Facebook Ads

The Complete Comparison Guide for Retargeting on Facebook

When retargeting users through Facebook Ads, you have two options: You can use either Custom Audiences, or Facebook Exchange (FBX). But which option should you pick? Overall, there is no right answer, as what you pick depends on the circumstances. The table below highlights what the capabilities are with each of the solutions. Below we'll walk you through some use-cases that will explain how to implement some of these products with your Facebook retargeting and direct response campaigns.

facebook exchange vs facebook custom audiences for retargeting on facebook

Mobile Delivery

If you’re trying to drive traffic to a mobile app, use Custom Audiences. This tool is best for mobile-focused companies like Uber or Venmo. However, if you don’t have a mobile app or mobile presence, such as some SaaS B2B platforms, FBX is adequate for retargeting.

mobile app install ad on facebook

Ad Formats

FBX only offers link ads, which are a great way to drive traffic back to a website. If you're a B2B advertiser with a desktop solution or service that wants more web traffic, FBX should be sufficient to meet your goals. For more visual ads, however, you'll need Custom Audiences. This tool is an absolute must for branding campaigns, in which rich pictures or videos become essential. For example, Dos Equis relies on the memorable antics of "The Most Interesting Man in the World" to keep their brand on top of mind for when beer consumers go to the store.

branding objective


Almost 80% of Facebook’s daily users are on mobile. And because FBX is only available for desktop users, you'll increase the reach and visibility of your campaigns by using Custom Audiences. FBX can still be useful for businesses that don’t have a strong mobile presence, such as desktop applications.

Facebook Lookalike Audiences

Lookalike audiences uses pixels that track the user on your page. In Custom Audiences, the pixel additionally tracks email and demographics, which is ideal for getting more users that are similar to your existing ones. With FBX, however, the pixel does not track this extra information, so it can only be used for web retargeting, where you serve ads to convert people who dropped off.

lookalike targeting create audience in facebook power editor

Exclusion Targeting

Exclusion targeting allows you to block existing customers or competitors from your seeing your ads, which helps you be more efficient with your ad spend. It should be used with your existing customer base when you are targeting lookalike audiences, so you don’t waste ad spend on those who've already converted. You can do this easily with Custom Audiences, but it is trickier with FBX.

The problem with exclusion targeting in FBX is as follows. When you set up retargeting in FBX, you can set it so that when someone lands on your page and drops off, she or he is served an ad for certain period of time based on your settings, like 7 days for example. However, if the user converts within 1 to 6 days, FBX is not smart enough to stop showing them the ad, creating wasted impressions.

Access to Facebook’s Targeting

Targeting on Facebook can be very useful. Say you want to go after 18-35 year old males that have an interest in sports and use an Android device. This type of targeting can be used in conjunction with Custom Audiences, giving you the power to create even more targeted ad creatives for people who have landed on your website or mobile app. Facebook's core targeting is particularly useful for your creatives when your call to action is "Download from the Google Play store" versus "Download from the iTunes store."

facebook core targeting on facebook

Here's another example of using Facebook's core targeting. Imagine you are running a conference with a session for women in power. Your ad for the session is for the female audience, and you don't wish to serve ads to the males that have visited your site. In this case, you can use Custom Audiences to serve ads to those who landed on your website, plus segment that list even further to target females with your “Women in Power” ad. With FBX, you are limited to targeting the list of people who’ve previously landed on your website, and you can't segment that list even further. You instead will need to run a retargeting ad that caters to all genders, such as "Register for the Conference Today."

Dynamic Creative

Dynamic creative ads are most useful for businesses that have a product feed, like eCommerce or travel companies. Managing millions of campaigns manually could be difficult, so FBX and Custom Audiences offers a solution that allows you to automatically generate ad creative based on what product the visitor landed on. For example, if a user lands on the Disneyland Marriott page but doesn’t convert, if Marriott has uploaded its feed to FBX or Dynamic Product Ads on Facebook, the ad will automatically retarget the user showcasing the hotel she or he was interested in.

product feed for facebook dynamic product ads

Real-Time Bidding

With real-time bidding, your bids are competing against other advertisers in real time.  Your bid cost will be determined by how many advertisers are bidding for the ad impression. Because of the fluctuation of inventory and demand, every single impression will cost a different amount, making real-time bidding a solution that spends your budget more efficiently.

For the more cost-conscious retargeter, FBX is the better use-case because of the efficiency that comes from real-time bidding. Your ads will never cost more than the impression is worth. With Custom Audiences, you are subject to the network's algorithm which will likely be charging you more for the impression based on your maximum bid and what other advertisers' bid settings were for the auction.

In conclusion, choosing FBX versus Custom Audiences comes down to what you're trying to accomplish. By the looks of it, Facebook is making big and valuable improvements to Custom Audiences, and we absolutely love using it in our own campaigns. With AdStage, you can use Facebook Custom Audiences, and you can even repurpose that further into retargeting on Twitter Tailored Audiences. Which tool do you prefer to use? Let us know in the comments!

AdStage Team