When you have 2 Billion users, the question is no longer can I find my niche. A better question is how to connect with the right prospects, so you do not squander your budget on low value ones. That is why Facebook’s Custom Audiences is an important component to find these prospects for your business.
Custom Audiences have been on Facebook for years. However, one of the new tools Facebook added to Custom Audience is the ability to track the Lifetime Value (LTV) of Facebook ads.
This is a game changer, because you can find prospects based on how much money they can help your businesses earn over a customers’ lifetime.
What is Facebook LTV Custom Audiences?
Before we get into how to use the Facebook LTV Custom Audience tool, we want to review what Lifetime Value (LTV) means for your business. From a business perspective, it is imperative to know what the lifetime value of a customer is. Being able to understand this value when you do Facebook ads helps you understand the best places to spend your advertising dollars.
That is because when you advertise on Facebook you must look beyond the first sale. According to AdSpresso, the average Facebook CPC is $.27. That means if you want 100 visitors to come to your site, you need to spend $27.
However, if you only convert one customer to buy a $10 product then advertising on Facebook does not make sense. On the flip side, if you know the average customers’ LTV will be $100 you can confidently keep marketing your business on the social network.
Facebook now allows you tie in real world profit and loss strategies with their advertising platform. By entering in the correct information on Facebook ads, you tell the social network how they can connect you with higher value customers.
Identifying Your Facebook LTV Custom Audience
To help you use this tool effectively, we need to start by identifying your ideal audience.
Facebook can help you target these prospects, but only when they have the right information. It is your job to provide the best information to enhance your audience. Here are some questions you need to ask to identify your ideal customer.
- Who are your top three customers? Why?
- What behaviours make them so valuable?
- How can you measure these behaviours to quantify and track them online?
- How much do these customers typically spend?
- How often do they purchase from you? How many times will they purchase from you over the course of your business?
Once you understand this, you can match this to Facebook’s Lookalike Audience criteria. Fortunately, you can put these questions into a spreadsheet to turn them into customer data files.
This means when you compile your audience in a spreadsheet you can match it up to specific Facebook data points to help the social network find similar customers to your core audience. Below we discuss how to do this on Facebook.
Note: You need at least 100 people on a list from one country to do this with Facebook ads. If you do not have 100 people, contact us and we can go over some additional strategies to help you build your audience on Facebook before you start your next ad campaign.
7 Steps to Add Facebook LTV Custom Audiences
Once you have a spreadsheet of your customers, you want to incorporate this into your Custom Audiences.
Step 1: Go to the Custom Audience features in the Facebook Ad Manager.
Step 2: Select the Customer File. Then in the next dialog box, select “Include LTV for better performing lookalikes.”
Step 3: Click Get Started for the Value-Based Custom Audience. Read and accept Facebook’s Value-Based Lookalike Terms of Service.
Step 4: Add your custom audience file along with customer data to help determine the LTV. Facebook provides you with a file template on this page to help you
Step 5: Match the correct Customer Values Column.
Step 6: Make sure the data correctly maps the path from your list to Facebook’s value list. Then use the upload and creation button to add the list to Facebook.
Step 7: Create a Lookalike audience based on your LTV Custom Audience you just created.
You now created your first Lookalike audience based on your Facebook LTV Custom Audience values. This tool can accurately help you target the highest yielding prospects for your business.
If you still need help improving your Facebook LTV Custom Audience then contact us to speak with one of our expert social media consultants.