Looking for ways to scale your customer acquisitionIt is the process of bringing new customers or clients to your business. It includes the entire customer's journey from when they become a lead to when they convert to a paying customer. while also making the best of your marketing budget? Look no further: with powerful Lookalike AudienceIt refers to a group of users who share similar characteristics with your existing customers or target audience. These characteristics can include interests, behaviors, demographics, etc. Meta's algorithm uses these similarities to help businesses find and target new potential customers who are likely to be interested in their products or services., you can both scale and bring home the best Return Over Ad Spend without needing to waste time and resources with countless audience tests or worse – trying to guess who is your ideal customer by trial and error.

Let’s delve deeper into the wonderful world of Lookalike Audiences and explore how you can leverage them to save time, make money, and deliver powerful ads to hundreds of thousands, or even millions of people who are more likely to buy your products.

Understanding Lookalike Audiences

Ever seen those detective dramas where they call in a profiler who can get into the mind of the criminal to anticipate their moves and get a better shot at catching them?

Now substitute the bad guy for customers, and the profiler for the Lookalike Audience.

When you create a Lookalike Audience, you’re giving Meta’s algorithm data about your ideal prospect’s behavior so it can “profile” its millions of users’ data and identify those who have the same interests and digital behaviors as your ideal prospect.

Then, you can use that audience to show them laser-focused ads that will make them tick – and by tick, we mean buy your products.

We don’t want to bore you with the nitty-gritty tech details about how Meta does it. But it is worth mentioning that Meta has literally millions of e-Commerce stores sending real-time data about their customer’s purchase behaviors via Meta Pixel and/or Meta Conversion API.

This is why this tool is so powerful – and why it’s so important to have your Pixel set up accurately – here’s a guide on how to do it.

The data coming from Meta tracking tools is a precious asset in any e-Commerce advertising strategy by providing answers to crucial questions like:

• Do these folks buy online?
• What products do they buy?
• How often do they buy?
• What is their Average Order Value (AOV)?

Due to privacy regulations, Meta can’t and won’t give you the actual answers or the data behind them. Instead of providing you with the data, Meta will create your Lookalike Audience based on all these criteria and allow you to leverage that data without privacy infringements.

Tip: take big media buyer recommendations with a grain of salt. Some of the hotshots are saying Lookalike Audiences are obsolete, and broad is a better choice. Bear in mind they usually manage 5-figure daily ad spend for a single client, allowing them to get great results with broad audiences. If your budget is $100 or under per day, you will definitely get better ROAS with Lookalike Audiences.

What’s In It for Meta?

If you’re asking yourself why Meta created such an outstanding tool to help small businesses and e-Commerces get better results?

That’s simple. Let’s think about what happens to their revenue when businesses win or flunk their ads.

When a company can manage to turn $1k ad spends into $5k or more in revenue, they will increase their ad spend to $2k, maybe even $3k, and will keep increasing as long as it brings results.

But if their ads flunk, they will cut back on ad spend and look for other advertising channels.

Helping millions of small business owners run successful ad campaigns means billions of dollars in revenue for Meta. It’s a win-win situation – and we’re here to teach you how to get the biggest wins for your business using Lookalike Audiences.

Benefits of Lookalike audience

One of the most challenging aspects of advertising is bullseyeing your audience.

In the early years of Facebook Advertising, extensive manual testing was required. To run a successful ad, you had to identify the demographics, behaviors, and interests through research and conduct a myriad of tests with different audiences, one variable at a time, just so you can find the audience that would work.

Then, once you had it, you needed to keep testing and honing your audience to make sure you kept up with the market and consumer changes.

Now, there are two commonly used practices:

a) Create Broad Audiences and allow Meta’s algorithm to find clients among them

b) Working with Lookalike Audiences and leveraging that same algorithm in a slightly different way.

The main advantage of working with Lookalike Audiences is that it is more suitable for lower budgets. If you don’t have $500+/day for ad spend, Lookalike Audiences will bring you faster returns by automating your target optimization.

You can use either one of those with success, but we recommend small brands use Lookalike Audiences as it will give them the best ROI and it’s the safest bet when it comes to automating your target optimization and increasing your ads performance.

