Dynamic creative optimization (DCO) takes programmatic advertising to its logical endpoint: personalizing each advert to each individual lead. With increasingly sophisticated automation and AI, digital marketers can achieve one of their ultimate goals: micro-level personalization at massive scale.
What is Dynamic Creative Optimization?
Dynamic Creative Optimization is a digital marketing tactic that uses algorithms to automatically create, deliver, and refine ads for each individual lead based on as much data as is available.
DCO leverages real-time data such as customer demographics, device type, past behavior, and more to create very specific ads to match each customer and their current wants and needs. If you’re a restaurant chain and you want a previous customer to buy today, should you advertise your local branch or a good deal on UberEats? If you know it’s pouring rain where they are, does that affect your decision?
DCO solves the problem of personalization for marketers. It leverages data that’s already been collected by social media companies, so it’s accessible to companies that are just starting out. And by combining this data with their own, they can cater to complex customer journeys that span several channels over time.
This makes campaigns more relevant and engaging. DCO tools directly contribute to your bottom line. More relevant ads increase ROI, but DCO tools also enable a high degree of automation. And the new wave of AI tools is only going to lead to more automation: we’ve already seen companies A/B testing AI-generated landing pages without human oversight. Does your marketing team need to figure out how to learn Hadoop to achieve this level of optimization? Becoming familiar with DCO tools now can put you in good stead to take advantage of new technology as it comes online.
How does Dynamic Creative Optimization work?
The usual method for “personalizing” ads involves crafting several variations on one ad, email, or piece of copy and targeting them based on simple demographics or segments. We might call this “static” personalization, as the ads don’t really change to fit the viewer. Everyone Googling “what is a VoIP phone number used for” has a clear search intent, and that’s valuable, but you can’t tailor your ads very closely with that one datapoint.
Dynamic personalization starts by splitting an ad into its component parts: the color background, the image, the copy, etc. Or marketers might leave mail-merge style “gaps” in the copy like “Flights from [BLANK] to [BLANK] from just [PRICE]”.
These “dynamic elements” can then be filled in with whatever content is appropriate for the individual viewer. You’ve probably seen ads on social media that mention your town or city by name, but that’s just the tip of the iceberg. Dynamic creative can customize all aspects of the ad based on factors like the weather in your area, the time of day, or the device you’re viewing the ad on.
Dynamic creative optimization takes that idea much further by testing dynamic elements at scale. That means A/B testing copy, imagery, CTAs, and prices based on behavioral data and taking those learnings into account for similar customers.
This starts with identifying personas, channels, and messaging, but once your ads are deployed, it’s all run by the platform you’re using to generate content.
How to Deliver Personalized Data-Driven Ads
Truly personalized, data-driven ads will require powerful tech and some creative thinking. You’ll refine this process as you get to grips with DCO, but your first campaign will look something like the following.
Personas, targeting, segments
Traditionally, marketers use buyer personas to represent thousands of customers in one “average” individual. In an established company, this will be informed by analytics data and customer segments. In a new company, they’re a low-resolution picture of the target market, one that might not be validated yet.
DCO gets marketers away from thinking about their audience in such broad strokes. It enables personalization close to the level of individuals.
Nevertheless, the DCO campaign will begin with the personas and segments you’re used to working with. You’ll refine them as your campaigns progress, but personas and customer segments can serve as a foundation for the “decision matrix” you’ll later use for targeting.
What tools do you need for the job? DCO will cover several technologies like Google Analytics and your social media pages. The solution you need will vary depending on what your goals are, but two of the most common tools in DCO are the demand-side platform (DSP) and data management platform (DMP).
Demand side platform
A demand side platform (DSP) is an online advertising platform that is used to buy ad space from online publishers. It allows advertisers to bid on and purchase online inventory from a wide range of sources: ad exchanges, data exchanges, and ad networks.
DCO involves demand side platforms when marketers need to gather third-party data about audiences and their browsing habits. This enables granular targeting and contextual placement of ads. This enables DCO campaigns to deliver the right message, to the right person, at the right time.
Data management platform
A data management platform (DMP) helps organizations collect, integrate and manage their data across all channels. This data can include things like website traffic, customer data, digital interactions, CRM data, and more. The data will be in different formats from different sources, which is why an integration platform like OpenLegacy is necessary to make it uniform and collect it all in one place.
With a data management platform, marketers can add value to the data collected from each channel. By cross-referencing data from the company site with social media data, marketers can get a much better picture of who their audience is. By feeding that data into their DCO strategy, they can achieve much more personalized ads than their vendor could provide alone.
What to look for
When shopping around for DCO tools, there are several factors to consider. Of course you should look for the right features for you, good customer support, and a pricing plan that can scale to meet your needs.
But there are three key features you should look for in particular: automated content creation, campaign management, and analytics.
Automated content creation
Content creation in DCO is all about scale. It’s easy to create bespoke content for a few broad segments, but you can’t hand-craft an ad for each individual customer.
Take a close look at each DCO platform’s content creation options. Platforms will usually give you some templates to customize to your brand, but how much can you modify those based on what you learn from the audience? What’s the latest format this platform is offering? Are they keeping up with the latest trends? You don’t yet know what’s going to resonate with your audience, so you want a platform that’ll give you flexibility where you want it and support where it’s needed.
Automated campaign management
A dynamic creative campaign has more moving parts than you’re already juggling, so a DCO vendor should offer highly automated campaign launch and management features.
When you’re operating across several channels, you need as much capability in one place as possible. You should be able to manage the whole lifecycle of these ads from one dashboard: launch, management, and optimization. Also look for the automation capabilities. While some degree of automation is standard, what is each platform doing with AI?
Built-in analytics and insights
DCO leverages a huge amount of existing data, but it also creates new insights. How much of that is being surfaced?
It’s one thing for the platform to tell you which ads performed better than others, but what could you really learn from these analytics? As your DCO campaign continues, will you find out about new segments and personas you should be targeting? While most platforms will let you plug in data sources like Google Analytics and Facebook performance insights, what are they telling you about the omnichannel customer journey?
A “decision matrix” will be the basis of how your DCO campaign decides what to show potential customers. You can think of this as a simple flowchart with questions like “Is this user in one of our customer segments?”, “Does this user show an interest in travel?”, “Is there a city named in this page’s URL?”. If you’re an airline and the answer to those questions is “yes”, your DCO platform can show that user a tailored ad for flights to that destination.
Your DCO platform will usually guide you through the setup process. But before that, you can map out your ideal decision matrix on a whiteboard. This will give you a measure to rate potential vendors against: how much of this ideal are they able to deliver on?
Each “endpoint” on your flowchart represents a customer segment you’d like to market to. Once you have that mapped out, and you’ve picked a vendor, you can start building out templates for the ads at each endpoint.
This is where “static” personalization ends, but where DCO is just beginning. Once your campaign is deployed, automated optimization can tailor your ads to customers based on all the factors we’ve been over above.
Personalization at scale
Dynamic creative optimization offers much more relevant ads to consumers than any other method. This results in useful ads that they’re happy to see, and actually likely to click on. And for advertisers who need to grow their operation, DCO enables automated workflows that help them achieve personalization at scale.
ABOUT THE AUTHOR
Alwayne Powell, Director of International Digital Marketing, 8×8
Alwayne Powell is an experienced performance marketing leader with an extensive background in the digital space, working client and agency side to provide paid search, SEO and CRO solutions in the B2B and B2C sectors. They are the current Senior Digital Marketing Manager at leading communication platform provider 8×8. You can find them on LinkedIn.