“Data-Driven Thinking" is written by members of the media community and contains fresh ideas on the digital revolution in media.
Today’s column is written by Frost Prioleau, CEO and co-founder at Simpli.fi.
Dynamic ads, where the ad shown to a particular user reflects products viewed or pages visited, have been a popular mainstay of programmatic advertising for some time. Their effectiveness at improving digital campaign performance is undeniable, to the point where larger players, including Yahoo, ValueClick and, most recently, Adobe, have begun acquiring dynamic ad startups.
While dynamic ads are used across the sales funnel, the majority are used in site retargeting. The ad is customized by image, product, message, price and other elements to match the products or pages viewed on an advertiser’s site. The ads are dynamic, but the audience is fixed, defined as a group of users that has visited the advertisers’ sites. These ads inescapably follow visitors around the web, showing a pair of shoes they just viewed online or low airfares to a city they recently researched.
Dynamic ads are a great fit for campaigns that target a fixed audience with known preferences. However, in many cases, it makes more sense to find the perfect audience for a fixed offer, instead of the other way around.
A Focus On Audiences
For instance, national advertisers often look to reach new clients who have not yet visited their website, while local advertisers with low-traffic sites rarely have a big retargeting pool to go after.
There are also advertisers that offer relatively few products or services, such as divorce lawyers or local plumbers. Without a broad product catalog, dynamic ads just typically won’t deliver the same benefits that a major retailer with diverse inventory might see.
Often, a more effective strategy for upper funnel, localized and single-product advertisers is to employ dynamic audiences. By optimizing a dynamic audience to a more limited set of fixed ad creatives, rather than the other way around, advertisers can improve performance by insuring that their ad is shown to the types of users showing the strongest response. The audiences are automatically optimized and tuned at a granular level on the fly, based on their performance during a campaign.
Imagine, for instance, a credit card company with a new type cash-back card offering. Instead of targeting a predetermined audience based on prepackaged audience segments, the advertiser will likely be better off using a handful of well-designed ads and finding the audience that best responds to their offer.
Optimizing Through Unstructured Data
To target dynamic audiences instead of fixed audiences, advertisers are moving from prepackaged audience segments to unstructured data elements.
Consider a Toyota dealership. Using a prepackaged audience segment, such as “Toyota intender,” an advertiser will find it difficult to tune the audience because it can’t change the composition of the segment quickly and easily during the campaign. It can only decide to include or exclude some segments in favor of others.
But when the advertiser targets with unstructured data, the algorithms can dynamically observe which individual data elements are performing and allow the advertiser to target those with higher bids, while excluding the data elements that aren’t performing. It can even bid various data elements up and down using unstructured data optimization, such as keywords recently searched, geofences recently visited and individual beacons recently activated.
Another important component in optimizing dynamic audiences: recency. Consider that a fixed audience for “plumber intenders” may include users who searched on “emergency plumber” one hour ago and one month ago. A plumber specializing in emergency repairs will obviously see much better performance from users who searched within the last few hours than from those who searched weeks ago. On the other end of the scale, buyers of big-ticket items, such as autos and homes, often stay in the market for several weeks, lengthening the optimal data recency.
So while dynamic creatives are the right option for many types of campaigns, smart advertisers understand that in some cases they are better off working towards a dynamically optimized audience. For some advertisers, particularly those with localized budgets and upper-funnel campaigns, optimizing with dynamic audiences rather than dynamic creatives can be a more powerful and strategic way to ensure success.