Janet Williams good question. Facebook lookalike (LLA or LAL) audiences are different from retargeting.
LLA are top of funnel - like interests, they help you reach new users who to Facebook’s AI “look like” your previous visitors or previous visitors who have performed some action (like purchase event).
Retargeting is reaching your site’s actual visitors (BoF) with ads. You can reach them with more top of funnel creative for users who simply viewed a page or more bottom of funnel creative, for users who added to cart to began checking out. We even use Facebook dynamic product ads (and email if they’ve given us their email address) to show users products they have viewed or added to their carts.
As we scale we find that the retargeting converts better but audiences are too small (frequency goes too high) so we have to push new visitors to the site with top of funnel ads - which don’t convert very well, but should be cheaper cpc and allow us to grow our retargeting audiences. We then retarget the people who have visited.
Additionally we should test the top of funnel audiences (LLA, various Interests) against each other.
I recommend starting with the smallest LLAs for ToF and single interest dynamic creative ad sets.