Lookalike audiences allow you to quickly scale your business to the next level.
So if you want to learn how to:
- Reach more consumers with your Facebook ads
- Quickly scale your online business
- Our favorite tips and strategies
Then you’ll love the actionable techniques in this new guide.
Let’s jump in.
What are Facebook Lookalike Audiences?
First, let’s clearly define what lookalike audiences are.
Facebook’s lookalike audiences use data from your previous customers and finds users who share the same characteristics.
In other words, it’s a powerful tool for exceptional ad targeting.
Facebook’s machine learning algorithm finds patterns in your best customers and finds new people who are likely to be great customers too.
The historical data Facebook uses is collected from custom audiences.
Thus, you will need to provide Facebook with a custom audience in order to create a lookalike audience.
Here is the lookalike audience creation process in 4 steps:
- Collect data from customers by running Facebook ads – we recommend generating daily sales for at least a week before using lookalike audiences
- Create a custom audience of all users who’ve purchased items in the last 30 days
- Use the new custom audience to create a lookalike audience of 2 million people
- Create a new ad campaign targeting the lookalike audience
Let’s take a look at an example so you can understand clearly.
Lookalike Audiences – Example
For our example, let’s pretend you are running an online dropshipping store selling coffee mugs. Your store has been open for 6 months now and has been performing consistently.
You decide you want to try increasing your revenue by scaling your ad spend up.
However, you are worried about saturating your current audience and want to expand and reach new customers.
Rather than interest targeting as shown above, Facebook lookalike audiences creates a brand new audience.
First, you will need to go into your Facebook ads manager and create a new custom audience.
You create a custom audience of all customers who have purchased a product in the last 180 days.
The Lookalike audience will consist of unique Facebook users who share the most similar traits to those in the custom audience.
Afterwards, you will go into your ads manager and create a brand new advertisement using the lookalike audience as the target audience.
What are Lookalike Audiences Used For?
Lookalike audiences are mainly used by advertisers to find new high potential customers.
What are high potential customers?
These are users who are more likely to purchase an item on your store because they share similar traits to previous customers.
Think about it like this.
Lookalike audiences are an advanced matchmaker for marketers. You tell Facebook what your best customer looks like, and Facebook delivers a brand new audience filled with candidates that meet your criteria.
Facebook takes into account all the traits of users in your custom audience: age, gender, interests, location, engagement patterns, time spent online, shopping habits, etc.
The advanced ads algorithm will then scour the Facebook userbase to find people who have similar characteristics.
When to Start Using Lookalike Audiences?
There are two main situations when it would best to create lookalike audiences.
Firstly, is when you run out of interests to target. If you’ve exhausted all the interests related to your niche and have trouble finding an audience, this is the perfect time to use lookalike audiences.
Secondly, we recommend creating lookalike audiences when you business is ready to scale to the next level. If you are able to successfully generate consistent sales with interest targeting, you can further boost your business with lookalike audiences.
We will discuss an in-depth Facebook ads strategy with you later on in this tutorial.
Important to Remember
Before creating lookalike audiences, it’s vital that you have enough data to give to Facebook. This is why we recommend you use interest targeting for a last a week before testing lookalike audiences.
Why are Lookalike Audiences Important?
Lookalike audiences are one of main reasons that marketers believe that Facebook is one of the best advertising platforms.
These audiences are crucial because they increase the probability of generating high quality leads. It allows you to spend less of your advertising budget targeting cold audiences that might not be interested in your products.
Moreover, lookalike audiences offer more value on your ad spend. In theory, you’ll generate more conversions with less ad spend.
However, this isn’t always the case.
Let’s talk about why.
Lookalike Audiences – Cons
At this point it should seem like lookalike audiences are the golden ticket of advertising.
Facebook literally feeds you a high potential audience just by providing a bit of data.
But as good as lookalike audiences sound on paper, they don’t guarantee your success.
A successful lookalike audience campaign may require consistent trial and error. You will need to test different source audiences, audience sizes, locations, ad creatives, and so forth.
So don’t think that lookalike audiences offer a free shortcut, you will still need to be thorough with your work for long-term success.
With this being said, let’s discuss how to create a Facebook lookalike audience.
How to Create a Lookalike Audience?
Now, it’s finally time for you to create a lookalike audience.
Start by going into your Facebook Business Manager.
Your screen should look like this on the left-hand side:
Click on ‘More tools’ and select ‘Audiences’.
The next step is to create a custom audience.
1) Custom Audience Creation
Click on ‘Create a Custom Audience’.
Your screen should look like this:
This screen allows you to choose the source of your custom audience.
The choices are split up between ‘Your Sources’ and ‘Facebook Sources’.
The different options include:
- Website: Data collected from the Facebook Pixel on your website
- Customer List: Users from your customer list
- App Activity: Users from your application
- Offline Activity: Data collected from phone or mail
- Video: Users who have viewed your Facebook videos
- Lead Form: Users who have started or completed a lead
- Instant Experience: Users who have opened up your experiences
- Shopping: Data from users who have clicked on your shopping experiences
- Instagram Account: Facebook users who have engaged with your Instagram account
- Events: Users who have shown interest or have attended one of your events
- Facebook Page: Facebook page followers and visitors
- On-Facebook Listings: Users who have engaged with your On-Facebook listings
The amount of options may seem intimidating, but we mainly use ‘Website’, ‘Video’, and ‘Facebook Page’ for our dropshipping stores.
Choosing the correct source audience is the most important part of creating a lookalike audience, so let’s discuss these 3 sources in detail.
Website allows you to create custom audiences of website visitors who have viewed a specific page, added to cart, initiated checkout, purchased, etc.
