You’ve been running ad campaigns on social media, but have been disappointed by the results. Facebook is where many business owners start their digital advertising because of the low point of entry. For a small buy-in and little experience on the platform, you can place an advertisement that reaches thousands of people. However, your Facebook ad size can be misleading. 😬
You can send an ad to thousands of users that are not interested in your product. If you’re marketing to the wrong audience, it doesn’t do much good how many eyes see your advertisement. Lookalike audiences can be an effective way to get your ad in front of interested users.
A lookalike audience is selected from a source audience of your choosing. For example, Facebook can use information collected from fans of your page, mobile app, email marketing list, or retargeting pixel on your website. Facebook then identifies the common factors in that audience, such as interests or demographic information. They then create a lookalike audience that is similar to the original audience. This means that your ad is seen by people who share some quality with people already interested in your brand. It’s a great way to grow your audience!
I help business owners utilize tiered bid caps and lookalike audiences to maximize your ROI for Facebook ads. These tactics help you supercharge your advertising dollars while reaching a targeted audience.
How Can a Tiered Bid Cap Scale Your Facebook Lookalike Audiences?
Lookalike audiences are a fantastic way to reach potential customers, based on the fact that they are similar to people already interested/purchasing your brand. Using a tiered bid cap can take your marketing efforts even further.
First off, what’s a tiered bid cap? You can give Facebook a maximum dollar amount. You can choose multiple lookalike audiences and weigh them all differently. By assigning each a bid cap, Facebook will use its algorithm to show ads to users in the lookalike audience without going over the dollar threshold. You can get a pipeline of warm leads without going over budget! 💰
Instead of having to figure out the ideal audience yourself by setting demographics, you bypass the work of testing who’s interested in your product by utilizing the information you have about people who are already interested.
Even though your Facebook ad size will be smaller than a general audience (such as adults ages 18-65), it will be made up of more qualified leads. You have more control over who looks at your ads and better use of your advertising dollars.
Establish Your Max Cost Per Lead
The key to all marketing campaigns (and to life, really) is a strategy. I am a data nerd, so I want to know the FACTS. I’m not winging it when I place a campaign — I have a set maximum cost per lead (CPL), a budget, a target audience, and a goal for the campaign. ✅
To use the tiered bid cap and lookalike audience strategy, you first must determine your max CPL for the campaign. How much are you willing to pay for a lead? Keep in mind that these leads are more likely to convert than a larger Facebook ad size.
Are you wondering where to start when thinking about CPL? You can take your cost of customer acquisition on Facebook (how much do the ads cost you?) and multiply it by the average conversion rate (take your total number of leads on Facebook and divide by the number of sales). This will give you a number to start with.
This is just a starting number because you are using your historical campaign performance (where maybe you didn’t use tiered bid cap OR lookalike audiences) and your average conversion rate (which can get better!).
Of course, it’s important to consider not just historical data to determine a max CPL but simple business math as well. Will your business still be profitable if you have to pay X amount of dollars per lead?
If you haven’t used tiered bid caps, or lookalike audiences, or advertised on Facebook at all, then you probably need to do some testing before deciding on a CPL. Try testing a 1% lookalike audience with an automatic bid to see the CPL of that campaign. Once you have tested, you will have better groundwork to base future campaigns.
Determine a Tiered CPL Bid Cap
You’ve set the max CPL bid. Now you create “tiers” by decreasing the cost per lead by roughly 15% with each step in your lookalike Facebook ad size.
For example, say you’ve set $30 as the CPL for your 1% lookalike audience, then $25 would be the max CPL for your 2%-3% lookalike audience, $21 would be the max CPL for your 4$-5% lookalike audience, and $16 would be the max CPL for your 6%-10% lookalike audience.
As the audience gets further and further away from the original audience sample, your max CPL goes down. You have the highest chance of conversion with the 1% audience. But that doesn’t mean that marketing beyond the 1% is useless. You can broaden your reach and your Facebook ad size by advertising to the 6%-10% market. 📉
Build Your Facebook Lookalike Audiences
You’ve determined your max CPLs for various groups and you’re ready to build your lookalike audiences. To do that, go to your Facebook Ads Manager and head to the Audiences dashboard. Click Create Audience and select Lookalike Audience from the dropdown menu.
