How to Set Up Effective Audience Targeting on Facebook Ads?

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Facebook has a wealth of demographic data on its users, which you can use to target your ads. However, simply targeting by demographics alone is not always the most effective way to reach your target audience. It can be challenging to know how best to set up the audience targeting in Facebook ads for maximum effect.

To increase Facebook ad performance, we need to experiment with targeting different audiences and continue to learn about which types of people are most likely to be interested in your product or service.

Thus, this article will walk you through the recommendations for designing your campaign and a structured method experimenting with different audiences for better Facebook Ads optimization.

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Understand Your Conversion Funnel

Audience Targeting and Experimentation

Iterative Experimentation Process

Understand Your Conversion Funnel

The first step for effective audience targeting is understanding your conversion funnel and identifying the stage(s) you want your ads to influence. For example, the retargeting funnel mainly influences those who have visited your product pages or added to the cart but never purchased on your website.

Thus, knowing your funnel will help you better identify and target those audiences that are most likely to convert. The ARR funnel (Acquisition, Retargeting, and Retention) is the most commonly used framework for running an online retail business. Here is how it looks:

Acquisition: Reach out to new audiences to know your brand and products.

Retargeting: Re-engage with the high intent web visitors to make a purchase.

Retention: Upsell or Cross-sell to existing customers responsive to offers, often interact with your brand, and enjoy making purchases.

You may refer to the recommended targeting audience and best practices at different funnels below.

Funnel/ AudienceBest Practices
  • Interesting Targeting
  • Broad Targeting
  • Lookalike Targeting
  • Offers: New Arrivals, Promotion, or Sales
  • Ad Format: Image/Video, Carousel, Collection
  • Promote the same ad post even with multiple ad sets to build social proof.
  • Maintain the ad serving frequency between 2-6 and reduce the budget if it exceeds 6.
  • Visited products pages or added to cart but never purchased for the past 30 days.
  • Added to cart but never purchased for the past 30 days.
  • Offers: Dynamic Catalog based on products viewed or added to cart
  • Ad Format: Carousel, Collection
  • Include ad copy that creates a sense of urgency, e.g., “Complete your purchase while it last!” or “Selling Fast!”.
  • Ad primary text: Try using emoji star ratings, social proof & satisfaction guarantee to convince the potential customers.
  • Maintain the ad serving frequency between 4-8 and reduce the budget if it exceeds 8.
  • People who purchased for the last 180 days.
  • People who purchased for the last 60-180 days.
  • Offers: New Arrivals, Promotion, or Sales
  • Ad Format: Image/Video, Carousel, Collection
  • Promote the same ad post even with multiple ad sets to build social proof.
  • Maintain the ad serving frequency between 8-12 and reduce the budget if it exceeds 12.
Recommended Audience Targeting & Best Practices by Funnel

Audience Targeting and Experimentation

Now that you understand your conversion funnel, it is time to start experimenting with different audiences. The most efficient approach is to cast a wide net first to identify where the best audiences are “hiding”. Once we’ve found them, we may continue growing in those directions.

It is crucial to test as many angles as possible while identifying the ideal audiences for your acquisition funnel. For example, targeting criteria based on the topics they are keen on, community or events they are engaging with, other products or services they are using, or even your competitors. 

Below are the recommendations for audience targeting and experimentation, which give you a structured method to increase the ad performance.

Acquisition Funnel

When setting the audiences to test at the acquisition funnel, the best strategy is to test whether conversions will arise from the quantity or quality of data. You can start by setting up Existing Customers Lookalike 5% from one side of the scale and Loyal & Promising Customers Lookalike 1% from the other side. This tactic allows you to test the broadest customer segment vs. the most specified one. Then, we try to narrow the “net” based on the ad performance (or ROAS).

As shown in the diagram below, the ROAS for Existing Customers Lookalike 5% is lower during the first test, so we narrow the targeting from one side of the scale (quantity) to Existing Customers Lookalike 3% while maintaining the other side (quality) to proceed for the 2nd test.

facebook audience experimentation
Recommended Audience Testing for Facebook Ads

Once you identify the winning audiences with higher conversions (or ROAS), narrow your targeting criteria by experimenting with other audiences with similar actions or attributes. For example, suppose the Loyal & Promising Customers LA 3% is the winning audience. In that case, you can then test further by including other interests or behaviors targeting to see if you can improve the ROAS further. 

