Interest targeting, custom audiences, lookalikes, and retargeting - what each one does, and the order most businesses should actually use them in.
The classic approach - picking interests, behaviours, demographics, and locations to define an audience. It still works as a starting boundary, especially for location and age range, but it's less precise than it used to be on its own. Meta's delivery algorithm now does most of the fine-tuning within whatever boundary you set, so treat interest targeting as "who's eligible," not "exactly who will convert."
For local businesses this matters more than almost any other setting. A radius around a physical location, or a specific city/area, keeps budget from being wasted on people who could never realistically become customers - a salon in Gulberg doesn't need impressions shown to someone in Faisalabad.
Targets people based on actions Meta has observed - device usage, purchase behaviour patterns, travel habits. Useful for niche cases (e.g. frequent online shoppers) but generally a smaller lever than interest and location for most small business campaigns.
Built from a business's own data - website visitors (via pixel), a customer phone/email list, or people who've engaged with the Facebook or Instagram page. This is the foundation for retargeting and the source material for lookalikes.
Meta takes an existing customer list or pixel data and finds new people who statistically resemble them. This is usually the strongest-performing cold audience available, but it needs enough source data first - a lookalike built from 20 customers won't be nearly as sharp as one built from 500.
People who already interacted with the business but didn't convert - site visitors, video viewers, past ad engagers. Because they're already familiar, retargeting audiences almost always produce the lowest cost per result of any audience type. Any active campaign should have a retargeting layer running alongside cold targeting.
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