Custom Audiences May Be Facebook’s Most Compelling Ad Product

facebook-logoOne of the most powerful advertising vehicles available on Facebook will probably turn out to be its still little-known Custom Audiences tool. Introduced in August last year, Custom Audiences enables Facebook marketers to target their existing users based on Facebook ID, phone number or email address.

Facebook says that it has taken pains to prevent user data from “leaking” and to safeguard privacy by hashing phone numbers and email addresses. It doesn’t store third party data or otherwise add that data to user profiles.

On the surface, the program will potentially seem scary to privacy advocates. Once you dig deeper, however, it’s not scary — and certainly no more scary than offline direct marketing.

Custom Audiences is a fairly unique and, I believe, compelling tool. It enables marketers to upload their contact databases and find those same users on Facebook. This allows for highly personalized and uniquely targeted campaigns.

While Facebook isn’t the first to enable retargeting to a customer list, it’s usually very challenging to find people online. By contrast, Facebook says that it sees match rates of more than 50 percent and “sometimes as high as 95 percent.” That’s because Facebook has so many users and its “coverage” is so broad.

Marketers can upload an unlimited number of lists (e.g., recent buyers, best customers, prospects) and develop ad creative to address each or any of these customer or prospect segments. Custom Audience targeting can also be combined with Facebook targeting (i.e., demographic, location, interests) for extremely customized promotions and campaigns. It is already being used by some advertisers with significant results.

MGM Resorts, for example, used Custom Audiences to target repeat customers with offers for its Aria, Luxor, MGM Grand and Mirage hotels. The company reportedly saw a 5X return on ad spend. That’s because of the precision of these ads. In addition, online shopping site JackThreads used it to target inactive buyers. There was a 6X return on ad spend (used in combination with Facebook targeting). The site also reported a 30 percent lower customer acquisition cost vs. other channels.

Most fascinating to me is the way that Custom Audiences helps bring together online and offline marketing. It also could dramatically increase the sophistication and effectiveness of campaigns on Facebook. Mobile can be separately targeted as well.

Custom Audiences can be used at a basic level to help build more followers, but it can equally be used to drive regular consumers or dormant buyers into physical stores. It can also be used to retarget online buyers who’ve abandoned shopping carts on e-commerce sites.

The versatility and creative possibilities opened up by Custom Audiences are extremely broad — and very powerful.

Related Topics: Channel: Social Media Marketing | Facebook | Facebook: Advertising | Facebook: Mobile | Facebook: Privacy | Features & Analysis | Top News

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About The Author: is a Contributing Editor at Search Engine Land. He writes a personal blog Screenwerk, about SoLoMo issues and connecting the dots between online and offline. He also posts at Internet2Go, which is focused on the mobile Internet. Follow him @gsterling.

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