It has been over 5 years since making my 1st facebook ad. It was a catastrophe thinking back on it now. I didn’t have a tracking pixel so no way to gauge ROI, no custom audiences and had no idea at the time that worldwide targeting was useless. Luckily I have come a long way since then and so has facebook.
The cornerstone for many facebook advertisers is the Lookalike audience. This is when you upload a customer file and then Facebook’s algorithms will try to find the people who are most similar to the people in your Custom Audience.
It is more effective then interest only targeting and a great way to increase ROI.
Facebook has been on fire recently with new ad features and they just took steps to make lookalike audiences even more powerful.
Facebook Value-based Lookalike Audiences
With the addition of the “customer lifetime value” feature, lookalike audiences can now target only those users who have attributes like of the people who will deliver the most value to your business over time or the most profitable.
Think of it like this. Someone who purchases from your store a single time during a Huge sale or contest pales in comparison in value to someone that buys products on a monthly basis.
So given a choice between the two who would you want to target? Many people make the mistake of just thinking creating a general lookalike audience will solve all their problems. Maybe one or two users might buy in but it will most likely fail to create long term profits and a lot of repeat business.
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 create this audience you need to figure out who your valuable customers are.
value may mean different things to different people so that will be on a case by case basis.
For example for some businesses the most valuable customers are the ones who make repeat purchases or subscription products.
Or is it those who spend $1,000 on a single purchase or people who spend $100 every two month?
Once your most valuable customers are isolated take the list and add a value column. Put a value of 1-infinity on the value of that customer.
The higher the number, the more important Facebook considers that customer.
It will then target users with similar characteristics in your ads.
Set Up A Value Based Lookalike Audience.
Create a Custom Audience with a customer value data column
No one said this would only take 5 minutes. I just went through a list of over 300k buyers for a customer and it took me 6 days to isolate and assign value to each.
Once you’ve assigned values to each of your customers, you can start setting up your value-added lookalike audiences.
Go to your Facebook Audiences page
Click the “Create Audience” dropdown and select “Custom Audience
Select “Add customers with current and predictive value attached
Accept Facebook’s Value-based Lookalikes Terms
Upload your customer file
Choose to upload your customer file as a file (.txt or .csv) or copy and paste it
If you choose to upload, click on “Upload File” and select your customer file.
If you choose to copy and paste, do so in the “Paste your content here” field
Name the audience.
Click on the “Select value” column dropdown.
Select the column in your uploaded list that you want Facebook to use for customer value
Choose the geographic location of your lookalike audiences, as well as the size you want to target.
You want to be sure Facebook understands the data in your uploaded customer file so it will create the most effective lookalike audience possible.
Here are a few tips that will help.
Don’t just create a list of your highest value customers, be sure to include a full range of customers, from low to high value.
The reason being is Facebook’s algorithms will get more data to differentiate good customers from bad ones
Use dollar values only and avoid using other numeric values such as rankings or ratings
Don’t use negative values to signify undesirable customers as Facebook won’t count those
Use a single currency throughout your columns to avoid any confusion about your data
Maximize Return Using Value-based Lookalike Audiences
As seen in the image above if created properly you may enjoy MASSIVE returns on ad spend.
Just last month I was able to turn 28k spend into 112k return or 400% ROI.
It is a lot harder to see ROI that high as you spend more so that shows you the value of this new feature.
The whole key to success with facebook advertising is experimentation.
I am a huge fan of creating different audiences for different goals.
For example if you’re promoting a blender, create a file that assigns higher value to customers who previously bought similar products or even products that go hand-in-hand with your new one.
Facebook’s value-added lookalike audiences are highly advanced but still take the time to test, measure and analyze your lookalike campaigns.
This allows you to tweak your strategy and improve your ROI even more.
If you have questions feel free to email me at Justin@jmhhacker.com
Or Follow me on Twitter @jmhhacker