Lookalike audiences have long been a favorite amongst Facebook advertisers. Allowing you to upload a customer file and then target Facebook users similar to your existing clientele, they’re a great way to up ROI and reduce wasteful ad spend.
But earlier this month, Facebook took steps to make lookalike audiences even more powerful.
Introducing: Facebook Value-based Lookalike Audiences
By adding a “customer lifetime value” feature, lookalike audiences can now target only those users who resemble your most profitable, bottom line-boosting ones—the people who will deliver the most value to your business over time.
After all, not every customer is created equal, right?
Someone who purchases from your business a single time during a flash sale certainly doesn’t have as much to offer you as a customer who buys your products on a monthly basis.
So why would you want to target the former with your ads? Sure, one or two users might buy in—but will they lead to long-term profits? It’s doubtful.
Facebook’s new value-added lookalike audiences reduce this wasted spend and increase the efficacy of your ads overall.
Determining Lifetime Value
Before you can set up your Facebook value-based lookalike audiences, you first need to sit down and determine who your most valuable customers are—and, more importantly, what “valuable” means to your business.
Value varies from company to company, and it really depends on your goal as an organization.
Are the most valuable customers the ones who make repeat purchases or are they the ones who buy your priciest or longest-lasting subscription product?
Are they people who spend $500 on a single purchase or people who spend $10 every two weeks?
Take a minute to consider what your ideal customer is—how much they spend, how often they buy, and what their relationship to your brand looks like. This is who you should target with your lookalike audience and where you should spend your ad money.
Once you determine what your most valuable customers look like, take your customer file, and add a value column. Assign each customer a value (from 0 to infinity) to show its value to your business.
The higher the number, the more important Facebook considers that customer. It will then target users with similar characteristics in your ads.
How to Create Value-based Lookalike Audiences
Once you’ve assigned values to each of your customers, you can start setting up your value-added lookalike audiences.
To start, go to the Business Manager section in your Facebook admin account, and select “Audiences” from the drop-down menu.
Click “Get Started,” and you should see a message welcoming you to the new lifetime value audiences platform.
This will take you through a step-by-step process to set up your lookalike audiences.
You’ll need to:
Agree to the terms of service for Facebook’s value-based lookalike program.
Upload your audience file and give it a name.
Select the column you want used for your value rankings.
Preview and map out your file’s identifiers.
Choose the geographic location of your lookalike audiences, as well as the size you want to target.
That’s all. You’ll then be able to select your lookalike audience when building your ad campaigns.
Keep in mind: you can create multiple lookalikes. So if you have a few different versions of that “ideal” customer, you can build out several lookalikes to match each of those. This will allow you to get more targeted with your ad strategies.
How To Leverage Value-based Lookalike Audiences
Now that you’ve got your value-added lookalike audiences set up, what should you use them on?
Officially, Facebook says they’re best used for pushing low-funnel actions, like specific product promotions, opt-in forms, lead pages, etc.—things that deliver significant, measurable value.
But take that with a grain of salt. Depending on your business model, you may want to use it to promote targeted content, blogs, sales or new services. Feel free to experiment; just be sure to track your results and analyze them on a regular basis to really hone in on a strategy that works.
You should also:
Create different audiences for different efforts – I touched on this earlier, but if you’re promoting a certain product, create a file that assigns higher value to customers who previously bought similar products in that vein—or even products that go hand-in-hand with your new one.
Be sure to include low-value customers too – Facebook needs a range of customers—both low and high value—to truly learn from your file. Don’t use negative values, though; Facebook won’t count them!
Use dollar values if possible – If you can, use dollar amounts to assign value to your customers, as this is Facebook’s preferred system. Just be sure to use a singular form of currency across the board.
Test, measure and analyze – Though Facebook’s value-added lookalike audiences are highly advanced, you should still take the time to test, measure and analyze your lookalike campaigns. This allows you to tweak your strategy and improve your ROI even further.
Keep in mind when using value-added lookalike audiences—or any Facebook audience targeting, for that matter—that it’s designed to improve long-term ROI, not necessarily lower your ad spend or offer immediate cash flow.
It may be a few months before you start to see results, but if they’re used right, lookalike audiences can drastically boost the power of your ad dollars.