What is Dynamic Creative Optimization (DCO)?

DCO tailors and personalizes advertisements to each user. Consumer data is analyzed in real time to assemble an ad variant people are most likely to engage with.

This trend of data-driven advertising continues to grow because it enables personalization at scale – and with less of a manual burden on advertising teams. It’s a vital tool for brands because personalization increases marketing ROI by 10-30%, McKinsey suggests. But McKinsey research also shows 71% of people expect personalized interactions.

Little wonder, then, that 99% of agencies told Digiday and Clinch that DCO is a significant factor in their work.

What is Dynamic Creative?

You most likely encounter dynamic creative every day. If you’ve ever received an ad reminding you about something you’ve viewed or left in your basket, you’ve encountered dynamic creative, which has long been a mainstay of retargeting advertising. An ad template is structured with interchangeable components that can be swapped in (such as different imagery) based on the people being reached and the product they engage with or are most suited to.

That’s what makes it dynamic– it varies according to the recipient, as opposed to static ad creative that doesn’t. Dynamic creative can respond to variables such as user behavior, location, device, and demographics. These dynamic ads can reference the nearest store that’s stocking the promoted product or offering an exclusive deal, for example.

DCO takes it to the next level, using machine learning to orchestrate real-time optimizations to the dynamic creative within a campaign. This supercharges its relevance, personalization, and impact. A sudden heatwave arrives? DCO can use real-time weather data to display a retailer’s summer clothing and barbecue products to people in the affected location.

Find out more about how Acxiom’s Real-time Personalization offering helps power DCO.

Addressable Creative vs. Dynamic Creative

Dynamic creative is a form of addressable (or programmatic) creative, rather than a different type of advertising. Addressable advertising uses data to automatically serve audiences with an ad type that’s optimized for their customer profile – whether that be their age, location, or another demographic characteristic. The advertiser sets the parameters, then the technology does the rest – including buying ad inventory – with minimal human involvement.

In the case of dynamic creative optimization, artificial intelligence, and machine learning sift through the available creative assets and messaging combinations to match an optimized ad variant to the user. This allows advertisers to be more specific in their ad campaigns but also makes the process of delivering personalized ads more efficient. The time to create all the different creative iterations is reduced, and DCO ultimately leads to a better customer experience since the final ad is more relevant to the user.

This is why some advertisers refer to dynamic creative optimization as the next evolution of programmatic advertising.

For more information, take a look at Acxiom’s Addressable Advertising solutions

Why is Dynamic Creative Optimization important?

DCO can help marketers and advertisers meet the twin pressures of personalization and driving higher ROI.

As discussed, the majority of users expect a personalized ad experience. And this carries tacit benefits for brands, too. More relevant and personalized ads improve brand image and reputation by showing an understanding of customers’ needs.

DCO algorithms are also more reliable and precise than advertising teams trying to make dynamic ad combinations themselves. Dynamic creative optimization can go deeper than an advertising team’s logic and calculated assumptions. For example, rather than serving ads for a certain sports team’s merchandise to the area around its stadium, DCO can intelligently serve the right creative to fans of different teams who all live in the same place. It can also reach supporters who might not live locally.

Dynamic creative optimization can therefore strengthen customer loyalty since brands are less likely to serve irrelevant ads. That’s in addition to increased clickthroughs, conversions, and customer acquisition, helping advertisers make their marketing budget go further and enhance their ROI.

Brands can also draw on dynamic creative optimization to combat market volatility. Instead of reactively assembling a new ad set in the wake of sudden industry change, brands can respond proactively. When trends like “staycationing” emerge, for example, the leisure and hospitality industry can promote localized holidays dynamically in their ads, instead of promoting vacations abroad that have temporarily fallen out of favor. Brands can also tap into micro trends that might not be universally viral, catering to nuances within demographic groups and locations.

Such shifts aren’t uncommon. Fluctuation defines many industries, so having this adaptability is an existential need as much as a competitive edge.

Overall, while dynamic creative optimization can help brands maximize the success of individual ad campaigns, it can also help secure the business’s longevity through the cross-pollination of data and creative.

What are the Benefits of Dynamic Creative Optimization?

Dynamic ads tend to outperform static ads. Facebook reports, for example, that its dynamic product ads can achieve a 34% increase in click-through rates and a 38% increase in conversion rates compared to static ads. There are three central reasons why dynamic ads outperform their static counterparts.

1. Ad relevance

Brands can better differentiate themselves in saturated markets by leveraging the hyper-relevance of dynamic creative optimization. Ad messaging can be more effectively and continuously connected to users’ pain points – when they’re experiencing them. This more explicit ad usefulness can deepen brands’ customer relationships from a one-off or ad-hoc interaction to a lifestyle choice or go-to staple.

Dynamic creative optimization can also drive sales by forging clearer links between products and people’s needs. DCO’s predictive algorithms are more sophisticated than most marketing teams alone can create, allowing them to customize relevant messaging and creative in real time. By intelligently and rapidly mining the data from numerous sources and variables, it can identify relevant connections that might not otherwise be apparent to human marketers.

2. Ad retargeting

Similarly, dynamic creative optimization helps make ads more persuasive and compelling – particularly useful for converting users who didn’t complete a purchase.

Instead of simply serving as a reminder of an entire product range, DCO can more accurately establish a greatly reduced number that are most likely to interest people It can then select the most appropriate messaging and creative to engage them, based on user data.

