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Dynamic Ad Optimization: A Solution for Display Advertising?

November 12th, 2009 Leave a comment Go to comments

Display has to change, otherwise it’s headed for failure. If advertisers don’t recognize online is more challenged with the old approaches and needs to be incredibly hyper-targeted, they’re going to fail.
- Chip Hall, SVP, Sales & Marketing, Teracent, as told to AdAge.

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Even Internet executives admit that traditional banner ads fail to meet marketer’s expectations. That view is changing however, as marketers employ the latest techniques to more precisely target the intended audience and measure all of the activity associated with a person’s interaction with an ad.

Today, a spate of companies offer dynamic ad optimization capabilities, among them Teracent, Tumri, PointRoll, ChoiceStream, Dapper. (Disclosure: I’ve done some contract work for Teracent)

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What is dynamic ad optimization?
Think of all of the parts, the elements or components of an ad: the headline, animation, logo, background color, main image, call to action text and the button itself, the product featured and price. Each one of these can be tweaked – optimized – to deliver the combination of elements that best achieve the defined success metrics on the fly. Multi-variate testing on steroids, if you will. Depending on the provider, the marketer can set the rules (only send the snow blower creative to the northeast) or the “engine” can learn automatically over time or a combination of rules and self-learning can apply.

The results can be impressive. Consider:

  • Last year, a Tumri-based HP holiday campaign reached over 140 milion US unique users with approximately 4,000 unique creative and messaging combinations, delivering performance on par with search. I wish they’d shared actual results, but hey, it won awards and got plenty of press coverage, so it must be true.
  • More recently, a Teracent-based Travelocity campaign served a retargeting campaign that delivered ads to consumers based on their search queries on Travelocity’s site. The result: a 230% increase in bookings, a 651% increase in CTR per Ad Age.

    Examples like these at scale and with such strong metrics are likely to spur display advertising forward. The benefits to marketers are compelling:

  • Reduced creative costs. Plus, Teracent helps creatives do more via a development tool called Darwin that allows advertisers to control the creative design from concept to testing.
  • Massive multivariate testing determines which combination of elements work best to achieve the goals set by the brand and does so virtually from the moment the campaign launches.
  • Improved ROI. See examples above. In today’s environment, accountability isn’t a nice-to-have. It’s a must.
  • Always on media. The beauty of the approach is the creation of an ongoing campaign that can continue to be tweaked as a brand introduces different products or offers or sets different objectives.

    Dynamic ad optimization isn’t just for lower funnel performance-oriented campaigns only. Companies focused on brand awareness and consideration are taking note. A test by Mercedes Benz for their Certified Pre-Owned campaign, showed dramatically improved results in actions that indicate buying intent in the first month of it’s running alone, per agency Razorfish.

    If it’s good for marketers, it should be good for publishers, too, boosting sagging display revenues. And for consumers? A better experience in which the ads consumer see are more relevant to them, delivering on display advertising’s promise made so many years ago. Isn’t that a solid step in the quest for the holy grail of online advertising?

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