Facebook announces Lookalike Audiences, lets advertisers target potential customers similar to current ones

Facebook on Tuesday announced “Lookalike Audiences,” a new feature for advertisers that is rolling out to power editors this week. Contrary to its name, the new targeting tool doesn’t let marketers only sell ads to a certain group of people based on how they look, but instead lets them “reach potential customers who share similar characteristics with their current ones.”

Facebook lists five ways advertising to similar customers can benefit businesses: fan acquisition, site registration, off-Facebook purchases, coupon claims, and brand awareness. The company says it has been testing lookalike targeting with select businesses for a few weeks now, and the new tool “worked well” both online and offline.

Once businesses get access, they can choose to optimize any type of Facebook ad for “Similarity” or “Greater reach”:

Here’s how Facebook differentiates the two options:

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• When you optimize for Similarity, your lookalike audience will include the top 1% of people in your selected country who are most similar to your custom audience. The reach of this new audience will be smaller, but the match will be more precise. This option is best when you want a very specific match or have a limited budget.
• When you optimize for Greater Reach, your lookalike audience will include the top 5% of people in your selected country that are similar to your custom audience, but with a less precise match. This option is best if you want to get your message in front of more people who are likely to be interested in your business.

You’ll notice that to use Lookalike Audiences, you need to create a “custom audience” first. The latter feature, launched last fall, lets marketers take their current customer lists and show ads to just those people on Facebook. The former meanwhile means they can further drill down using Facebook attributes like interests or demographics to show ads only to people who share common attributes with their existing customers.

Facebook claims the new targeting technique drives a wide range of success metrics for “direct response companies like Fab,” including lower cost per checkout, lower cost per acquisition, larger purchase size, as well as faster and increased return on investment. Intuitively, this makes sense, but we’ll remain cautious until we see raw numbers ourselves.

Top Image Credit: Meral Akbulut