Static ads, by comparison, require marketers to create variants for products associated with pages of the brand’s app or website a user visited. Retailers can also serve users static ads promoting related products. But the static approach can lead to spamming people with ads featuring products they might never have been interested in to begin with if they were simply browsing the site.

Dynamic creative optimization enables a brand to focus on the product the person last viewed, and then include an enticing promotional message about a discount or offer. This message could be as personalized as highlighting how cheap delivery is to the customer’s home, or that the item can be picked up in store a couple of miles away.

3. Ad automation

Dynamic creative optimization improves the likelihood the ad will be relevant to the user since the algorithm acts automatically every time the ad is served. This automation also saves significant work for advertisers, since DCO can compare the various ad components: creative, calls to action, layouts and messaging.

Marketing teams are otherwise left to perform A/B testing and conversion rate optimization experiments themselves to find best-performing ad variants. Dynamic creative optimization uses data, real-time analytics and machine learning to quickly uncover the optimal ad combinations, automatically improving conversions and marketing efficiency.

The benefit of DCO’s automated advertising insights extend beyond a campaign context. By discovering more about how different audience groups respond to their products, brands can apply those learnings to the page copy and creative – all while the DCO technology is constantly optimizing their ad campaigns.

Find out more about the AI technology brands are using throughout the customer journey

What are the challenges of Dynamic Creative Optimization?

Although the result of dynamic creative optimization is a more engaging ad experience, the approach and technology presents drawbacks for advertisers to navigate.

DCO tools vary in how easy they are to use, with some requiring a level of technical proficiency that can prevent advertising teams from customizing the template and programming the audience profiles. Conversely, DCO technology can be too simplistic for advertisers to create nuances and a sufficiently comprehensive ad campaign.

Overcomplicated DCO tools can also make it harder to monitor and measure campaign performance, so ad spend can get out of control.

DCO ads can take longer to load while the technology performs the data analysis and selects from all the ad elements to build an optimal ad. Brands have to balance effective advertising with seamless user experience, as people may scroll past or ignore an ad that takes too long to render.

Creating a Dynamic Creative Optimization campaign

1. Define the ad campaign scope
   Having clear set objectives at the start will enable you to measure ad performance. This will also feed into the messaging and creative itself, as well as the audience you’re aiming to reach.
2. Outline your audience
   In terms of your audience specifically, you need to identify their primary needs and pain points. Referring to your first-party data can give you this understanding. This will lay the foundations for the DCO algorithms to make the ad experiences as relevant as possible.
3. Create the dynamic ad template
   Consider the different combinations and ad components you’ll want to test, so the template is flexible, such as:
   • Images: explore different dimensions, as well as styles such as photography versus illustration.
   • Title: pose interesting questions or direct statements.
   • Copy: compare problem-based or solution-based messaging.
   • Call to Action: experiment with the format of the CTA button itself, as well as the tone of the copy.

The more creative the variation, the more you’ll be able to identify how best to engage your audience. To do so, you need to monitor campaign performance throughout. Your teams can then adjust creative and messaging that isn’t resonating. The DCO technology itself can alter ads based on results without manual input.

Examples of Dynamic Creative Optimization

Dynamic creative optimization has broad and niche applications across industries.

In retail, DCO can use data to determine not only that an individual owns a pet dog, but the breed. Retailers can then serve the user dynamic ads promoting pet accessories that are associated with that breed, for example, or manufactured for their typical dimensions.

A contemporary real-world example of the usefulness of DCO for the retail, leisure and hospitality industries is the Covid-19 pandemic. With premises opening and closing at short notice, DCO’s real-time analytics meant brands could direct users to their closest open venue, instead of inadvertently encouraging customers to visit sites when they were closed. Restaurants could even quickly pivot to take-out and curbside pickup offers, while retailers could switch their ad creative to promote their online deals.

Rather than serving static ads to a blanket audience, or a carousel of several options, travel brands can use dynamic creative optimization to match destinations and holiday types to people’s preferences. And it can even show them how close they are geographically to their dream getaway.

DCO isn’t just used to promote different products but can pinpoint different specific features depending on the user. A technology brand selling a smartphone, for example, can engage budding photographers with camera specs or businesspeople with processing speeds for calls and messaging.

How Acxiom can help

Dynamic creative optimization can help you forge closer connections with your customers. But like so many martech and adtech tools, what it can achieve depends on the quality of data that fuels it.

The algorithm that performs the ad selection requires extensive customer data to understand their demographic information. Much of that comes from a brand’s first-party data, but if it’s not comprehensive and accurate, in real time across your channels, the AI and machine learning performance is limited. Acxiom’s customer data solutions can evaluate where your existing data can be augmented, and exactly what’s relevant for your audience.

For any channels that lack customer insights, Acxiom can offer a comprehensive single source of third-party audiences with thousands of attributes, propensities and intent signals – all critical for DCO. Acxiom’s identity solutions combine this third-party data with your first-party data to form a complete view of your customers and prospects – the foundation of accurate, usable insights.

On top of that, Acxiom’s rAPID capabilities provide the first-party, real-time services brands need to deliver customized, relevant, and engaging messages to customers. And at speed – the technology can deliver decisions in less than 10 milliseconds, ensuring your brand experiences are seamless as well as deeply personalized.