How to Create Facebook Custom Audiences That Convert

Running ads on Facebook can quickly become expensive, which is why you’ll want to target your ads to people who are most likely to convert. Facebook custom audiences are a powerful tool that allows you to target and segment your potential customers with laser-like accuracy.

In this comprehensive guide, I’ll explain what custom audiences are, explore the different types of custom audiences you can create for your Facebook advertising campaigns, and finally, find new customers by turning your custom audiences into lookalike audiences.

What are Facebook custom audiences?

In a nutshell, Facebook custom audiences are an ad targeting option that lets you find and create your own audience segments. These segments usually consist of people who have already interacted with your business—such as people from an email list or CRM, website visitors, and people who’ve interacted with you on Facebook. You can even create custom audiences that segment people who’ve already purchased from your business.

You can create off-Facebook custom audiences (i.e., people who’ve interacted with your business outside Facebook) and on-Facebook custom audiences (i.e., people who’ve interacted with your business inside the Facebook ecosystem).

Overall, showing ads to your custom audiences is more likely to result in conversions because they’ve already shown some interest in your business. Here at Madgicx, we’ve created a unique segmentation system for building Facebook audiences, known as the ARR Method (Acquisition, Retargeting, and Retention).

The acquisition stage is sub-divided into Prospecting and Re-Engagement. Prospecting audiences consist of people who don’t know your brand at all. Audiences in the Re-Engagement stage, meanwhile, have engaged with your brand but haven’t visited your website or purchased from you.

Retargeting audiences, in contrast, have visited your website but haven’t converted. Finally, Retention audiences are current customers who have the potential to be transformed into loyal customers.

Based on the ARR Method, off-Facebook custom audiences fall under the Retargeting stage, while on-Facebook custom audiences fall under the Acquisition Re-engagement stage.  

For even more refined targeting, you can add or remove people who have carried out specific actions—like removing those who’ve purchased a product from your store in the last 30 days. This ensures that you’re not showing your ads to the wrong group of people (such as people in the Retention stage), resulting in wasted ad spend.

You can also use your custom audiences to create lookalike audiences. These are lists of people you can target with ads because they’re similar to the people who are currently interacting with your business (more on this later).

Recommended Reading: The Facebook Marketing Bible

What are the 4 main types of custom audiences?

While you can create up to 500 custom audiences per Facebook ad account, this feature can be broken down into four broad categories:

1. Website custom audiences

This is a targeting option that matches your website visitors with people on Facebook. Tracking is done using the Meta pixel.

The Meta pixel is a JavaScript code that you can add to your website to track visitor activity. It’s also an analytics tool that helps you measure and enhance the effectiveness of your ad campaigns.

While you could previously create a custom audience for any group of website visitors you wanted to reach with Facebook ads, new privacy updates to Apple’s products are changing the way advertisers track web conversion events.

For starters, Apple users who’ve upgraded to iOS 14 have access to new privacy features. Apple now requires every app in the App Store that engages in tracking to show a prompt to iOS 14 users asking them if they’re willing to opt-in for tracking. This prompt is mandatory and complies with the company’s AppTrackingTransparency framework.

As a result, you won’t have access to crucial data from iOS 14 users who’ve chosen to opt-out of tracking. This will limit your ability to create custom audiences for retargeting purposes.

A great workaround is to switch to server-to-server reporting—namely Facebook’s Conversions API (CAPI). This tool allows you to report web conversion events via server-to-server data transfers. In other words, your server will be able to report website events directly to Facebook’s server via a secured connection without the use of browser cookies.

Integrating CAPI will help compensate for the loss of data due to the iOS 14 privacy changes and improve ad targeting.

2. App activity custom audience

This custom audience is a great way to target ads to groups of people who have already taken desired actions on your app. You can use the Facebook SDK to pass data from your app to Facebook. This data can then be used to specify who should be included in this custom audience.

3. Customer list custom audience

This type of custom audience allows Facebook to match the information you provide about your customers with existing Facebook profiles. The info found on a customer list or a list of email subscribers (such as email, phone numbers, and addresses) is known as an identifier. Facebook will use this information to find the audiences you want your ads to reach.

Your customer list can either be a TXT or CSV file that has these identifiers. For more information on how to format and upload a customer file, as well as create this type of custom audience, check out Facebook’s step-by-step guide.

