Value based lookalike audiences are those audiences who are lookalikes of high value customers.

When you create a custom audience list with value assigned to each user / customer, it is called value-based custom audience on Meta. To use value-based custom audience, you need to have the data segregated in a proper required format.

In Meta, the lookalike audiences are not dynamic. In Google Ads, the lookalike audiences is dynamic because it uses optimized targeting and audience expansion that works in real-time to find new lookalike audiences (although google names them as finding high-intent audiences and not lookalike audiences).

Create ‘Lookalike audience’ is a feature on Meta Ads that allows you to find audiences who share similar interests as your existing customers.

You give your first-party audience data to Meta and it will run its algorithm to find users who share similar characteristics, and profile as that of your first-party data.

A 1% value-based lookalike audience means the lookalikes Meta tries to find have just 1% deviation from the characteristics, interests and profiles of your existing users and a 10% value-based lookalike audience means Meta will find more users who even have upto 10% deviation from your sample custom audience. In short, a 1% lookalike is more concentrated and highly valuable lookalike audiences whereas a 10% lookalike is very diluted and finds users both valuable and also least valuable users. Therefore, it is recommended to have not more than 2% lookalike audience.

The core concept of retargeting revolves around targeting the existing users who have already interacted with your business. When it comes to lookalike audiences targeting, Meta tries to expand its audience net by finding and targeting audiences similar to your existing users but not the same existing users.

To create value based custom audiences, you need to sync the data with Meta in the required format either through a CSV or through Conversions API. You need to have a value assigned to each and every customer in the list. The value should most likely be a lifetime value and not a single purchase value.