Furthermore, you have the option of using up to the past 180 days of data.
For example, you can create a custom audience of all visitors who added to cart in the past 90 days.
The video source allows you to create audiences based on the percentage of the entire video that users watched.
A lot of our advertisements come in the form of video ads, so we use this source audience often.
Facebook page allows you to create custom audiences of users who have engaged with your posts or page in any way.
As you can see in the image below, you have the option of creating an audience of everyone who engaged with your page. Engagement means clicking, sharing, commenting, or liking.
Most Used Custom Audiences
The source audience you choose to use is the most important part of creating effective lookalike audiences.
That being said, here are our most effect custom audiences.
- Video Views (50%/75%/95%)
- Ad Engagers
- Website Visitors
- Add to Cart
- Initiate Checkout
- Add Payment Info
Which Audience Should You Start With?
Simply put, start with whichever one has the most data. If your store already has a lot of sales, we recommend starting with ‘Purchase’ and ‘Add to Cart’.
However, if your store doesn’t have many (1000+) sales already, you can start with ‘Ad Engagers’ and ‘Website Visitors’.
You will need at least 1000 people minimum to create a custom audience.
How Many Days in The Past Should I Use?
Depending on when you launched your first Facebook ads, you can vary the days back you go. Furthermore, you can think about when you launched your last successful ad campaign and go back to that amount of days.
We typically use 30, 60, 90, and 180.
After creating your custom audience, go back to the ‘Audiences’ section in your Facebook Business Manager.
2) Lookalike Audience Creation
Now, it’s time to select ‘Create a Lookalike Audience’.
Your screen will look like this:
In step 1, select the custom audience you just created as your lookalike source.
For step 2, choose your desired location of the audience. You can choose multiple countries or regions depending on where your customers are located at.
Here’s an example:
In step 3, you will choose the size of your lookalike audience. Furthermore, you can choose to create multiple lookalike audiences.
As you can see, the audience size ranges from 1% to 10% of to combined population of your chosen locations.
In this example, the total Facebook population of Canada, USA, and UK is 310 million. This means that 1% of the total population size is 3.1 million.
Furthermore, each percentage is a different similarity level to the source audience. For example, 0-1% (1%) will create an audience that is most similar to the custom audience.
This allows you to test multiple different similarities and audiences sizes for your advertisements.
Here’s what our initial lookalike audience setup looks like:
This setup will create 3 separate lookalike audiences: 1%, 2%, and 3%.
Based on our experience, this is the most optimal way of quickly testing your source audience. These 3 lookalike audiences are all different from each other, but still consist of similar people to the custom audience.
After choosing all of your lookalike audience preferences, click ‘Create Audience’ on the bottom right-hand corner.
Your newly created lookalike audience will begin populating. It may take the Facebook ads algorithm up to 30 minutes to fully populate the audience so its ready to use.
Once your lookalike audiences are finished, it’s time to use them in an advertisement.
3) Ad Creation – Lookalike Audience
Now, it’s time to put your new lookalike audience(s) into action.
Head over to your Facebook Ads manager and press ‘Create New Campaign’.
Setup your campaign objective to align with your business goals. When creating our campaigns, we choose ‘Conversions’ 99.99% of the time. Conversion are the same thing as sales, which is the main objective of our ecommerce store.
After setting up your campaign, it’s time to refine the audience. Go into the ‘ad set’ customization and find ‘audience’. Under ‘Custom Audiences’ choose one of the lookalike audiences you created.
Remember to only select one lookalike audience if you created multiple. Each ad set should only contain one lookalike audience.
Finish setting up your advertisement as you normally would.
At this point you should have one ‘ad set’ and ‘ad’ completely finished.
If you created more than one lookalike audience, it’s time to duplicate your ad set.
Select your ad set and click duplicate.
Keep your duplicated ad sets in the original campaign. Furthermore, the number of duplicates will depend on how many lookalike audiences you created. Since we created 3 lookalike audiences, we’ll choose 2 copies.
Next, click ‘Duplicate’.
Your screen should now look like this:
These 3 ad sets will be completely identical.
You will need to edit the duplicated ad sets by changing the ‘Ad set name’ and ‘Custom Audience’.
The finished lookalike audience setup will look like this:
Be sure that each ad set contains a different lookalike audience. You don’t want to make the mistake of putting the same lookalike audience on multiple ad sets.
With all the previous steps completed, you can finally launch your new lookalike audience advertisements.
Effective Facebook Ads Strategy
Using lookalike audiences is only step of an effective Facebook advertising strategy.
Here’s an overview of our dropshipping ad strategy:
The goal of this strategy is consistent long-term profits through 5 phases.
Phase 1) Interest Testing
Testing interests related to your business while collecting data.
Phase 2) Interest Scaling
After finding a stable performance in your interest targeting, you can begin to increase you ad budget.
Phase 3) Lookalike Audience Testing
Once you’ve successfully scaled your interest targets, you can use all the data you collected and test different lookalike audiences.
Phase 4) Lookalike Audience Scaling
This phase involves increasing the ad budget on your successful lookalike audiences.
Phase 5) End Game
The final End Game phase is when you can run your dropshipping store on ‘autopilot’ at max scale.
Watch our Facebook Ads for Dropshipping video above for an in-depth look at our strategy.
Final Lookalike Audience Thoughts
At this point you should have a thorough understanding of what lookalike audiences are and how to create them.
Now it’s your turn to put everything you learned into action.
Remember, consistency is key when it comes to dropshipping and Facebook ads. Finding success on your first try is rare, so you will need to keep testing and analyzing the results.