Dynamic creative optimization (DCO) isn’t new. In fact, ad tech companies first started talking about it more than a decade ago. But it’s back at the center, largely because of the growing role of data-driven marketing at scale. DCO isn’t slowing down and is driven by personalization and direct-to-consumer trends like Spotify’s personalized Discover Weekly playlist, Coca-Cola’s Share A Coke campaign, NIKEid’s custom shoes and Amazon’s personalization engine. Hyper-relevance has become table stakes. In other words, personalization is valued by consumers when done the right way.
DCO is the real-time creative engine that produces hyper-relevant ads to the individual it’s reaching based on what it knows about the individual or their context.) Read more about it here.
There are 3 tiers of DCO, each offering a progressive level of sophistication — think of it as crawling, walking and then running:
Tier 1: low-scale audience segmentation with few creative variants, which can be referred to as limited personalization (e.g. the weather or the user’s location)
Tier 2: higher scale, data-driven personalization that incorporates 1st and 3rd party data in the creative message. 1st party data can include product catalogs or point of interest data that can help provide relevant personalization for a specific user (e.g. showing a list of trending restaurants in a city; a discount on a bathing suit in a coastal city, etc.)
Tier 3: 1:1 advertising, with creative that is personalized depending on where the user is in the customer journey and the user’s intent and behavior (e.g. retargeting and re-engagement campaigns)
In Celtra’s work with a major supermarket chain, the brand wanted to better reach parents who would be cooking for a family and differentiate them from people who would be cooking for themselves. Through DCO, they were able to determine the parental status of a prospective customer and show them creative geared toward saving time while making healthy meals for others. The creative someone saw also depended on the time of day — so if the ad were viewed in the morning, the message would feel appropriate to that time of day. (Think cereal in the morning and chicken at night.)
According to 2017 Accenture Strategy research of nearly 25,000 consumers across 33 countries, “Thirty-three percent of customers who abandoned a business relationship last year did so because personalization was lacking.”
That cost is too high for a brand to ignore. Another data point from their research shows, “48 percent of consumers expect specialized treatment for being a good customer.”
A pet retailer saw similar success in its DCO work with Celtra that centered on whether the individual had a pre-existing relationship with the brand. (In this case, whether or not they had ever made a purchase.) But the DCO went another layer deeper. If the individual had made a recent purchase, they were shown a pet-specific upsell that came with a fully personalized offer. So if the customer had bought a dog harness a few days ago, the retailer might show them a dog leash and throw in a 10 percent off discount. If the individual was completely new to the brand, they would get an ad promoting something relevant to their location — like a nearby store.
Today, every brand is in the user experience business, and the greatest user experience for the individual comes from hyper-relevant ads that take into account their needs and their context. When a brand speaks to a consumer, it must pick up the conversation where it left off. It can’t restart the conversation as if it’s never spoken to this person before. The use of real-time, sophisticated personalization strategies for digital advertising is key to achieving better advertising performance and greater cost efficiencies.