What Are Lookalike Audiences, and When Should You Use Them?

What Are Lookalike Audiences, and When Should You Use Them?

Back in early 2018, when Facebook announced its plans to end Partner Categories targeting, no one in the digital marketing world knew what would happen next. But our 9 Clouds team was sure of two things:

  1. There certainly would be a good — if not better — solution to make up for the Partner Categories’ absence.
  2. We would find it.

And we did — for now (since we know the digital world is always on its feet). Thanks to the many recent changes in Facebook Ads Manager, we’ve found an effective and arguably better tool to start taking advantage of in place of Partner Categories.

Hey, Lookalike Audiences, we see you. And while the feature has been around awhile, it’s finally getting its shining moment — at least with our automotive clients. 

Pssst! When you’re done with this post, be sure to check out our article breaking down Facebook’s new Special Ad Category for credit-related ads (AKA most automotive Facebook ads out there). We explain what it is, why it’s not as scary as it seems, and how to use the new Special Ad Audiences to your advantage.

Looka-what? 👀

If you’ve never experimented with Lookalike Audiences in Ads Manager, here’s the rundown.

A Lookalike Audience is an audience targeted by Facebook that is based off of a custom list you’ve imported. Each time you import a Custom Audience, Ads Manager presents you with an option to create a Lookalike Audience from that list, like this:

"Create a Lookalike Audience" screen in Facebook Ads Manager

So what exactly does that mean?

Here’s an example. Say you create a Custom Audience of each person who has purchased a RAM 1500 truck from your dealership in the past five years by pulling that data from your customer relationship management (CRM) system and importing it to Ads Manager.

When you create a Lookalike Audience based on that list, Facebook finds people with similar demographics and interests to those of your existing customers and uses them as the target audience.

When Should You Use Lookalike Audiences?

You should utilize Lookalike Audiences if you know what you’re selling (such as a specific vehicle) and have a detailed list of past customers who have purchased that thing (AKA a list from your CRM).

Before finding the Lookalike Audience, Facebook identifies specific user information to match your customer list to their actual Facebook profiles, so the more information you can import, the better. Here are the customer properties Facebook can use:

  • First name
  • Last name
  • Email addresses (up to three)
  • Phone numbers (up to three; must include country code)
  • City
  • State / province
  • Zip / postal code
  • Country
  • Date of birth
  • Year of birth / age
  • Gender

This is why it’s advantageous for your sales team to actually gather this information from their leads and customers — because you can more accurately use it to find others who may be at the same point in the sales funnel.

Our Success with Lookalike Audiences

We spent several months A/B testing Lookalike Audiences against the Partner Categories data before it went away, and our findings were remarkable.

In nearly every campaign in which we tested a Lookalike Audience against third-party data, our automotive clients saw a higher relevance score, lower cost per click, and more impressions for the ads shown to the Lookalike Audience.

More importantly, we also saw an increase in offline leads and offline purchases when using the Lookalike Audience. (Here’s a post explaining Offline Events if you need a refresher.)

I’ll break it down even further for the data nerds. Let’s take a look at a few specific tests our team ran.

For each of these campaigns, we ran two ad sets at the same budget, in the same location, and using the same creative. For Ad Set A, we used third-party data to target relevant in-market shoppers. For Ad Set B, we created a Lookalike Audience using a Custom Audience list of past purchasers from the client’s CRM.

Test 1 | New Hyundai Models

Facebook ads for Hyundai dealers

For this Midwestern auto client, we created a Facebook campaign promoting its new Hyundai inventory.

Partner Categories Data Results (Ad Set A)

  • 163 link clicks
  • 25,889 impressions
  • $0.98 CPC
  • Relevance score – 2
  • Offline leads – 5
  • Offline purchases – 1

Lookalike Audience Results (Ad Set B)

  • 476 link clicks
  • 40,102 impressions
  • $0.33 CPC
  • Relevance score – 4
  • Offline leads – 8
  • Offline purchases – 2

Test 2 | New RAM trucks

Facebook ads for RAM dealers

We again put Lookalike Audiences head-to-head with the third-party data for this rural dealership in a campaign promoting new RAM trucks.

Partner Categories Data Results (Ad Set A)

  • 54 landing page views
  • 23,423 impressions
  • $1.61 CPC
  • Relevance score – 2
  • Offline leads – 0
  • Offline purchases – 1

Lookalike Audience Results (Ad Set B)

  • 141 landing page views
  • 31,546 impressions
  • $0.68 CPC
  • Relevance score – 3
  • Offline leads – 6
  • Offline purchases – 3

Test 3 | New Ford Escape

Facebook ads for Ford dealers

In this third example, we paired the third-party data to a Lookalike Audience of past Escape customers.

Partner Categories Data Results (Ad Set A)

  • 68 landing page views
  • 29,924 impressions
  • $1.15 CPC
  • Relevance score – 2
  • Offline leads – 5
  • Offline purchases – 1

Lookalike Audience Results (Ad Set B)

  • 113 landing page views
  • 39,092 impressions
  • $0.69 CPC
  • Relevance score – 4
  • Offline leads – 8
  • Offline purchases – 1

And the Winner Is…

Lookalike Audiences — by a landslide.

I could go on with more data from the tests we’ve done, but you’d see a similar trend.

We’ve been pleased with the results of using Lookalike Audiences in our Facebook campaigns and believe it’s a valuable — while often overlooked — tool. Especially in light of the changes to Partner Categories data, this is definitely a tool you’ll want to become familiar with.

Want even more reason to use Lookalike Audiences? Check out this case study to see how a North Dakota Ford dealer found success with Lookalike Audiences!

Test Lookalike Audiences for Yourself

Don’t just take our word for it — test Lookalike Audiences for yourself! (We’re all about A/B testing over here.)

While you’re at it, test the new Special Ad Audiences, too. These audiences are similar to Lookalike Audiences but are specific to anyone using the new Special Ad Category for ads related to housing, employment, or credit.

If you’ve never created a Lookalike (or Special Ad) Audience in Ads Manager, give it a try, and see how it performs compared to other methods. While these audiences are working beautifully for our automotive clients, you must find what works best for your business, your product, and your audience.

Just don’t be surprised if utilizing a Lookalike Audience helps you hit your key performance indicators (KPIs)!

Keep Learning About Facebook’s Ad Targeting Changes

Moving forward, we’ll continue taking advantage of Lookalike Audiences using our clients’ CRMs. We’ll also be tuned into and listening for the ever-constant Facebook updates, so we can continue to adapt our marketing strategy. (Subscribe for updates.)

Want to learn more about Facebook’s latest ad targeting changes? We hosted a webinar all about them (and how to adjust your marketing accordingly). Watch it now!

If you’re ready to achieve real results with a trusted digital marketing partner, contact us for a custom digital marketing proposal for your dealership. We guarantee that our services will increase your internet conversion rate by at least 25% in the first six months.