Why is understanding the 'audience overlap' metric crucial when running multiple Instagram ad campaigns targeting similar demographics?

Understanding the audience overlap metric is crucial because it reveals the extent to which different ad sets are targeting the same users. High audience overlap means your ads are competing against each other in the auction for the same individuals. This internal competition drives up costs (Cost Per Mille/CPM, Cost Per Click/CPC), reduces ad delivery efficiency, and can lead to ad fatigue. 'Ad fatigue' happens when users repeatedly see the same ads, decreasing their likelihood of engagement and harming campaign performance. By analyzing the audience overlap tool, you can identify redundant targeting and consolidate audiences or exclude overlapping segments. For instance, if two campaigns both target 'females aged 25-34 interested in fashion' and the overlap is 70%, it indicates significant redundancy. To mitigate this, you could combine the campaigns, refine targeting criteria in one campaign to focus on a more specific niche within that demographic, or exclude the overlapping segment from one of the campaigns. This prevents your own ads from driving up costs and ensures a more efficient allocation of your ad budget.