Personalization continues to play a crucial role for brands looking to deliver the most engaging form of advertising to any potential customer. But in what circumstances do the costs of running dynamic creative optimization outweigh the benefits?
When it comes to user experience, there’s nothing worse than clicking on a website and being hit with random, unnecessary ads that are either malicious or spammy placeholders.
Some might argue that the same can be said for ads that are tailored to you based on the tracking of your browsing history through third-party cookies.
The impact of invasive and spammy ads can be seen in Hootsuite’s 2022 Digital Trends Report, which states that 42.7% of internet users actively use ad blockers.
In fact, in 2022, the FBI issued a statement advising the general public to use ad blockers when browsing online to protect themselves against the harm of such ads.
The impact of Wild-West-style advertising has undoubtedly created a difficult environment for advertisers. With this in mind, it’s crucial that in the moments advertisers do reach their target audience, they are delivering relevant and engaging content. And this is where dynamic creative optimization comes in.
What is dynamic creative optimization?
Dynamic creative optimization (DCO) is a solution for programmatic advertising that allows advertisers to create more tailored experiences with their campaign creatives. The technology is able to onboard multiple components within an ad to develop different creative variations at scale.
Since these ads are placed on hundreds, if not thousands, of websites, it can be challenging to ensure that the messaging or objective of a specific creative is optimized for every user.
Thus, advertisers use DCO to automate changes to have more creative license, and adjust their ads based on the analytics fed back to them.
How does dynamic creative optimization work?
The term “dynamic creative optimization” is actually a culmination of various different technologies, all working together to optimize dynamic creatives.
This includes a creative management platform (CMP), a data management platform (DMP), and a demand-side platform (DSP).
Here’s how they work together.
The process of DCO starts with input from a creative management platform (CMP). This allows marketing and advertising teams to add the varying elements they want. Its purpose is discussed in more detail below.
The algorithm then analyzes historical customer behavior data from a data management platform (DMP).
Once this has been completed, it is then able to serve the best option for the visitor based on the above data analysis through demand-side platforms (DSPs).
The algorithm adjusts its output by testing and combining different elements, then teams working on the supply side can employ new ad creatives based on the performance results.
What is a creative management platform (CMP)?
A creative marketing platform (CMP) is a cloud-based solution designed to support marketing teams in managing and organizing their digital assets, such as images and videos used in advertisements.
Through a suite of tools, a CMP’s main objective is to help empower marketing professionals by streamlining their workflow and ultimately boosting any given campaign’s effectiveness.
Most CMPs will allow teams to adjust any DCO campaigns from a single dashboard and utilize machine learning to gain insights from other ad platforms to help fine-tune campaigns.
Why is dynamic creative optimization important?
In short, by combining data – including demographic, contextual, and user behavior data – through machine learning, DCO allows for more tailored advertisements that readers will view as more relevant.
Advertisers are able to test – at scale – images, titles, CTA buttons, and other variables to uncover which combinations of creatives are best for each customer segment.
What industries might use dynamic creative optimization?
Industries with a number of different sales-based campaigns, such as FMCG, are more likely to make the most of DCO. Every business has ideal customer profiles and understanding their intent is key to any strategy, especially when incorporating DCO.
Another example can be seen with sports betting. Gambling operators might look to use DCO on a sports news site to display live odds on a game that is taking place later that day.
The connection between the fan’s knowledge of what game is going on and the associated live odds that are available increases the chances of the user clicking through to engage with their brand.
Does dynamic creative optimization use cookies?
At the moment of writing, yes. But although DCO often uses third-party cookie information, the approach towards the technology will change, since there simply isn’t an option that allows for such flexibility, at scale, in real time.
With the inevitable death of the third-party cookie remaining on the horizon, businesses are becoming more aware of the value of first-party data and other smart data paths to help build their creatives before feeding into a CMP for a campaign.
Advertisers can create audience personas that identify the types of people that will interact with their ads. The analytics fed back to them should be a clear indicator of what is working and what isn’t.
How will the Google third-party cookie ban impact dynamic creative optimization?
Google’s phasing out of third-party cookies has been somewhat protracted – but that has given advertisers plenty of time to brace themselves for significant changes in their dynamic creative optimization strategies.
It’s undeniable that the programmatic landscape has long relied on third-party cookies for essential features like frequency capping and cross-publisher identifiers but given that Kenneth Research predicts DCO’s overall market value to reach $3bn by the end of 2035, there is still an appetite for the technology in a post-cookie world.
The change will force some form of transformation – and, as a result, advertisers will have to explore alternative methods for exposure and attribution measurement.
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What other solutions are available that don’t involve dynamic creative optimization?
There are a number of alternative solutions available to advertisers and businesses that might not see the value in DCO.
For example, the advertising industry is already embracing new solutions such as advertising identifiers that work at the device or user level. These identifiers can help with frequency capping and enable more targeted advertising experiences.
As well as this, other well-known solutions are also experiencing something of a resurgence.
Contextual targeting, where ads are placed based on the content of the web page rather than individual user data, is just one being revisited with renewed interest.
The importance of gathering and owning first-party data has also received plenty of attention in the past few years. Solutions that involve customer relationship management (CRM) systems and email marketing are being reconsidered from a more tailored perspective.
Previously it could be said that most of these techniques were used as a quick way to run widespread campaigns, or almost as a need-to-do, rather than the core principle of a campaign.
Key takeaways
Whatever combination of solutions advertisers and agencies decide to use, the difference maker will be seen in those that leverage existing data and customer interactions to their advantage without violating the new privacy regulations.
In theory, the privacy changes should instill more trust and help consumers better navigate the internet without as many privacy concerns.
But, regardless of how strong the public’s sense of invasion is and how much this changes once the ban is in place, it’s worth highlighting that over half of consumers (51.9%) still say they are more likely to purchase a product or service from a personalized ad.
DCO acts as a strong alternative for advertisers struggling with how best to pivot their dependence on third-party cookies and continue to deliver personalized content.
It likely means higher campaign costs, but if the research, buyer personas, and existing data show that more relevant and personalized advertisements will impact the target audience better, it might be worth experimenting with this.
The key takeaway in all of this is about finding the right combination of solutions, which is only something that comes with time.
Advertisers should look to focus on developing relationships so that they can acquire first-party data with consent, experiment using alternative solutions in a broad-minded manner, and really hone in on why a person would want to click through.
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