Note that you can only create a customer list custom audience if you’re the owner of the ad account connected to the Business Manager. Alternatively, the owner will need to provide you with either advertiser or admin permissions. Neither are you allowed to scrape data from publicly accessible websites or download email/newsletter lists from people who haven’t given you permission to harvest their data.

Pro Tip: Your customer list custom audiences should be updated regularly to remain relevant. You must do this manually once every couple of months.

4. Engagement custom audiences

This type of custom audience is made up of people who’ve engaged with your content across the Facebook ecosystem.

Engagement refers to actions people take while on Facebook, such as watching a video, liking a Facebook page or post, interacting with your products in a shopping experience on Facebook, or engaging with your Instagram account.

Check out Facebook’s guide for the complete list of engagement custom audience types.

Benefits of Facebook custom audiences

Custom audiences allow you to target your warm and hot audiences with laser-sharp ads. Your warm audience refers to those who’ve expressed some interest in your business but need more nurturing to convert, while your hot audience refers to those who simply need a well-timed nudge to convert into customers or make a repeat purchase.

Aside from helping you move people down your sales funnel and optimizing your customer lifetime value, custom audiences allow you to drive very specific business goals. This, in turn, will help you derive the best ROI from your advertising campaigns.

Find new customers by turning your custom audiences into lookalike audiences

As previously mentioned, you can use your custom audiences to create lookalike audiences.

Lookalike audiences belong to the top of the sales funnel (i.e., the Acquisition Prospecting stage). Targeting these audiences allows you to reach new potential customers who are likely to be interested in your business because they’re similar to your existing leads and customers.

This tactic is integral to every Facebook advertiser’s audience targeting strategy (alongside interest-based targeting). It is commonly used by Facebook advertisers to broaden their reach and expand their customer base by leveraging Facebook’s enormous database.

​​The main advantage of lookalike audiences over interest-, location-, and demographic-based audiences is that it exposes underlying commonalities among your existing leads and customers. They may have common characteristics you were not aware of. These can be revealed by Facebook's algorithm, allowing you to tap into profitable audiences you were not able to reach before.

For more information on how to build and test powerful lookalike audiences, please check out our actionable guide.

In the next section, we’ll show you how to create custom audiences that will drive the most profitable customer action. We’ll also share examples of custom audiences that can be turned into dynamic and profitable lookalike audiences.

4 powerful custom audiences that drive business goals

1. Use website custom audiences to target site visitors with abandoned carts

This custom audience allows you to target previously qualified visitors with Facebook ads that encourage them to complete an action.

Let’s say you have website visitors who’ve added items to their shopping carts but didn’t proceed to checkout. You could target these visitors with ads that remind them about the items they’ve left in their carts and offer them an incentive (like free shipping for the next 24 hours or a 20% discount) to complete their purchases.

To create an abandoned cart audience for retargeting, start by going to your Facebook Business Manager account. Select the three horizontal lines on the left-hand side of your screen. This will open the “All Tools” tab. Select “Audiences” from the list of shortcuts.

Once you’re in “Audiences,” click the “Create Audience” dropdown and select “Custom Audience.”

Next, choose a custom audience source from the list of options. Select “Website” from the “Your Sources” list and click “Next.”

In the “Create a Website Custom Audience” popup, make sure that the correct Meta pixel is selected. Under the “Events” dropdown, make sure that “All website visitors” is selected.

Go to “From your events” (this section can be found lower in the “Events” dropdown). Select “InitiateCheckout.”

If you want to run ads to people who’ve abandoned their carts over the last seven days but don’t want to run ads to people who’ve purchased from your online store during the same time frame, select the following:

• At the top of the popup, you’ll see “Include people who meet ANY of the following criteria”. Make sure this default option is what you see there.
• Under “Events” > “InitiateCheckout” > “Retention” > type 7 days
• Click “Exclude people” > Under “Events,” click “Purchase” > Under “Retention,” type 7 days
• Give your audience a name
• Click “Create Audience”

Consider testing different audience exclusion windows, starting with seven days, then increasing to 14 or 30 days, depending on your custom audience’s performance, as well as the behavior of the ad account and target market.

