Once you're on Settings>Preferred page audience, you’ll simply start at the top of the page to make your selections, and roll down through all of the choices. For a local business, the locations choices are critical - these options include country, state, city and zip code, plus the ability to set a radius. This is where you target customers who are near enough to actually buy or visit your location.
If your goal is local sales, it’s important to set this geotargeting within a realistic location . Don’t hope they’ll buy online from all over the world - pick a location where the majority of your customers who buy come from.
If your Page is for a physical location - such as a retail store - you’d want to set this for your city (either within the city limits or a radius of a reasonable driving distance, such as five or ten miles). Choosing your state isn't realistic if you don’t have customers that come from all over. You can also select more than one location, which is particularly useful for brands with multiple physical locations.
Be ruthless and realistic in your targeting so your Page generates results, otherwise doing this task is a waste of time.
If age ranges apply to your target audience, don’t skip over this option. Narrow it down to the ages most relevant to your business or product. Gender may or may not be applicable - if your socks don’t come in men’s sizes, only women’s, well…. you get the idea.
The “interests” section is where this truly becomes most effective - this is where you can identify topics that resonate with your audience and make them more likely to be interested in your Facebook Page.
You might logically think of this as a keyword tool similar to Google keywords, but it’s a bit different. Here’s how Facebook defines interests:
“Likes and Interests allows you to refine your ad’s target audience based on what they’ve included in their profiles, as well as the Pages, groups and other things on Facebook they’ve connected with. This includes sections like interests, activities, favorite music, movies and TV shows. Your audience won’t be shown the ad because they search for the term you’ve targeted or as a result of other actions they take on Facebook.”
Make your selection of interests relevant, but add in as many as you can think of that fit your target audience. Don’t be stingy. Facebook won’t exclude people who don’t fit the interests you select, so you aren’t hurting your reach, but you do want to help Facebook target the right audience as much as possible. Add in as many as you can think of, as long as they're closely relevant. If you get too generic, you aren’t giving Facebook enough guidance to narrow down reach effectively, and setting this up won’t be useful. It’s also okay to go in and change or update these preferences occasionally.
One last feature of Preferred Audiences that might be worthy of testing is the ability to exclude certain audiences. You can only exclude by age, gender, location and language, however, so you can't use it to exclude competitors or certain sub-interests.
That’s my two-cents worth on this topic. This is very useful for page managers, so if that’s you, go check it out.