Value-Based Lookalike Audiences, which launched in 2013, has been labeled the “bread and butter” for most Facebook marketers. Lookalike targeting, a popular advertising technique across many areas of digital advertising, uses data from past advertising campaigns to identify audiences that have similar behaviors to the people that have clicked on or converted on ads. Facebook has its own special flavor, which uses their own vast array of data points. For many companies that go all-in on Facebook, they eventually hit a wall if they continue to shovel money onto the platform without refining their targeting strategy. In the case of direct-to-consumer brands, there’s actually a door in that wall that few have opened.
A year ago, Facebook began rolling out a feature called Value-Based Lookalike Audiences, yet not a lot of marketers are leveraging this tool, which is actually very helpful for increasing conversion rates. For brands that have historically relied on Lookalikes as a key piece in their Facebook acquisition toolbox then Value-Based Lookalikes offers an incredibly powerful way to extend reach for new customers.
Find more of your best customers
With Value-Based, Facebook has created a dynamic way to allow marketers to use internal data and find new audiences without a lot of heavy lifting. Similar to Lookalike Audiences, the value-based version uses one additional element: customer CRM data is available in a new column in the data file, which signifies the value of the customer to the company. While it’s possible that advertisers don’t use the value-based option because they actually don’t have consumer CRM data available, it’s often more likely that they simply haven’t bothered to do the work to collect the data from their CRM system and append it to their Facebook advertising files. This small extra step is well worth the effort now, as reports have recently surfaced of marketers backing away from spending on Facebook due to increased prices or competition.
Marketers can add any version of customer value in that column, from lifetime value to total year to date sales. Facebook can then use that data to model their own audiences to find people that look similar. Rather than focus on a small group of valuable consumers, marketers should include data for everyone so Facebook has the ability to compare and test against less valuable audiences. This not only helps with accuracy but also provides the opportunity to create scale.
Including more than the 1 percent
With Value-Based Lookalikes, marketers can quickly leverage scale if they find a promising lookalike segment (or segments). Marketers may find that there are subgroups within Value-Based Lookalikes that each perform differently, which can be used to create separate campaigns.
The top 1 percent segment of Lookalikes might be the closest looking thing to the current customer file uploaded, but that doesn’t mean brands should skip higher percentages during testing phases. The 2–10 percent segment of Lookalikes can outperform the traditional 1 percent in numerous occasions, so brands shouldn’t be afraid to test a broader group if an audience is showing promise.
An easy way to test multiple percentages at once is called the “nested” method. Targeting ranges between 1 and 10 percent, and excluding the lower percentages from the higher will ensure no audience overlap. Brands can use the advanced lookalike creation feature to create pre-excluded segments. One advertiser we worked with saw the strongest performance in a 5 percent Lookalike when testing 1, 2, 5 and 10 percent segments.
Revenue-focused tactics are rolling out
Value-Based Lookalike targeting goes hand-in-hand with a new wave of Facebook features that emphasize revenue and value for marketers. In addition to Value-Based Lookalikes, Facebook has also rolled out value optimization, which prioritizes the revenue generated rather than the volume of conversions, and reporting metrics on ROAS (return on ad spend) as they listen to marketers cry for value-focused tools. This doesn’t even include the further promise in testing different creative and messages for different value-based segments, which could improve performance even more.
Of course, there is huge value in diversifying spend across digital and traditional channels but many brands leave Facebook without testing all of the different features that can turn the platform into a high-performer. Facebook might be a hotbed of competition for retail brands, but with Value-Based Lookalikes and the right personalized approach, those brands have an opportunity to win.