My suggestion is to give your audience a name that will help you understand your ad targeting parameters, such as “Abandoned Cart (7 days) No Repeat Purchase 7 Days”.

Then, consider the impediments that could be stopping this target audience from proceeding to checkout. Perhaps they’re looking for a discount, or the shipping fees are too expensive. Once you’ve figured out the potential hurdles, create incentive-based retargeting ad copy and creative.

One method is to use Facebook Dynamic Product Ads to address this target audience’s pain points. This is the best way to retarget people who’ve abandoned their carts, especially if you sell many different items in your online store. Your Dynamic Product Ads could inform this audience of free shipping on their carts for the next 24 hours, or give them a great discount to incentivize the purchase.

The main benefit of Dynamic Product Ads is that it allows you to easily target website visitors with ads showing them the exact products they left in their abandoned carts. Using this feature saves you hours of work creating hundreds (or even thousands) of different ads for every item in your catalog.

2. Use website custom audiences to target site visitors who visit product pages on your website

Another great segment of website visitors to target are people who’ve viewed specific pages, such as your product pages, but didn’t make a purchase. This type of custom audience combines a URL condition with an event action.

To create this new custom audience, follow the aforementioned steps to create a website custom audience. In the popup “Create a Website Custom Audience,” choose “People who visited specific web pages” from the “Events” dropdown.

In the URL field, you can indicate the specific web page or pages that must be viewed by this audience. Since you’re trying to target all visitors to your site’s product pages, you’ll need to enter the part of the URL path that leads to your site’s online store. The URL path can contain the word “products” or “collections,” depending on the way you’ve named this category on your website.  

Make sure to set the dropdown option to “contains”.

To ensure proper ad targeting, you’ll need to exclude site visitors who’ve purchased products from your website within a specific time frame.

To make this exclusion, click “Exclude people,” which opens another conditions box.

In the “Events” dropdown menu, select “Purchase”.

Finally, set your audience durations. You can start with seven days for the product page views. If your audience isn’t large enough, you can expand your audience duration. For the purchase exclusion, you’ll want as many people who’ve previously purchased your products to be excluded. To ensure this, set your exclusion to its maximum (180 days).

Don’t forget to name your audience: e.g., Product Page (7 days) exclude customers (180 days). Then, click “Create Audience”.

Since site visitors who’ve browsed your product pages are displaying a higher intent to purchase, you’ll want to retarget this audience with Dynamic Product Ads. By showing them the products they’ve recently browsed, you’re encouraging them to return to your store to complete the purchase.

What’s more, you can use this custom audience to help you warm up your retargeting audiences right before a major eCommerce sale (like Black Friday and Cyber Monday). For more information on how to execute profitable and successful Black Friday Facebook ad campaigns, check out our helpful guide.

3. Use engagement custom audiences to target re-engagement audiences

Another great audience segment to target is your re-engagement audiences. As previously mentioned, people in the re-engagement stage have interacted with your business (e.g., by watching your videos or liking your Facebook page), but haven’t visited your website or purchased from you.

Re-engagement audiences are considered to be very high-quality audiences since they’ve already shown some interest in your business and are more likely to convert. What’s more, those who’ve shown extremely high levels of engagement (e.g., watched more than 75% of one of your Facebook videos) are more likely to become profitable, long-term customers.

One type of engagement audience you could target is your video watchers.

How to create a video watcher custom audience

In the “Choose a Custom Audience Source” popup, select “Video” from the Facebook sources, then click “Next.”

This will lead you to the popup, “Create a Video Engagement Custom Audience.”

To target your most deeply engaged video watchers, consider choosing either “People who have watched at 75% of your video” or “People who have watched at 95% of your video.” In this case, we’ll go with the former.

Select the videos to target by clicking on the “Choose videos” link:

You can select not just the videos from this popup, but also their source (Facebook Page, Instagram Business Profile, etc.). Once you’ve selected the videos and their source, click “Confirm."

Next, you’ll need to confirm the time frame. In this case, let’s target all viewers who’ve consumed more than 75% of this video over the past 60 days. If your videos tend to receive fewer views, you can extend the time frame to 90 days to capture a broader audience segment. Note that 180 days is the maximum time span you can target.

As usual, name your audience, then click “Create Audience.”

Another great re-engagement audience for you to consider targeting is your Facebook Page fans.

