Dynamic Creative Optimization (DCO): A Complete Guide to using DCO on Paid Social

The traditional method of creating ads is broken.

There are too many choices - should you choose a single image, a carousel, or a video?

Which CTA would work on your audience? Should your description be long or short? Is your ad copy resonating with potential buyers?

If you choose unwisely or don’t have enough resources to put behind rigorous A/B testing, you may not see enough conversions.

And then there’s the question of personalization at scale.

There’s one solution to combat all these issues: Dynamic Creative Optimization.

Table of Contents
1. What is Dynamic Creative Optimization (DCO)?
2. Should you use Facebook Dynamic Creative?
3. What kind of dynamic ads can you set up?
4. How to set up: step-by-step
5. Best Practices
6. Benefits of Facebook’s DCO

What is Dynamic Creative Optimization (DCO) on Facebook?

It’s vital to define what dynamic creative is since DCO and dynamic creative are used interchangeably.

Dynamic creative is an ad unit that has a combination of elements that can be changed and assembled on the fly. While Dynamic Creative Optimization allows you to swap those ad components to create a winning combination that resonates the most with your audience and aligns with your campaign’s goals.

For all practical intents and purposes, Dynamic creative/Dynamic Ads and Dynamic Creative Optimization are the same in the context of Facebook ads.

DCO or dynamic creative optimization was a core feature of Facebook’s Power 5 ad tools released in 2019 to improve conversions from ads.

What are DCO ads used for?

DCO enables advertisers to test which ad performs best by dynamically delivering different combinations of creatives to the target audience. You can use a combination of 10 images or videos, 5 titles, 5 text variations, 5 descriptions, and 5 CTA buttons.

How does Facebook DCO work in real-time?

Facebook’s dynamic creative feature uses the assets you upload and treats them as individual components to create multiple ad variants and test them across different audience segments.

According to Facebook, “When it comes to the creative, it is never one size fits all. Great creative finds the perfect match between your ad and your audience.”

You offer up a range of 30 components, specify who you want to reach, and your budget and Facebook takes care of the rest. It saves time, money, and effort.

Could you run the same test manually? 

Yes!

But, it will require heaps of effort and will cost you ad dollars that you can save with Facebook’s dynamic creative.

So, what can you test?

You can have:

• 10 Images or 10 Videos
• 5 Text Descriptions
• 5 News Feed Link Descriptions
• 5 CTA Buttons
• 5 Headlines/Titles
• 1 Website URL
• 1 Display URL

Facebook determines different ad combos based on the ad performance but also takes into account user fatigue and ad frequency.

Should you use Facebook Dynamic Creative?

DCO is perfect for advertisers looking to use automation to save time and usually wasted ad dollars. It also appeals to smaller businesses without a dedicated team for performance marketing or enough resources to churn out multiple ad variants.

But if you want to have even more granular control, Facebook’s DCO might not be a good fit for you. Keep reading and you’ll see why.

When should you use Facebook’s dynamic creative?

If you are unsure of the copy and creative that will resonate with your audience, use Facebook’s dynamic creative.

Product insights are the foundation of dynamic ads.

Some instances of when this tool can come in quite handy are:

• Testing different headlines for your ad
• Testing different description lengths
• Testing single images vs. carousel vs. video
• Testing ad combos for different business objectives
• Testing different copywriting techniques for selling and persuasion

What are some business objectives that you can set up for dynamic creative optimization?

1. Brand Awareness
2. Reach
3. Traffic
4. App Installs
5. Video views
6. Lead Generation
7. Conversions

When you set up your ad (we’ll show you how), you have to choose from one of the above objectives. Based on that, Facebook will display the right combo to help you achieve that objective.

Pro Tip: Need a quick win? Start using DCO at the bottom of the funnel and work your way up.

What kind of dynamic ads can you set up on Facebook?

Dynamic ads are intended for retail and e-commerce businesses.

You upload a product catalog and let Facebook generate ad variants and test them dynamically on your target audience. But Facebook has taken it up a notch by introducing specific dynamic ads meant for the travel, automotive, and real estate industry.

Psst... Facebook has also recently become flexible with betting ads. We have a playbook to set up dynamic ads for betting that you can download for free.

Travel ads

Facebook helps you connect your travel business to the right travelers by using specific details like dates, destinations, and properties and creating dynamic ads at scale.

Read how G Adventures got back into the game after the pandemic with Hunch.

There are a few ways you can use travel ads:

1. Add a COVID-19 messaging module

   You can create a temporary module to keep your customers updated on your policies and business updates on your page.

2. Reach potential travelers

   Facebook enables you to reach potential features with their Trip consideration feature. Trip consideration uses machine learning to scour your target audience and displays different ads based on the level of their intent. This can be an excellent way to dip your toes in travel ads as a travel advertiser.

3. Drive site and app conversions

   Facebook allows you to set up travel ads for retargeting visitors that have visited your app or site and show them properties, flights, and destinations that interest them. You set up a travel catalog with all these details along with availability and pricing, and these ads use this information to test and determine the best performing ads dynamically.

4. Reach new audiences

   Facebook’s travel ads also make it easy for you to expand your reach and share your inventory with potential travelers that are either dreaming of travel or are actively looking at properties through the use of machine learning.