Advanced Tips: For acquisition campaigns, we would strongly recommend setting your budget at the campaign level and letting the Facebook algorithm automatically allocate your budget to the audiences that may give you the best results. Check out our other blog post to learn more about setting your ad budget at the campaign level vs. ad set level.

We recommend using the same approach for other customer segments, but first, we have to identify the respective segments that belong to which side of the scale. Example as below:

The Widest Customer Segment (Quantity)The Most Specified Customer Segment (Quality)
Existing Customers (Lookalike 5%)Loyal & Promising Customers (Lookalike 1%)
Broad TargetingInterest & Behavioral Targeting
Infrequent Low AOV Customers (Lookalike 1%)Frequent High AOV Customers (Lookalike 1%)
Examples of Audiences Testing for Acquisition Funnel (Quantity vs. Quality)

Retargeting Funnel

Retargeting funnel requires a different testing approach than the acquisition funnel. Its audience size is usually smaller and mainly relies on the traffic driven at the acquisition funnel. Retargeting is more of onsite behavioral targeting that considers the actions and attributes that your visitors have been doing on your site, pages, or products.

For example, you can start by targeting those who visited product pages or added to the cart but never purchased in the last 30 days, as this audience shows higher intent to purchase.

Once you’ve covered the entire retargeting funnel, you can test the performance uplift by testing out more complicated audiences, such as the top 25% visitors in terms of time spent on your online store. However, we do not recommend narrowing the targeting criteria further by setting any demographic and interest targeting as this may lead to an audience that’s too small to be effective.

We recommend setting the budget at the ad set level for retargeting campaigns. Doing so allows you to easily create an A/B test to test which audiences give you better results and scale them accordingly.

Retention Funnel

We recommend testing audiences based on their actions and attributes on your website for retention campaigns, similar to retargeting. For example, if you want to try basic retention by increasing your customers’ purchase frequency, go for those who just purchased for the last 180 days.

Depending on the nature of your business, you may also want to have a split test with your customers who haven’t bought for the last X days (by excluding those who purchased recently). Each business will have a different purchase interval, and we recommend checking the data from your eCommerce system to study the optimal purchase interval.

We had an experience where we subjectively think that the customers are less likely to make subsequent purchases within the first 60 days after their first purchase. However, we found that 61% of the customers will make their 2nd purchase within the first 60 days, and 33% even made the 3rd purchase within the same period. We even validate this finding by setting up similar audiences testing (Post Purchase 180 days vs. Post Purchase 60-180 days) on Facebook Ad. Eventually, Post Purchase 180 days is still the winning audience with much higher ROAS.

Once you have covered all your bases, you can try more specific audience targeting, such as category/product-specific targeting. However, again, try not to set demographic and interest targeting criteria. Otherwise, your audience size will be too small, making it difficult for the Facebook algorithm to give you good results, or at worst, it could be zero conversion.

Similar to retargeting, it is advisable to set the budget at the ad set level if you wish to conduct split testing on the audiences.

Iterative Experimentation Process

To achieve the best possible results, we recommend a process of iterative experimentation – testing different audiences and ad creatives/formats at different cycles.

Then doing more tests based on what you have learned from your experiment and adjust your targeting and ad creatives accordingly. This is where Facebook Ads truly shine. It allows for constant optimization through a good experimentation process.

To make this experimentation as efficient as possible, we recommend the following process:

facebook ads iterative experimentation
Recommended Iterative Experimentation Process for Facebook Ads Optimization

Getting the right audiences may take some trial and error, but you can scale in that direction once you start seeing good results. However, merely running Facebook ads isn’t enough.

Here’s a secret tip for you: Based on our experience, it seems to have a positive correlation exists between Facebook Ads and email marketing. We often see better results when combining Facebook Ads with email automation and campaigns.


That’s it! We hope this article can give you a better understanding of what works well on Facebook Ads and help you increase your Facebook Ads performance through better audience targeting and experimentation process. 

For more advanced tips on how to get better Facebook Ads results, you might want to check out the following articles:

If you’re looking to outsource your Facebook Ads campaign to a digital marketing agency, or if you want assistance on building effective ads for your business, feel free to drop us a message. We offer Facebook Ads managed services, and we’re always happy to help! 🙂

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