Now that you have read our previous blog article, “Can you recognize customers on Facebook?” you may be facing a dilemma. The dilemma is “which type of audience should you be targeting?” Should you be targeting only your custom audience or should you be targeting only look alike audience? You may also think about going for a retargeted Ad on Facebook. It’s really important decision in your Facebook Marketing plan to decide about the type of Target audience you would be choosing for your campaigns.

So, how should you go about it?

I cannot answer this question. Why? Because it would be sin on my part to suggest any targeting strategy without knowing the goals of your Facebook campaign. So, it really depends on what you want to achieve from the campaign. Do you want to build brand awareness or you want to drive new traffic? Do you want to build fan base for your page or do you want to have conversions on your website (landing page).

For my business, if I have to decide on the Facebook ad spend strategy, I would take the approach of an investor.

An investor’s approach to Facebook Ad Spend


An investor always looks for diversification. He doesn’t want to put all his eggs in one basket. Even though one or two stocks look lucrative in terms of their potential to give immediate returns, the investor know that there are inherent risks as well. He can’t bet on just a few lucrative stocks and take the risk of complete bankruptcy.

Let’s apply the approach of an investor in our ad-spend strategy. For a Facebook advertiser, the stocks are the target audiences- Demographic targets, custom audience, look-alike audience and retargeting. You may want to put all your ad-spend in one of the above target audience based on your business or campaign’s marketing goals. But that has to be clearly justified by the campaign goals. However, when you are not sure of the results from the above target audiences, you may take a diversified approach.

For example, when your goal is only brand awareness and not direct response then you go for demographic targeting or look-alike audience and thus, exclude your custom audiences and retargeting. However, when your goal is to have your target audience take actions such as newsletter sign ups, or sign up for event, then you may take a diversified approach towards he target audience.

Ad-Spend Diversification

So, what is this diversification anyway?

Diversification is when you distribute your ad-spend across the various targeting options. Suppose you have $1000 dedicated for Facebook Marketing with the objective of Newsletter sign ups.

Objective: Newsletter sign ups

Allocated Budget: $1000

Targeting options: Demographic targeting, custom audiences, look alike audiences, Retargeting.

Diversification is to distribute your ad spend across all these segments. The following could be one of the various combinations that are possible:

  1. Demographic Targeting: $200
  2. Custom Audience: $300
  3. Look-alike audience: $200
  4. Facebook Retargeting: $300

How did I decide on the above distribution of ad-spend? Well! I just did it based on my experience with my business’ industry. It is not the point that how much you allocate to different segments. The point is not to put all your eggs in one basket.

Why do I need to diversify?

You need to diversify because you don’t know the future. Let me explain. Look at the marketing funnel in the picture below:



If you get 1000 visitors to your website from a campaign, probably only 100 of them would register for the newsletter. Out of these leads, only 1 may buy your product or service.

You do not know which source this customer may come from. There are just too many variables here Eg. CTR, newsletter sign up rate on the landing page and customer conversion rate. People get filtered out at each stage.

For direct response marketing, it is important to take in as many people in the first stage as possible. You may identify the most lucrative sources later, after you have sufficient conversion data. This data would come only when you experiment with all these target audiences.

After you have collected sufficient data (based on which you may take decisions), then you may increase your spend on your high return segments whereas decrease the spend on other segments. If you observe that one of your segments does not have a satisfactory ROI, then you may discard it totally. But this data would come only after you have done initial experiments with all the four different segments.

Too few dollars of Ad-spend

What if your boss allocates only $100 for Facebook Ad and asks you to show positive ROI on it? Well, I can totally understand your situation in this case. You will have to take a judgment call in this situation (this is of course stupid to do in the First campaign)? Which audience do you think would have the highest tendency to convert?

For example, if you are digital marketer of an e-commerce company and you have a list of customers in your email lists who are all crazy about deals. Now, if you are planning to run a discount deal, then you may want to advertise to only this custom audience. You’ll get the maximum click through rates on your ad and probably the best conversion rates on the shopping cart as well.

You would certainly loose some customers whom you might have got if you had advertised to all the audience. But remember, when are you are limited by marketing budget, it’s always good to go with the highest ROI segment.