How to set up a Facebook page fan custom audience

To set this audience up, go back to the “Choose a Custom Audience Source” popup, select “Facebook Page” from the list of Facebook sources, then click “Next.”

In the “Create a Facebook Page Custom Audience” popup, you’ll be presented with the following options in the “Events” dropdown:

If you want to target the largest possible re-engagement audience, you should go for the second event (i.e., “Everyone who engaged with your Page”) since it includes the largest number of possible actions related to the Page.

Other re-engagement events to consider include the first (“People who currently like or follow your Page”) and the last one (“People who saved your Page or any post). I would only consider the first event if I’m sure that the people who like or follow my page are genuine fans and aren’t friends or family members.

After you’ve chosen the event, confirm the duration (in this case, 60 days, though you can expand the time frame to target a larger audience segment). Name your audience, then click “Create Audience.”

Create Facebook re-engagement audiences with Madgicx

Re-Engagement audiences are a great segment to base your lookalike audiences on. While you can definitely launch highly-targeted custom and lookalike audiences via Facebook Ads Manager, a more efficient way to build and launch these audiences is to leverage Madgicx’s Audience Launcher.

Instead of manually building your custom and lookalike audiences via Ads Manager (which can be time-consuming and error-prone), you can quickly launch your most profitable audiences with the Audience Launcher. Using this product, you can launch a full-funnel audience targeting strategy, complete with optimized ads and audiences segmented using the ARR Method.

Madgicx users have access to more than 100 ready-to-deploy audiences—including Video Enthusiasts and Facebook Fans. Video Enthusiasts target video watchers who’ve watched more than 75% of your videos, while Facebook Fans target people who’ve engaged with your Facebook page or event. You can also launch pre-built lookalike audiences that are based on these two audiences.

For more information on the Madgicx Audience Launcher, check out this helpful video.  

4. Use website custom audiences to target frequent site visitors and deep browsers

If you want to target another custom audience of people that have demonstrated high levels of engagement with your business and are more likely to convert, consider targeting deep browsers and site visitors who’ve browsed your site multiple times.

Follow the aforementioned steps to create a website custom audience. In the “Create a Website Custom Audience” popup, select “People who visited specific web pages” from the “Events” dropdown.

Let’s keep the retention at 30 days.

In the URL field, let’s ensure that “contains” is selected and add a condition that’s true for all of your web pages (such as the name of your business). In this case, let’s say we’re tracking frequent visitors to the Madgicx website; hence, we’ll add the name “Madgicx” to the URL field.

Next, navigate to the “Further refine by” dropdown and choose “Frequency”.

To target highly engaged retargeting audiences, let’s consider targeting site visitors who’ve browsed a page on the Madgicx website at least two times over the last 30 days:

As usual, name your audience and then click “Create Audience”.

Site visitors who’ve visited your website multiple times are displaying genuine interest in your business. This makes them easier to convert and optimize for maximum customer lifetime value. These types of high-quality custom audiences are also a great source to build your lookalike audiences on.

Create dynamic and profitable lookalikes with AI Audiences

Madgicx’s Audience Launcher includes 27 AI audiences which are built using data from your Meta pixel and our eRFM model (engagement Recency, Frequency, and Monetary Value). eRFM audiences are built by segmenting website visitors and customers to create lookalikes based on their level of engagement, recency, and frequency, as well as the monetary value that they bring with them.

A key feature of eRFM audiences is their ability to continuously optimize performance: the AI will analyze an audience over 24 hours and identify which events are most suitable to optimize for. Then, using data collected from the event, it will create a lookalike with slight modifications in recency, frequency, and monetary value. In short, eRFM audiences are tailor-made to your account, enabling them to outperform other audiences.

Conclusion

Custom audiences are a great way to target and segment your leads and customers based on where they are in the sales funnel. By targeting different audiences with Facebook ads that address their pain points, acknowledge their potential roadblocks to conversion, and incentivize them to complete a purchase, you’ll be building a stronger relationship with your leads and customers, which in turn will positively impact your bottom line.

Moreover, if you want to launch a profitable full-funnel audience targeting strategy that encompasses both custom and lookalike audiences, consider utilizing the Madgicx advertising platform, specifically the Audience Launcher and AI audiences.