Paid Social
How the Facebook Ads Platform Grew Up
It is easy to forget how unserious Facebook advertising was three years ago. A small box on the right rail, targeting built on whatever people had typed into their profile, and results that made it hard to justify a budget. Two product releases changed that completely, and neither of them was an ad format.
The two releases that actually mattered
In October 2012 Facebook launched Custom Audiences, which let an advertiser upload their own customer list and match it against Facebook users. In March 2013 it followed with Lookalike Audiences, which takes one of those lists and finds users who resemble the people on it.
Read those two together and the significance becomes clear. Before Custom Audiences, Facebook targeting meant guessing at interests: you selected "cycling" and hoped cyclists who might buy from you were in there. After Lookalike Audiences, you could hand Facebook your actual best customers and ask it to find more people like them. The advertiser stopped describing the audience and started demonstrating it.
Interest targeting asks you to guess who your customer is. Lookalike targeting asks you to prove it, then does the finding for you. Only one of those improves as your business learns.
| Era | How you defined an audience | The limitation |
|---|---|---|
| Pre-2012 | Declared interests and demographics from profile fields. | You were guessing, and profile data is stale and aspirational. |
| Custom Audiences, Oct 2012 | Upload your own customer or subscriber list. | Powerful but capped at the size of the list you already had. |
| Lookalike Audiences, Mar 2013 | Give Facebook a seed list and let it find similar users. | Quality depends entirely on the seed. A bad list produces a confidently bad audience. |
The news feed was the other half
Targeting improvements would not have mattered if ads had stayed in the right rail, which people had long since learned to ignore. Moving ads into the news feed put them in the same visual position as posts from friends, at full width, on mobile. That is why performance improved so sharply, and it is also the uncomfortable part: the format works because it does not look like advertising.
For advertisers the practical consequence is that creative built for a display banner fails here. A feed ad competes against personal updates, so it has to earn attention on the same terms. The ads that work read like something a person would post.
What this means for a small business
The genuine shift is that precision stopped being a function of budget. A local business with a thousand-person customer list can now build a lookalike audience and reach people it could never have identified before, for a daily spend of a few pounds. That capability did not exist at any price for a small advertiser three years ago.
- Get your customer list in order first. Lookalike quality is determined by the seed list, so a list of your best customers beats a list of everyone who ever bought.
- Start with Custom Audiences of people who already know you. It is the cheapest reach you will ever buy.
- Build lookalikes from your highest-value segment rather than your largest one.
- Write for the feed, not for a banner. If it looks like an advertisement it will be scrolled past.
- Test one variable at a time on a small daily budget, and give each test enough days to escape the learning noise.
Key takeaways
- ✓Custom Audiences (October 2012) and Lookalike Audiences (March 2013) mattered more than any ad format change.
- ✓Lookalikes let you demonstrate your audience instead of guessing at interests, and improve as your customer data improves.
- ✓Seed list quality determines lookalike quality. Use your best customers, not all of them.
- ✓News feed placement works because it does not look like advertising, so feed-native creative is required.
- ✓Precision stopped scaling with budget, which is what made the channel viable for small businesses.
Keep reading
Sources
- How to Use Facebook Custom Audiences, Search Engine Watch (2012)
- First Results Are In: Facebook’s New Custom Audience CRM Ads Increase Conversions And Lower Costs, TechCrunch (2012)
- Facebook Lookalike Audiences: A Complete Guide, Jon Loomer Digital
Valter Brandt
Chief Marketing Officer
Valter Brandt is the Chief Marketing Officer of ThisCom, working with clients across the United States and Europe. He has led marketing strategy through the major shifts in social advertising, mobile, content marketing, programmatic media, and marketing automation.
All articles by Valter Brandt →Frequently asked questions
How much should a small business spend to test Facebook ads?+
Enough to gather meaningful data without betting the budget, focused on one objective and one audience at a time. The common mistake is not the amount but the impatience: changing the campaign every two days means every test runs on noise. Pick a modest daily budget, leave it alone long enough to produce a signal, then scale what worked.
What is the difference between a Custom Audience and a Lookalike Audience?+
A Custom Audience is built from data you supply, such as your customer or subscriber list, so it reaches people who already know you. A Lookalike Audience takes that list as a seed and finds Facebook users who resemble those people, so it reaches strangers. Custom Audiences are for retention and re-engagement; lookalikes are for acquisition.
How do I get the best results from a Lookalike Audience?+
Feed it your best customers rather than all of them. The algorithm finds people similar to whatever you provide, so a seed list of high-value repeat buyers produces a far better audience than a list of everyone who ever transacted. A small, high-quality seed beats a large, indiscriminate one.
Why do my display banner designs perform badly as Facebook ads?+
Because a news feed ad sits between posts from friends and family and is judged on those terms. Banner creative announces itself as advertising, which is exactly the signal that triggers a scroll. Ads that perform in the feed look like something a person would post, with a clear reason to stop.
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