It’s no secret that global Facebook advertising spend has grown significantly over the past year due to sweeping changes Facebook unleashed to their campaign creation workflow, creative options, mobile advertising capabilities, and targeting options. Of these changes, we believe none is more important than the introduction of Custom Audiences targeting. And our customers have shown the same level of optimism; over the past four months, the number of Facebook advertisers on the Marin platform using Custom Audiences targeting has increased by 82% compared to the previous four months.
Custom Audiences provides marketers with a simple solution for targeting audience segments based on first party, customer, or prospect data owned by the advertiser. This means that, by using Custom Audiences targeting, online marketers have the ability target Facebook users based on their purchase history or stage in the conversion funnel and serve uniquely tailored creatives to each audience segment.
While demographic- and category-based targeting has proven to be an effective method of reaching a broad range of Facebook users at scale, an emerging theory in the industry is that Custom Audiences targeted campaigns (which utilize first party customer data) have the ability to outperform category-based targeting campaigns. To validate this hypothesis, Marin recently completed an analysis of more than 5,000 Facebook campaigns across more than 200 Facebook advertisers we work directly with to determine the relative performance of creatives utilizing Custom Audiences targeting vs. creatives using demographic- or category-based targeting.
Of the creatives used in the analysis, those utilizing Custom Audience targeting had a 14% lower cost per click and a 64% lower cost per conversion than those using demographic or category targeting. Additionally, creatives using Custom Audiences targeting had conversion rates 3.87 times greater than creatives using demographic or category based targeting options.
The results from our analysis reveal the following key implications for Facebook advertisers:
- Advertisers who increase investment in Custom Audiences targeted creatives could decrease their overall Facebook advertising CPCs. Custom Audiences targeting is generally narrower (i.e. reaches a smaller quantity of users) than other types of Facebook targeting, therefore we’ve seen it drive lower effective CPCs.
- Advertisers who increase investment in Custom Audiences targeted creatives can decrease their overall Facebook advertising CPA. Custom Audiences targeting increases the relevancy of creative messages by allowing the advertiser to target audiences based on specific products they have expressed interest in. The relevancy of the creative and audience target is generally correlated with the ROI of the creative.
- Facebook users are more likely to purchase from advertisers they have previously engaged with. Custom Audiences targeting allows advertisers to reach customers and/or leads within the purchase funnel, which generally produces higher conversion rates and lower costs per conversion than targeting purely based on profile information.
Facebook Custom Audiences targeting adoption is growing quickly, and for good reason. First, it has proven to deliver better ROI and lower CPCs than demographic and category-based targeting. It also provides marketers with a highly effective way to retarget users on Facebook, with greater flexibility, transparency and control than FBX retargeting. As Facebook continues to broaden its partnership with leading data management platforms, advertisers should expect more and more first-party customer targeting options to emerge using Custom Audiences as means of implementation. Get started now - you’ll be glad you did.