Do you own a company or business that sells products online? If yes, then you definitely want to take advantage of Facebook’s new targeting feature to enhance your Facebook advertising. A little over a month ago, the social network announced they were releasing LTV (Lifetime Value) Lookalike Audience targeting. Follow along as I explain how this new feature works and how to effectively set it up to enhance your Facebook targeting.
First, what is a Lifetime Value (LTV) Lookalike Audience? Facebook created Lookalike Audiences to expand reach on custom audiences (which are audiences advertisers can set up based on preferred targeting), as many custom lists are limited in size. Lookalike Audiences allow advertisers to find new customers with similar interests and behaviors to their current base.
If you own a company that sells products online, you’ll want to know your customers’ lifetime value (that is, how much each customer is worth in revenue), and you’ll want to keep track of it.
Daniel Kehren of BizBest explains it best:
“Understanding the value a customer has to your business over time is critical to making smart, cost-effective decisions about where to spend money on advertising and marketing.”
Facebook defines LTV as “a value associated with your customers based on how much and how often they spend with your business over the course of their relationship with you.” Facebook also notes that these customers “may be more expensive to acquire, but lead to greater value over time.” For instance, if you own a furniture store with ecommerce sales, the lifetime value of a customer isn’t just the value of that first purchase; repeat business also factors in. The cost of acquiring that customer may be high, but the LTV should exceed that initial investment.
A basic understanding of customer lifetime value is fairly simple, but setting it up may be the hard part.
So let me walk you through the process.
The first step in setting up your LTV Lookalike Audience is to create a custom audience. This requires a file with extensive customer data. Putting an audience together for an online clothing store, I was able to export an Excel document from the backend of client's website that included customer names, email addresses, and lifetime values to date (how much money they spent with the company on clothing purchased).
Using the exported data, I completed the following steps:
Step 1: Used one or more customer identifiers (name and email).
Step 2: Included a column with a range of customer values. For this step, add up all purchases per customer and make a single column that aligns with their name and/or email and then format your numbers to avoid decimals.
Once the upload for step 1 was complete, step 2 asked me to make sure I aligned the correct values with custom identifiers. I verified that the numbers in the Excel document were the correct customer values and the names were full names. Using email address instead of the full name can help provide a higher match rate for the audience.
Step 3 (not shown for privacy) asked me to edit data mapping. This allowed me to exclude information that did not match, and remove names.
Step 4 matched the audience to Facebook users (that’s where the magic happens!).
Step 5 asked me to create a Lookalike Audience. I typically start these by targeting 1% of users in the US.
And there you have it! A new, value-based target audience to test. Make sure, when testing Facebook audiences on the Facebook ad set level, that you are qualifying or disqualifying certain types of audiences. Ask yourself: Who am I targeting and why? And make certain your advertising creatives align with the audience type.
For more Facebook advertising tips, make sure to Follow WideFoc.us on Facebook and Twitter. We’ve been brainstorming how these new Facebook tools will help our clients break through the noise and drive real results. If you’re not taking advantage of Facebook advertising and advanced targeting methods, drop us a line at email@example.com today.
-- By Carrie Gottschalk
Carrie Gottschalk is a Senior Strategist at WideFoc.us, and excels at creating effective social advertising campaigns for our clients. In her free time, she’s an avid traveler, a Denver foodie, and she dedicates her marketing and PR prowess to the nonprofit Denver Active 20-30 as a board member. For more of the stuff she nerds out on, take a look at her favorite highlights from the Facebook Developers Conference.