Leveraging the Power of Technology

Lookalike audiences have been playing a critical role in the success of advertising campaigns since 2020 thanks to the power of their data analysis and machine learning algorithms.

By enhancing their ability to identify and target potential customers, Meta helps businesses save time and resources they can now shift to other segments of their business or even to other marketing-related activities, such as content and design.

The result of automated targeting optimizations and more persuasive content and creatives is a higher conversion rateIt refers to the percentage of users who complete a desired action, such as making a purchase or filling out a form, out of the total number of users who interacted with an ad or visited a website. and a process that pays for itself – instead of spending a lot of time and money to find an audience that works, you can hit the ground running with simple creatives by using a Lookalike Audience and then reinvest the revenue to further optimize ad creatives and improve overall campaign performance.

Lookalike Audiences make the process of finding high-quality leads repeatable and predictable, making them a great ally when it comes to scaling your custom acquisition efforts. It allows you to reach new people outside of your current customer base that shares similar characteristics with your top buyers.

Lookalike Audiences benefits are:

a) Automating target optimization

b) Increased ad performance

c) Higher conversion rates

d) Repeatable and predictable process

Now that we’ve established the benefits of Lookalike Audiences for small businesses and e-Commerce, let’s take a look at how to set up the most important Lookalike audiences to kickstart your advertising strategy with a bang.

Creating Your Lookalike audience

The process of creating the Lookalike Audience is easy and straightforward:

1. Access Facebook Ads Manager: Log in to your Facebook Ads Manager account at https://business.facebook.com and go to the Ads Manager dashboard.

2. Open Audiences: Click on “All Tools and then “Audiences”

3. Create a Lookalike AudienceIt refers to a group of users who share similar characteristics with your existing customers or target audience. These characteristics can include interests, behaviors, demographics, etc. Meta's algorithm uses these similarities to help businesses find and target new potential customers who are likely to be interested in their products or services.: Click on the “Create Lookalike Audience” button

4. Choose Source: When selecting your Lookalike Source, choose “Custom Audience” in the dropdown menu. Depending on the data you have, you will select a different source. See below for further instructions on the Must-Have Lookalike Audiences

5. Name Your Audience: Provide a name for your custom audience. Use a descriptive name that helps you identify the audience later.

6. Choose Location and Audience Size: Specify the location you want to target with your lookalike audience. You can select a specific country or region. Additionally, choose the desired audience size (1% – 10%). The lower the percentage, the more similar your audience will be to your source, but the size of the audience will be smaller. Learn more about Lookalike Audience Sizes here.

7. Create your Audience: Click on the “Create Audience” button to generate your lookalike audience and wait for it to process. This may take some time depending on the size of the source audience and your targeting settings. You’ll receive a notification when the audience is ready to use.

That’s it! Now, let’s see how to create specific Lookalike Audiences by choosing different sources in Step 4.

Must-Have Lookalike Audiences

As you noticed, creating a Lookalike Audience is a walk in the park – but choosing the right source audience can be quite challenging at first. We’re sure you’ll get the hang of it fast and understand which Lookalike Audience you need for each situation, and which source you should use to create your Lookalike Audience.

Even though you can create a good Lookalike Audience from a list with a minimum of 100 people, we suggest you use a seed audience ranging from 1,000 to 5,000 people.

You can create Lookalike Audiences from various sources: purchasers, landing page viewers, cart abandonment, initiated check-out but didn’t finish the purchase, or even people who saw your videos or viewed your products.

The choice of the source will depend on how many people you have in your database. For example: if you have only 100 people who viewed your product landing page, you won’t have enough data to create a Lookalike Audience from purchasers or abandoned carts. The best you can do is either go with landing page views until you have enough data to use other sources, and go up the ladder from Content View to Abandoned Cart and ultimately, create your Lookalike Audience with 1,000+ purchasers.

Here are a few of the most effective Lookalike Audiences you can create for your e-Commerce:

Purchasers

What is it: made from the data of individuals who have made a purchase from your e-Commerce, this Lookalike Audience will identify and target users with similar characteristics and user behaviors as the purchasers from your website data or customer list.

Source: when selecting your source, follow these steps:

• In the “Create a Custom Audience” window, select “Website” as the source of your audience.
• In the “Events” section, select “Purchase” from your events.
• Specify the Retention field: choose the time frame for this event. The longer, the better – we recommend you go with 180 days so you can give Meta more data to profile your buyers.

