blog | 7 min read

Lookalike Audiences: Basics & Benefits

May 3, 2023

One of the most successful methods for brands striving to find ways to reach new customers is the use of lookalike audiences: new audiences who look like your existing audiences. 

Lookalike audiences started as a segmentation method created by Facebook and adopted by other platforms, which aims to target people with similar behaviors and interests. With the right tools, lookalike audiences are easy to create, and with reliable source data they can produce serious results. 

By basing lookalike audiences off your best customers in your existing audiences, you can target highly-qualified customers you may not have reached otherwise. Plus, targeting prospects who are more likely to convert optimizes your spending. 

Basics of Lookalike Audiences

Essentially, a lookalike audience is an audience comprising people who share key characteristics with your current customers.

These characteristics are most useful when they focus on customer behavior. For example, it might be people who have visited your website in the past 15 days, people who have a certain pattern of app use, people subscribed to an email list, etc. 

The creation process for lookalike audiences hinges on data analysis, so the more data you have about your existing audiences and the better able you are to access and rely on it, the more successful your lookalike audiences will be. 

With good data to start from, the behaviors and patterns of your existing audience are mapped and mirrored onto a broader potential audience to efficiently target likely-to-convert users. Of course, the source data needs to be accurate and complete in order to create the best audience — more on this later. 

Benefits of using Lookalike Audiences

Increasing reach of marketing: By using lookalike audiences, you can reach more people than your existing customer base. In addition to increasing the potential revenues from the campaign, it expands brand awareness and builds name recognition. 

Higher conversion rates: Targeting similar audiences ensures you're reaching out to those most likely to engage with your brand. Instead of just casting a wide net and hoping for the best, you can focus on individuals who share characteristics of your existing customers.

More efficient ad spend: Money spent on targeting lookalike audiences usually yields a higher return on investment. That’s because you’re directing your resources toward individuals who are more predisposed to engage with your brand, reducing the risk of your ads being ignored.

Reinforcing a culture of data-driven marketing: Using customer data to build lookalike audiences means that your efforts are based on more objective information than intuition and assumptions. Building this muscle across initiatives leads to better results. 

What to do with your Lookalike Audiences

So you’ve got your lookalike audiences. What should you do with them?

The goal is to send them to advertising environments like Facebook, Google Ads, TikTok, LinkedIn, X, and Snapchat to compare with existing customer data and reach new audiences. If your source has direct connectors, they can be sent directly; otherwise they can be sent through ad onboarders and agency partners. However, this may take a bit longer, involve additional costs, and affect the quality of the data (depending on the ad onboarder) which can degrade with every handoff (depending on how it's handled).

The approach is similar across platforms, though the details of execution can differ. Meta-owned platforms Facebook and Instagram work through Facebook Ads Manager, where advertisers can set up a custom audience—a handpicked group of users based on various criteria. Facebook uses this custom audience to find and create a lookalike audience, but recommends having at least 100 people in your custom audience for optimal results. The Facebook lookalike audiences system leverages information such as demographics, interests and behaviors from your source audience to find new people who share similar qualities. 

With Google Ads, their lookalike audiences are termed "similar audiences." The concept remains the same as Facebook’s, but Google uses its vast array of search data and browsing patterns to create these groups, ensuring advertisers can reach individuals with intent. 

Other social media platforms such as LinkedIn, TikTok, X (formerly Twitter), and Snapchat have a bit less data reach than giants like as Meta or Google, but they do offer their own versions of lookalike audiences and empower brands to expand their reach.

How to build Lookalike Audiences

Data source: This is the foundation of your lookalike audience. A well-maintained customer list or database of your current customers will ensure that when finding similar users, the platform has accurate data to work with. Note that for the best results, the source data should be both accurate and comprehensive, reflecting a customer’s whole relationship with the brand for the clearest picture—such as the unified customer profiles that Amperity creates.  

Selecting your seed audience: This involves picking a segment of your existing customers to serve as the blueprint. Whether it’s your most engaged website visitors or frequent buyers, selecting the right seed or source audience for your campaign goals is essential. A good place to start is customers with higher lifetime value.  

Determining audience size: Once you have your seed audience, you'll decide on the size of your lookalike audience. A smaller lookalike audience will closely match your seed audience, but it might limit reach. On the other hand, larger audiences increase your reach but might not be as precise. Again, you need to adjust based on the goals of the specific campaign.  

Customization: Using the ad manager of the platform you're working in, you can fine-tune the behaviors, demographics, and other characteristics of your lookalike audience. This ensures you're targeting people who aren't just similar in one aspect but across various criteria.

Challenges with Lookalike Audiences

Privacy concerns: As data privacy becomes a growing concern, it’s critical to make sure that your lookalike audience creation process adheres to all regulations and platform guidelines. That means an emphasis on first-party data collected with customer consent to reduce risk associated with renting audience data in the era of increasing privacy controls. 

Data quality: If your source audience doesn’t accurately reflect your ideal customers, your lookalike audience might be ineffective. Be sure that the data you provide—especially from your customer list—stays up-to-date and relevant.

Limited seed audience size: Without a sufficiently large seed audience, the lookalike audiences you build will be less effective. 

Ignoring platform-specific guidelines: This method isn’t one size fits all. It’s important to understand the best practices and requirements for each platform you’re using. 

Over-reliance on too few audiences: Lookalike audiences are a powerful tool, but they should still be subject to rigorous analysis toward improvement. Creating a variety of audiences will allow you to compare and optimize.  

Integrating with other marketing strategies

Retargeting: Lookalike audiences can be combined with retargeting strategies. If someone from your lookalike audience visits your site but doesn't convert, retargeting can bring them back for another chance at conversion.

Content marketing: Insights gained from your lookalike audience can inform your content creation. Knowing what appeals to this audience can guide social post topics, video content, and more.

Email marketing: With the data you have on your lookalike audience, you can segment your email marketing efforts more effectively, ensuring your messaging hits the mark every time.

Tips and Best Practices

Regular updates: As your brand and customer base evolve, so should your source audiences. Regularly update them to reflect any changes.

Test and optimize: Don't just set and forget. Regularly assess how your ads are performing with your lookalike audience and make adjustments as needed. In other words, stay nimble and be prepared to pivot at the right moments. 

Combine with analytics: To truly gauge the effectiveness of your campaigns, integrate them with analytics tools. You’ll gain a clearer picture of how your lookalike audience is engaging with your brand.

The power source for Lookalike Audiences (Hint: quality counts)

As with most aspects of marketing and advertising, the quality of your audience matters. And the quality of the lookalike audience depends on how accurate and comprehensive the data is that informs the seed audience. 

When you have high quality data inputs at the outset, it has a beneficial effect on all the other processes and activations downstream. In short, the principle of garbage in, garbage out is alive and well, and the way to get around it is with a foundation of unified data underpinning all your other efforts. 

By starting with data organized into accurate, complete profiles as a basis for creating lookalike audiences, combined with continuous optimization and integration with other strategies, brands can significantly enhance digital advertising and marketing initiatives, saving money and increasing revenue.

To learn more about lookalike audiences and how they fit into a broader paid media marketing strategy, check out our paid media solution brief.