Audience overlap is the share of people who show up in more than one targeting group at once — two saved ad audiences, or two competitors' followings. A high overlap between two groups means they are effectively the same audience, whatever their labels say.
For a competitor set, a high overlap between two accounts is itself a finding: it says an audience already moves between them, which is exactly the audience a new post is trying to reach.
For a content strategy rather than an ad account, the same idea applies to a competitor set: two accounts with heavy audience overlap are effectively one comparison, not two.
High overlap between an account and a named competitor is also a useful signal on its own: it says the two are already competing for the same attention, whatever the category labels on either account suggest.
A common misreading is to treat overlap as if it settled the comparison on its own: two accounts can overlap heavily in followers and still post to very different results, because overlap describes who could see a video, not who actually watches, engages with, or acts on it. Overlap is a reason to look closely at an account, not a verdict on how well it performs.
Low overlap is also worth reading the right way. An account with almost no overlap against an obvious same-category name is not necessarily uncompetitive — it may be reaching a different segment of the same market, which is itself useful for deciding whether to chase that audience or leave it alone. Overlap is one input into building a competitor set, not the whole test: an account with low overlap but genuinely comparable content can still belong on the list, and one with high overlap but nothing worth learning from can still be dropped.
Where it comes from
Meta's own Ads Manager has a dedicated feature for this, under overlapping audiences: it flags when audiences a campaign is targeting separately actually reach many of the same people, which can mean ad sets compete with each other instead of reaching new viewers.
Read the source: Meta Business Help Center — About Overlapping Audiences.
What Rankfield reads
The landing page answers this directly, in its own words:
Your account end to end, your competitors, and the wider market around you: posts, videos, captions, comments, rhythm, what you offer. It watches the videos, not just the numbers under them.