You can also upload a list of existing customers:

• In the “Create a Custom Audience” window, select “Customer List”
• Follow the instructions on how to prepare and upload your list
• Select whether the “Customer Order” or “Lifetime Value” is in the list or not
• Upload your customer list and select the fields with the customer value, if it’s available
• Name your audience
• Map fields if necessary
• Confirm and wait for the audience to populate.

If you want, you can check a detailed video tutorial here.

If you don’t have that many customers to create a Lookalike Audience from purchasers, you can use these sources instead, in order of priority:

Initiated Checkout:

What is it: a Lookalike Audience that will find people with the same profile as those who have initiated a checkout in your e-Commerce, including those who ultimately bought your products.

Source:

• In the “Create a Custom Audience” window, select “Website” as the source of your audience.
• In the “Events” section, select “InitiateCheckout” from your events.
• Specify the Retention field: choose the time frame for this event. We recommend you go with 180 days so you can give Meta more data to profile your audience.

Add to Cart:

What is it: a Lookalike Audience that will track people with the same profile as those who have added products to your cart – whether they finished the purchase or not.

Source:

• In the “Create a Custom Audience” window, select “Website” as the source of your audience.
• In the “Events” section, select “AddToCart” from your events.
• Specify the Retention field: choose the time frame for this event. Pick the largest time possible – 180 days in this case.

View Content:

What is it: a Lookalike Audience that will track people with the same profile as those who have viewed a product page on your website., whether they bought it or not.

Source:

• In the “Create a Custom Audience” window, select “Website” as the source of your audience.
• In the “Events” section, select “ViewContent” from your events.
• Specify the Retention field: choose the time frame for this event. Pick the largest time possible – 180 days in this case.

Viewed Video 75%+ Length or Engaged with Content:

What is it: a Lookalike Audience that will track people similar to those who have either viewed 75% of a specific video or engaged with your Facebook or Instagram page according to the parameters you set (e.g. everyone that liked a post in the last 90 days), whether they bought your products or not.

Source:

• Select “Video” in Meta Sources
• Select the desired engagement – here, the suggestion is viewing 75% or more.

What If You’re New?

To fully benefit from lookalike audiences, you should have a good source audience so you can feed Meta’s algorithm with enough data so it can accurately profile other users to match your ideal customers. This means both quantity of data and quality.

While you can create a lookalike audience from 100+ sized base audiences, we strongly recommend you work your way to 1,000 – 5,000 people in your source audience.

If you’re starting now and you don’t have that many purchasers yet, don’t worry – with this strategy, you can easily achieve the 1,000th customer milestone:

Step 1. Create a Broad Interest Audience based on your market research. Go for at least 2 million people. If you don’t know how to implement a Broad Audience, get the guide here.

Step 2. Run an ad with a Video or a link to a Landing Page

Step 3. Create audiences for people who have engaged with your ads. You can use different criteria how to measure engagement here based on what content you use. Our recommendations are:

• Watched 75%+ of your video (instructions above)
• View Content – provide the URL of your Landing Page (instructions above)

Even though Landing Pages are a good option, you can get more leads for your budget with videos. In our experience, videos are the best way to build your customer database, engage your audience, and build a winning Lookalike Audience faster and cheaper than website events.

Here are a few numbers: if you choose Landing Page visits, you may have a cost of up to $5 USD per visit based on your market niche. On the other hand, with the “Watched 75%+ of Your Video” option, you can get such a view for less than $0.50 even in the most competitive markets – this means you can get up to 10x more prospects to your funnel for the same investment.

Why is the video option cheaper?

It’s simple: when people watch a video ad, they stay on Meta’s platform (FB or Instagram). And that’s exactly what Meta wants: for people to spend as much time as possible scrolling!

Whenever you send them to a landing page, there is a risk that the user will stop scrolling and do anything else instead.

Always run this on videos. Meta will deliver cheaper results when they happen on their platform rather than on your website or anywhere else. They want to keep the user with them!

It’s a win-win for you and Meta: users will see your ads, but they won’t stop scrolling.

