people that do see them are more likely to be interested. Here at TDS we would always recommend you set your audience size to either 1% or 2% if possible. This will ensure the lookalike audience is closely related to your source audience and therefore more likely to convert. While a larger audience will have more reach, it will be less precisely matched to your source audience. Whichever audience size you choose, Facebook will provide an estimated reach.
Once you have selected your audience size, Facebook will set about generating your lookalike audience, which takes anywhere from 6 to 24 hours to complete. As long as you continue to run ads targeting your lookalike audience, it will refresh every few days; this ensures that you are always advertising to an audience closely matched to your source audience.
Some things to note
- Ensure that your source audience is of good quality before trying to create a lookalike audience from it. You might be tempted to use your entire email subscriber list as your source audience, but there is no point if 50% of them have never purchased or even opened an email. In this example, using active email subscribers would make for a higher quality source audience. Focusing on your ‘best customers’ for your source audience is likely to yield the best results.
- It is possible to further target your audience based on the products and services you offer. Using different ads and ad copy for different segments of your audience means you are more likely to get clicks and therefore conversions. Imagine you are creating ads for your camping holiday business. You would obviously want to target people who have shown an interest in camping but this would be a very large audience. In this case, it would be more effective to have one ad set targeting young adults looking for an adventurous camping experience and another targeting adults with families who are looking for a more relaxed camping experience. Using the same ad copy wouldn’t attract both groups, so you would see better results if you used different ads and copy for each of them.
- Lookalike audiences are still effective but since the Apple iOS 14.5 privacy update, users must now opt-in to data sharing. As of April 2022, only 25% of users had chosen to do so. Because of this, you may notice a slight decrease in results when using lookalike audiences.
- To identify your most effective audience strategically, utilise A/B testing by creating multiple lookalike audiences with different characteristics. Target the same ad to each lookalike audience with initial bids, then examine your analytics to evaluate the performance of each ad. Once you’ve established what your best-performing lookalike audience is, you can modify your bids for each audience, bidding more for valuable audiences and less for lower-performing audiences. This means you can stretch your paid social budget for your more effective audience whilst ensuring you’re reaching your ideal customer.
How would creating a lookalike audience help my business?
One of the beauties of a lookalike audience is that they are already ‘warm’ to your product or service by nature of their similarity to other current customers. Using a lookalike audience means businesses can increase the chances that their ads will be seen by potential customers who are likely to be interested in what they have to offer.
This also makes lookalike audiences a more cost-effective form of targeting. You can reach a larger number of potential customers without incurring the costs associated with targeting a wider audience. This will also save you a significant amount of time trying to manually grow your audience.
You will also get more value on your ad spend as you can test multiple audiences at once without having to create several campaigns. However, do remember that sometimes it will be preferable to create separate campaigns for different segments within your lookalike audience, as mentioned in the camping example above.
In conclusion, lookalike audiences are a valuable asset for businesses looking to expand their reach and target new customers. By leveraging the data of their existing customers, businesses can create audience segments that are similar in terms of demographics, interests, and behaviours. This allows them to target their advertising more effectively, resulting in higher conversion rates and improved ROI. However, it is vital to remember that the success of lookalike audiences depends on the quality of the data being used. It must be accurate, up-to-date, relevant and most importantly, used ethically and in compliance with privacy laws.