Dynamic Creative Optimization (DCO) may be the answer to privacy updates since it allows advertisers to create campaigns from ad components and show the best-performing version. But it isn’t without its challenges.
Pre-Read: Dynamic Creative Optimization: How Facebook DCO works [2022]
3 Common challenges with DCO
After helping hundreds of users launch thousands of video and image ads, we’ve identified some of the most common challenges advertisers face with DCO:
- Ads take a long time to reach statistical significance
- Ad budget is spent on the wrong ads
- Hyper-personalization leads to fewer impressions
#1 Takes a long time to reach statistical significance
With DCO, you may be tempted to launch hundreds of ads with slightly different variants. While this does help you understand what your audience resonates with the most, it can also take that much longer for you to complete the test because too many variables require more impressions to reach statistical significance.
Statistical significance helps quantify whether a result is likely due to chance or to some factor of interest.
Tom Redman, author of Data Driven: Profiting from Your Most Important Business Asset
Solution: Start with fewer variables to test so you can iterate faster. Instead of testing all ad components at once, create a hypothesis based on audience research. For example, if you want to understand what kind of CTAs work best, you can load up 5 different CTAs to isolate the effects of the other changes.#2.
#2 Ad budget is spent on ads that are not performing
Since it can take dynamic creative ads longer to reach statistical significance, you may be spending your ad budget on the “wrong” ads.
One way to curb that is test fewer components and iterate faster but imagine trying to do this for hundreds of products at scale. It’s near impossible to pull it off manually.
Solution: Use a creative management platform like Hunch to receive actionable product insights so you can turn on or off ads that aren’t going to give you a positive ROAS. Plus, you can talk to ad experts at Hunch to review your strategy to optimize your campaign goals.
#3 Hyper-personalization leads to fewer impressions
Personalization is integral to successful ad campaigns - you want the right people to see the right ad. When you find the right people and make personalized experiences for them, you could expect 69% more likely to purchase customers and overall better results. But with a whole lot of targeting options like demographics, lifestyle, interest, and behavior, you may end up creating a segment that’s too narrow.
What happens if you create narrow segments? Fewer people see your ad. That means you can’t reach statistical significance or justify that ad spend.
Solution: Root your campaigns in audience research and leave some room for new personas. For example, if most of your buyers are women between the age of 35-40 in California, don’t fixate on that persona while setting up targeting. Try being flexible with the age range or state to see if you can unlock a new audience.
New to DCO? Here are the most common DCO challenges first-time face
Advertisers toying with DCO for the first time encounter three main problems:
- How to convert a creative strategy into a media plan
- How to build the necessary assets and run campaigns
- How to understand the results of your campaigns and build better ads
How to convert a creative strategy into a media plan
Let’s say you want to show one version of the ad to male users, and a different one to female users. You need to transfer that strategy into an operational procedure and build a campaign.
So what do you need to do?
Build the creative for both male and female users. When setting up the campaign, you need to split the targeting into two audiences - male and female.
And you can apply the same tactic even with more complex strategies like wanting to target different user interests or targeting groups or showing different ads based on the time of the day or day of the week.
The best solution is to start a campaign and learn from it.
How to build the necessary assets and run campaigns
The second issue is creative production.
Let's say you have 5 products to show different target groups on social media and email. You need different creative assets for each product, target group and channel. That’s a lot of resources spent on design and copy.
You could do it manually for 5 products but for eCommerce companies selling hundreds of products with different variants, you need creative automation.
Using Hunch’s image and video templates, you can create thousands of ads that are contextual and personalized and then launch those campaigns right from Hunch saving you from a ton of context switching.
How to understand the results of your campaigns and build better ads
The first metric you can check is your CPM. If your CPM is higher, something is off and you may want to re-evaluate your strategy.
Besides that, you can also see which user group outperforms the other, and what kind of creative engages them.
For example, if you’re using a red CTA button that outperformed, you should keep using it in your ads.
Hunch’s platform converts data into meaningful insights so you can pull the plug on ads that underperform and divert your budget into high-performing ads instead.
Challenges for DCO veterans + How to solve them
Advertisers that have used DCO before face pretty much the same challenges. The only difference is that they grow in complexity.
The first main problem is creative production at scale. You have more moving parts, and more ad elements and you need to know if every creative is pulling its weight.
The other problem is reporting. As your ad strategy grows more complicated, you need detailed reporting.
When you look at your Facebook ad, you want to know if the headline you wrote makes a difference in conversions or if the description adds any value. You need to know if the overall campaign works and break it down to the individual performance of each ad component is satisfactory.
Hunch also makes this kind of granular reporting easy and turns data into product insights that help you build better ads.
Overcome common DCO issues with Hunch
Hunch’s platform is geared to help solve common DCO challenges and make the process smooth for both new and advanced DCO users. Plus, you also have ad strategists available 24x7 to guide you to success.
We had great customer support from Hunch. The onboarding process is crucial to get the most out of Hunch. When we initiated the process with Hunch, we had some ideas from our side. Hunch built a solution for our case and now we have everything set up, ready and going.
Heiman Safeen, Growth Officer at Ruokaboksi, said about our Customer Success team on our recent adventure with clients Genero and Ruokaboksi.
We strive to make the process as easy as it can get. Hunch tailors solutions that help your data, creative, and media work together enabling outmost campaign performance and results on Paid Social.
Still need help with DCO? Book a time to chat with our experts.
