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Demystifying Dynamic Creative Optimization (DCO)

Welcome to our new blog series on performance creative! A lively conversation between a Creative Strategist and Creative Director that explores what it takes to make winning creative in this age of digital connectedness. To kick things off, Emma and Colin are tackling dynamic creative optimization (DCO), a form of programmatic advertising that lets advertisers optimize the performance of their creative in real-time.

EMMA: It feels like these days every client wants to talk about DCO. They’ve read an article about dynamic creative optimization, heard it mentioned in a podcast, or saw a case study, and they want the benefits for their organization, but don’t really know where to start.

COLIN: I’ll start with a confession. When I was first introduced to DCO, my initial reaction as a creative was, well, lukewarm. It felt a bit robotic and limiting. But as is often the case in life, once you dive in and really understand it, your viewpoint totally changes. I’m all-in on Team DCO now. As you well know Emma from our recent collaboration with it.

EMMA: Happy to have a creative convert! And I have no doubt that the collaboration you mentioned made you even more of an advocate. With next to no changes to our creative approach, we got 23% more policies at 19% lower cost than usual. The other thing that was interesting about this project was that we really focused on creative optimization. Unlike retailers, we had no dynamic data to leverage, and had to create variations based solely on a set number of image and messaging options. 

COLIN: I’ve heard too many people say DCO only works for retail. But we’ve seen across our client base that it can work for all kinds of industries. 

EMMA: I think retail associations with DCO are so prevalent because so many of the early examples were playing into the strengths of leveraging dynamic data in retail. It’s exciting to be able to easily bring in-store location data and make ads instantly relevant based on the person's location. It’s also liberating to use a dynamic product feed and be able to show items that are in inventory or that they’ve expressed interest in without multiple steps and layers of edits and data checks. 

COLIN: It’s that wonderful union between efficiency and hyper relevancy.

EMMA: And it’s why retailers are going to continue to use and get even better at DCO, because of the enormous potential to truly be relevant in the moment. But that shouldn’t dissuade marketers in other categories from finding their own ways to leverage dynamic creative. 

COLIN: Personally, I’ve been dreaming of doing DCO around anything travel or tourism related. Oh, the possibilities!

Rapidly test different messaging

EMMA:  I can’t wait to play with it in travel as well! But I want to go back to the ‘robotic’ comment you made. That’s a very common misperception that turns off marketers and creatives alike, and it couldn’t be farther from the truth.

COLIN: From a creative standpoint, DCO still offers plenty of creative opportunities for us to stretch our thinking. One of the universal strengths of DCO that applies to all industries is the ability to rapidly test different messaging, designs and tactics to different audiences. It’s a great opportunity to test our assumptions about what works, what doesn’t, and to challenge ourselves to find brand new approaches. 

EMMA: Especially when those new opportunities deliver great results!

COLIN: There’s nothing better than finding fresh ways to connect with and motivate people to take action; DCO is great for that. But there’s a lot of upfront work that needs to be done before we creatives can begin our work in earnest.

EMMA: You absolutely need a well thought out strategy. There’s an expectation that we’ve encountered with several clients that you can just throw a bunch of things into it and let the magic happen. But without a plan and a deep understanding of client objectives, needs and available data, there is no magic. You need to know your target audiences, how many impressions to expect, be crystal clear about the KPIs, and know how likely the conversions are, in order to plan for the right number of iterations. 

COLIN: I’ve heard you say before the magic is in the plan. I’ve always liked that. 

EMMA: That’s the beauty of this approach. It really forces you to marry data, strategy, and creative. Each can push a little on its own, but together, we can get amazing results. Like getting a 132% increase in total revenue for Bloomingdales’ Ready to Wear category with 25% less spend, a 58% increase in machine sales for Nespresso with a 36% decrease in cost of per machine sales, a 150% increase in CTR for Green Dot,136% better retargeting CTR for Anthem, and the list goes on… 

COLIN: And two of those four examples were non-retail.

EMMA: Excellent call-out!

COLIN: I also like how DCO forces us creatives to be very methodical and strategic as well! We have to think deeply about what we want to test, the balance between tried and true messaging and visuals, and breaking new ground. And with different components of an ad template being tested, we need to make sure all of our various creative elements work with everything else. For example, you don’t want to test a headline or visual that can’t work within the larger whole. 

EMMA: One thing that I’m learning by doing this with you and other creatives is that your side of the house is a lot more strategic than what you’re typically given credit. Everything you just mentioned is often deemed as strategy, but it doesn’t work unless creatives think strategically and build templates and approaches that can work seamlessly in different contexts. That’s not an equation that you can simply apply; it truly requires a strategic mindset. 

COLIN: The job of a creative has changed a lot over the last few years. We’re wearing a lot more hats now, certainly at Merkle anyway.

EMMA: As someone who’s been here a little over a year, it’s one of the things that differentiates Merkle’s Performance Creative team from others in the industry. Our relentless focus on performance attracts and nurtures a creative mindset that is purposeful and can envision implications and permutations of combining a small set of elements into endless iterations. 

COLIN: I think that’s true. I also think the industry as a whole is going to be moving this way. They’ll have to. Clients and consumers both are demanding it. And building on my “more hats” comment, I’d be remiss if I didn’t point out this skillset is in addition to, not a replacement of, the ability to come up with the big ideas that have traditionally defined the creative realm. But that’s part of what makes our industry so fun. Constantly learning, constantly evolving, constantly improving. And on that note, Emma, see you back here in a month?

EMMA: Looking forward to it!