But before you start creating your Lookalike Audience, here are a few mistakes you should avoid.

4 Mistakes to Avoid When Creating Lookalike Audiences

Small Time Window: whenever you are choosing the time for your Lookalike Audience, whether it’s for purchasers or for engagement, make sure you assign it enough time. Conversions can take longer for some people and if you get the smallest time window available or the one that is automatically set, you will lose leads. Leave smaller time windows for exclusion audiences.

Excluding Purchasers from the Source Audience: Don’t mix up practices when you create audiences for exclusions and when you create source audiences for lookalikes. For example: if you use a source audience of people who added to the cart, but haven’t initiated check-out. The message you send to Meta is: Find me people who add to the cart but at the same time never continue with the check-out. And you don’t want this. The reason why you use the add-to-cart audience is the size (because you will have 5-10x more of them than those who purchase). You want to find people similar to all those who added to the cart! No matter whether they purchased it or not.

Forgetting The Funnel: this may be a no-brainer, but you should always have your sales funnel in mind whenever you’re running any advertising campaign. You can have a list of 1,000 names but if they’re all in different stages of the funnel, you will dilute the data and get poor results.

Use the Wrong Source Audience: if you use a generic or even the wrong audience to feed your Lookalike Audience, you will also dilute the data and the algorithm will show your ads to the wrong people. This will waste your budget and decrease your campaign performance.

Letting Audiences Go Stale: if you keep using the same audiences over and over again for all your campaigns, they will deliver the ads to the very same people causing ad fatigue and audience burn-out. This means consumers will get bored and stop responding to your ads. You can prevent this by refreshing your audiences every quarter or running campaigns with different objectives to escape the bubble. This is a more advanced ad strategy that we will cover in our future guides, so stay tuned!

Now, let’s see a few use cases where brands nailed their Lookalike Audiences and even expanded their businesses internationally.

Lookalike audience Case Studies

Lookalike Audiences are strong not only for new small businesses but also for those looking to scale their operations and grow their customer bases to other regions.

All My Way: this Korean cleaning brand specialized in antibacterial wipes got impressive results by testing Lookalike Audiences in their advertising strategy. They got 23% lower costs, 33% higher ROAS, and 29% more purchases.

Advanced Hair Clinics: this specialized clinic based in Greece leveraged video carousel ads and Lookalike Audiences to expand its customer base internationally to UK, German, and France reaching 5.9million people with a 30% lift in revenue and a 21% increase in leads

DEPIC International: by showing their ads to a multi-country lookalike audience based on a Custom Audience of local customers, this Taiwanese lingerie brand generated a 1.6x return on Ad Spend while opening new markets.

YIONN: a Dutch shaving-care business for women reached and engaged new customers in Germany through Lookalike Audiences, achieving a 44% increase in overall customers, 3x higher ROAS, and 2x higher conversion rate than the industry average.

Value-Based Lookalike audience

After you get your 1,000th customer, keep grinding with the same strategy until you achieve the 5,000th purchase.

Working your way to building a Purchaser Lookalike audience with 5,000+ customers is not an easy task, but it will allow you to reap even greater benefits. One of the many ways you can further optimize your Lookalike Audiences is by creating a Value-Based Lookalike Audience and finding high-ROAS customers with a lower Customer Acquisition Cost (CAC) that will spend more in your store.

This is possible because Value-Based Lookalike Audiences allow you to assign a Lifetime Value (LTV) for each user on your list, which in turn will make Meta’s algorithm look for people who match your high-value customer profile.

Although it’s challenging, after you get 5,000+ purchasers, you can filter the 20% highest LTV value customers and create your Value-Based Lookalike Audience from those. Following the 80-20 principle, 20% of a business’s best customers are responsible for 80% of its revenue – and by using this strategy, you can double down on those ideal customers.

Creating a source audience of your top 1,000+ LTV customers will take some time, but it will be worth the trouble because you will attract customers that will bring you high returns. You can use a plugin such as UserInsights to filter your most valuable clients by LTV and export that list to use as a source for your Lookalike Audience by following this guide.

Conclusion

Whether you’re a small business working your way to your 1,000th customer or if you’re looking to scale your sales, enter new markets, or even expand internationally, Lookalike Audiences will bring you results both in the short and the long run.

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