Media Planning & Buying

Under the Hood of Facebook’s New Custom Audiences

September 21, 2012

In early September, Facebook launched a new targeting feature called “custom audiences.” Custom audiences allows advertisers to use encrypted personal information about users, including their email, phone number and Facebook user ID, and match it to their CRM databases. The result is that marketers can sync both online and offline data, and target their offline customers directly on Facebook.

Facebook already allows advertisers to target users by personal information including location, age/birthday, interest & education

By using custom audiences + layering in any additional targeting, advertisers can further hone in on their desired audience and correctly identify individuals who have already connected with them in other channels.

How can marketers use Custom Audiences?

From the advertiser perspective, this new update is a huge benefit as it allows brands to target users based on their offline/CRM segmentation efforts. Prior to this, advertisers could only use online data provided on Facebook. This new feature will allow advertisers to reach segments of the Facebook audience that they might not have originally targeted.

Advertisers can also use this new targeting to send tailored messaging. For example, if there is a list of users within a loyalty program, they can be targeted with ads about special promotions or sales. Prospect lists or lapsed customer files can also be leveraged in a similar manner, allowing Facebook ads to play in a space much farther down the purchase funnel than they had previously. This can lead to a shift in how marketers message users if this proves to be more effective and efficient than sending messages via email or direct mail.

How do Custom Audiences work?

There is no limit on the number of custom audiences that an advertiser can create. Lists can be edited over time to add/remove users as well. The data matching technique is also currently free of charge during its early phases in market.

Advertisers can use the Power Editor to upload data, which is then matched to Facebook’s database in order to identify users. Facebook never actually receives the advertisers data list – instead data is hashed (encrypted) through the Power Editor and then sent to the Facebook server.

The nature of how personally-identifiable information (PII) is being incorporated into this new form of ad targeting – albeit encrypted – is a practice that has invited scrutiny from privacy experts in the industry, as well as from consumers. That said, custom audience targeting does adhere to commonly accepted industry rules and standards regarding the collection and use of consumer data. What’s more, the concept of data matching is nothing new and has been done by multiple research companies and websites for many years (Acxiom, Experian and Epsilon have partnered with the portals on programs for several years now, and even developed their own internal ad buying platforms).


Overall, this new offering is an absolute win for marketers who are looking to refine targeting and put their offline data to use on the most popular social media site.

*UPDATE*: In other data news, Mashable reports that Facebook is teaming up with Datalogix to “cull information from loyalty cards and programs from more than 1,000 retailers.” This will allow marketers to track the efficacy of their Facebook programs against online sales by using third-party data.