The impact of the Lookalike audience
To get an understanding of what this is about let's roll back to advertising
from scratch. To make it even worse, let's say you don’t even do targeting.
When you run your ad, Facebook is going to show it to everyone on
Facebook (well, a small subset of them every day). As you might imagine
most people aren’t interested in your ad, so you get a lot of wasted
impressions and wasted money.
As time goes on, the system optimizes, so it starts finding people that have an
interest in your product, and then it can begin targeting others that are similar
as it learns what their characteristics are. This, of course, can take some time
to work right, and it's not going to go as well because Facebook doesn’t have
that much data at first.
Now let's consider what happens when you upload a Facebook audience.
Suppose for the sake of an example that you’re again targeting people that
live in the Northeastern United States that want to move to Arizona. So far in
our discussion of this type of ad, we have been talking about randomly
finding them. What if instead, you were able to obtain a list of people that
actually did move from the northeast to Phoenix.
These people are probably going to have a lot of surprising things in
common. They may be a similar age, marital status, wealth, education level.
Maybe most of them will come from a subset of occupations. Of course, most
will be retired but we may still find out their occupation when they were still
working. In addition, these people have been spending time on Facebook and
leaving a trail of likes.
And so, we buy a database of these people that have already moved from
New York, Maine, Pennsylvania, Delaware, Connecticut, New Jersey, Rhode
Island and Massachusetts to Arizona. We upload it to Facebook and then it
cranks out an audience of millions of people who have the same
characteristics. Including many of the same likes and so on in their Facebook
history.
Now we can run ads targeting this new subset of people that Facebook has
found for us. It won’t be any surprise to learn that the ads that target these
people are going to be far more effective than the ads that start cold. In fact,