What It Is
A custom audience is an ad audience built from your own first-party data. The most common sources are customer email lists, website visitors via a tracking pixel, app users, video view audiences, and engagement on your social profiles. Once built, a custom audience can be targeted directly (to re-engage past customers) or excluded (to keep ads from showing to people who already converted).
Why It Matters
Custom audiences are the foundation of retargeting and the seed material for lookalike audiences. They also make ad budgets smarter by excluding the wrong people, like existing customers from a new-customer acquisition campaign, or recent purchasers from a campaign promoting the thing they just bought.
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