In the window that appears, you will have the option to choose the lookalike source (such as an existing email list), geographic location, and audience size. When you’ve selected all the options, click Create Audience.
With the tiered approach, you can focus on creating four lookalike audiences: 1%, 2%-3%, 4%-5%, and 6%-10%. 📊
Apply the Tiered Bid Cap to Its Corresponding Lookalike
In the last step, the lookalike audiences will populate. You can then start your conversion campaign and choose your optimization event. That’s when you can add in your tiered bidding, so click the Ad Set level and choose the corresponding bid for each lookalike audience. Remember, you want the 1% lookalike audience to get the highest CPL bid, the 2%-3% to get the next highest, and so on.
Once you’ve set up the tiered bid cap, simply navigate through the rest of the setup process and prep the campaign to go live.
Optimize Your Facebook Ads to Improve CPL Further
Your campaign is approved and live. Yay!
But you aren’t done yet! Now is your chance to monitor the campaign’s performance and improve it even further. Don’t make any changes to the ad immediately, but be sure to watch its delivery over the next several days to see what kind of reception it’s getting.
You may even determine not to make any changes at all. It’s important to remember that any changes you make to the bid levels after the campaign has gone live will reset the learning phase of Facebook’s algorithm, which will negatively affect the delivery of your ads for the rest of the campaign.
If you are going to make changes, the ideal points for optimization are creative material, audiences, and budget. For example, if the 2%-3% lookalike audience is doing really well so far, you might think about adding to the budget for that tier to gain even more leads.
Whether, and how often, you optimize your campaigns is up to you and your business. Regardless, it’s key to continually review and learn from your campaign performance to maximize ad spend and scale moving forward.
Optimize Your Facebook Bids by Placement
When you place an ad through Facebook Ad Manager, there are a number of different places a user can see it. Where you place the ad can be as important as the Facebook ad size, frequency of the ad, the creative copy, and the targeted demographic.
Choosing the placement is another way to optimize your campaign and decrease the CPL. You can choose multiple placements with a tiered bid (just like your separate lookalike audiences). For example, you can choose the 1% lookalike audience and then segment your ad spend for 40$ on Facebook News Feed Mobile, $30 on Instagram News Feed, $20 on Instagram Stories, and $10 on Facebook News Feed Desktop.
Your ad spend and placement priorities are going to be based on your brand and your targeted audience. Don’t just guess, use the data you have available to make an informed decision. If you have past Facebook advertising campaigns, review them to see what placement worked best for your biz. 💲
If you don’t know which placements will work best, try using Facebook’s offline sales conversion tool, which lets you upload a list of buyers that it matches against the campaign to reveal which leads converted into purchases.
Create an Offline Event Set
To use Facebook’s offline sales conversion tool, you have to set up a new offline event set. Here is where Facebook will place all your offline conversion info. To get started, go to Offline Events in Ad Manager and navigate through the options to create an offline event. Then you can click Upload Offline Events and upload a CSV file of your business sales so Facebook can match sales against existing information.
The CVS file needs to include the following information about the purchaser: first and last name, email address, event (i.e. lead), timestamp of the date and time of purchase.
I suggest doing this weekly for the best information. If you can’t manage weekly, be sure to do it at least monthly because Ads Manager can’t match sales past 28 days. 🗓️
Map the Data in Facebook
After uploading the CVS file, map the data in Facebook. The platform will generate a match rate to see how the number of leads compares to the number of purchases.
Once you see your match rate, you can always return to Ads Manager to review campaign performance and optimize as needed. This just gives you more information about the success of your ad. The more data, the better! 🤓
On a final note, be aware of your Facebook ad size when creating the lookalike audience. A smaller audience may closely mirror your source audience, but it may also be too small for effective advertising. You might need to broaden your view. I recommend creating a lookalike audience of a minimum of 1,000 people, and ideally somewhere between 5,000 and 50,000. You want people to see your campaign, after all! 👀
Facebook has offered lookalike audiences as an option for advertisers since 2013. Over the years, brands have realized the incredible ROI from harnessing lookalike audiences. They are especially helpful if you don’t have a perfect picture of your target audience yet. Adding the tiered cap scale lets you diversify your audiences, gather qualified leads, and convert customers!