The Lookalike Audience Is the Marketer’s Dream Come True

Let’s face it, some clients are better than others. Dream clients love your products because they fit their needs. They brag about you, recommend your products, and promote your brand.

Dream clients are much more profitable than the rest, aren't they? If only you could find more of those, your business would really prosper. Well, in digital advertising, you can. Online platforms are making that idea come to life with lookalike targeting.

"Show me your ideal clients, and I'll find an audience that looks just like them.."

Overview: What are lookalike audiences?

Lookalike audience targeting is about addressing an audience that has characteristics in common with a seed audience you define. Depending on the origin of the seed audience and the nature of the audience data the online platform holds, the resulting audiences may be very different.

Lookalike advertising uses messaging that performs well on the seed audience. Done correctly, it generates higher click-through and conversion rates than other audience targeting.

The way to succeed with lookalike audiences is to have a qualitative seed audience of a sufficient size. The higher the quality and volume of the seed audience, the better the outcome.

Where can you find lookalike audiences?

People often associate lookalike audiences with Facebook advertising, but many online platforms offer the same approach. Each platform bases user similarity characteristics on their own data set, so you may see variations.

Facebook and Google hold data on user interests and online behavior; LinkedIn on professional characteristics. Twitter and Mailchimp key in on topics users are interested in.

Similarly, Snapchat and TikTok use data on the video content users consume. Taboola and Outbrain look at the articles users read, while Amazon relies on user purchase history.

If you're curious about the data the platforms hold, have a look at your own Facebook ad preferences and your Google ads settings (you need to be logged into Google and Facebook to see them.)

All the above-mentioned platforms offer lookalike audiences, lookalike targeting, or similar audiences based on the data sets they hold. Lookalike audiences are no longer exclusive to a social media strategy, as they can be used on many online platforms.

While most social media management platforms provide inroads into social media advertising, lookalike audiences are typically beyond their scope, as they focus on managing content and scheduling posts.

Retargeting vs. lookalike audiences: What's the difference?

Retargeting audiences are defined as lists of users you’ve already targeted. Users who have visited your website can be tracked and retargeted with a "consideration" campaign since you know they are aware of your brand.

You can create more focused retargeting lists by identifying users who have performed a significant action. Visitors who add a product to the basket without completing the purchase are a good example.

Some online retailers market to this key retargeting audience extensively because the user was close to the buy. Dangle the proper incentive, and they may purchase. A retargeting audience resembles a lookalike audience in terms of higher click-through rates and conversion rates, but the resemblance ends there.

A lookalike audience is not a known audience like a retargeting audience. It comprises users who probably aren’t aware of your products or services but share characteristics with other users who do.

Combining custom audiences and lookalike audiences: The ideal targeting approach?

Rather than use retargeting audiences to source lookalikes, why not extract your ideal clients from your CRM and find lookalikes on that basis? If you advertise on Facebook, you may be familiar with their "custom audience" functionality.

It allows you to upload a list of clients to Facebook who then matches this list to user profiles and create an audience which you can market to. It can also be used as the seed audience for your Facebook lookalike audiences, enabling you to find users similar to your clients.

If you have enough dream clients and only extract those from your CRM, you can create an audience of dream prospects for your next Facebook lookalike campaign.

How to use lookalike audiences for your small business advertising

Many platforms offer lookalike audiences under different names, with varied data. The steps to use them, though, are similar. Below, we'll be using terminology from Facebook lookalike audiences.

In an audience-driven strategy, lookalike audiences are used to feed the top of the funnel with users qualified via their similarity to existing clients. Image source: Author

Step 1: Define your seed audience

The seed audience for a lookalike audience can be an extract from a CRM database or it can be a live audience captured from a pixel on your website or the fans of your Facebook page.

It’s important you use a decent size audience. Facebook recommends at least 1,000 contacts to be efficient. More is better since it will improve the quality of the lookalike audience.

Step 2: Verify privacy regulations

Don’t cross any red lines with your online marketing. To use personal data in an email address in your CRM or your newsletter subscription list, you need permission.

In recent years, privacy regulation such as the California Customer Privacy Act (CCPA) and the European General Data Protection Regulation (GDPR) impose stricter requirements for using email addresses.

As an example, to comply with GDPR, the advertiser needs to make sure a user has given consent to use their personal data in your marketing plan.

Step 3: Match your seed audience with second party data

When you upload a custom audience to an online platform, it’s good practice to encrypt email addresses. This ensures the online platform can't read the email address but still allows it to match with its user profiles.

A large proportion of profiles cannot be matched to user profiles, either because the users are not on that platform or because the email didn't match the one they used there. Matching levels of 50% and above are considered good.

Step 4: Define similarity level

When you create your lookalike audience on Facebook, you define the similarity level you want to target on a scale from 1% to 10%. If you choose 1%, Facebook will create the 1% of existing audiences that resembles your seed audience the most.

If you select a higher percentage, the similarity will be less important and the audience larger. An ideal lookalike audience is based on a large qualified seed audience and a low percentage. But broader audiences can be useful in more awareness-driven campaigns.

Step 5: Use the lookalike audience

In Facebook, you may have to wait up to 24 hours for your lookalike audience to be ready to use. Meanwhile, you can prepare your social media campaign and tailor it to the nature of the audience.

Facebook lookalike ads should speak to the characteristics of the seed audience and use branding elements to further awareness of your brand.

It’s easy to create audiences on Facebook, but you need to keep track of the origin and purpose of each audience. Image source: Author

Lookalike audiences are a marketer’s dream come true

With audience targeting, a higher proportion of your media budget can be applied to your target market than with traditional media-based targeting. Lookalike audiences are machine-generated and can be an excellent source for an advanced digital advertising strategy.

But remember: the quality of the output depends on the quality of the data you start with. With a great seed audience, you can reach a massive lookalike audience. And if you address it right, the results can be fantastic.