Who should use Facebook’s travel ads?

• Hotels
• Airlines
• Online travel agencies (OTAs)
• Package holiday providers

Automotive inventory ads

Like travel ads, you can upload your vehicle catalog, and Facebook uses it to automatically create compelling ads and display them to the right audience.

From test drives to cars sold - go beyond dynamic automotive ads.

Here are a few ways you can leverage automotive ads:

• Direct users to vehicle detail pages
• Drive them to submit a lead gen form
• Show your most relevant vehicles to potential buyers

Dynamic Ads vs. Automotive Inventory Ads

Dynamic ads are recommended for all e-commerce companies or companies with an e-commerce model. However, automotive companies should switch to automotive inventory ads because the targeting, retargeting, and recommender algorithm is specific to the automotive industry.

For instance, you can factor in the vehicle’s location when delivering automotive ads, which is not possible with the original dynamic ads.

Here’s a table from Facebook that explains the difference between dynamic ads and automotive inventory ads:

Real Estate Ads

You may have guessed it from the name already.

Formerly known as dynamic ads for property, real estate ads are intended to be used by real estate agents, realtors, or agencies. Real estate ads help their listings reach potential buyers and renters based on specific parameters like the neighborhood, price, square footage.

Using a Facebook pixel or SDK, the ads are shown to people that have displayed interest in your business by taking specific actions. The algorithm also factors in property location and property similarity.

Benefits of using dynamic real estate ads

• Real estate specific parameters make it easy to target the right audience
• Create a new audience of potential buyers that searched for similar listings

Who should use real estate ads?

This solution is geared towards high-traffic sites. So, it is recommended that you leverage this type of ad if you have at least 100 listings.

Facebook’s recommendations suggest using carousel ads and template tags for the best results.

What do you need to set up Facebook dynamic ad campaigns?

You only need three things if you’re planning to set up Facebook dynamic ads.

• Facebook pixel or SDK
• A business manager account
• A product catalog

#1 The Facebook pixel or SDK

Using Facebook pixel or SDK creates a strong feedback loop between your ads and your product catalog. You can either install the Facebook pixel on your website or use the Facebook SDK to increase app installs that drive direct app downloads.

#2 A Business Manager Account

The Facebook Ads Manager won’t allow you to create dynamic ads. Since they work on a larger scale, you will need to set up a Business Manager Account.

#3 A product catalog

You can either manually create a product catalog and upload it to Business Manager or connect your Shopify, Magento, or BigCommerce store and automatically set up your dynamic ads.

How to set up dynamic ads on Facebook (step-by-step instructions)

1. Open the Ads Manager
2. Select + Create
3. To create your campaign, choose from one of these objectives - Catalog Sales, App Installs, Lead Generation, Conversions, Traffic, or Messages
4. Based on the objective, you have to select your catalog at a campaign, ad set, or ad level

• Catalog Sales: Select your catalog at the campaign level
• App Installs or Lead Generation: Choose your catalog when creating the ad set
• Conversions, Traffic, or Messages: Choose your catalog when you create the ad

     5. Finish creating your ad based on the campaign objective by following the on-screen instructions

Where can you use Facebook’s dynamic creative?

Your dynamic ads can be placed in the following places:

• Facebook Newsfeed on mobile & desktop
• Right-hand panel
• Instagram feed
• Story
• Audience Network classic
• Audience Network In-stream video
• Audience Network rewarded video
• Messenger inbox

You can choose between automatic placements or edit placements to decide where you want your ad to show up.

Automatic placements are recommended if you just want Facebook to automate your ad placement. Edit placements allow more granular control, and you can decide where you want your ad to show up by choosing from a list of specific placements.

How do you view dynamic creative results?

• Click on the Ad Set tab on Ads Manager
• Hit ‘Breakdown’ and then select ‘By Dynamic Creative Asset.’
• Choose a ‘Breakdown’ from the dropdown to see the results

You can either choose the combination and it will tell you which is the best performing combination, or distill it down to all the creative elements and see which image is received well vs. others.

Dynamic Creative Optimization Best Practices

We’ve covered the best practices for dynamic ads on Facebook, so make sure to check that out.

Here's our Paid Social Playbook for Fashion.

Here’s a quick recap:

• Customize Creative for Performance
• Convert Abandoned Carts into Purchases
• Use Different Designs for Different User Intent
• Retarget for Better Retention
• Make Use of Dynamic Messaging
• Speed Up and Improve A/B Testing or Multivariate testing
• Stay On-brand and Remove That White Background
• Create a Customized data Feed for Clearance Sales
• Eliminate Worst Sellers
• Ad Strikethrough Prices for Discount Products
• Include More Product Images in a Single Ad
• Employ Countdown Ads

Benefits of Facebook’s DCO

DCO helps you spend more time doing things that help your business grow instead of worrying about what kind of ads will convert.

• Saves time
• Saves effort
• Saves money
• A/B testing at scale
• Targeted ad serving

Are there any cons to using Facebook’s DCO? Yes.

Unsurprisingly, there are some cons to using Facebook’s DCO. Some are limitations of the platform, while others make it difficult for you to achieve your objectives.

• Once you create an ad set with dynamic creative, you cannot turn it off
• You have to choose between images or videos. You can’t test them both
• You can’t test multiple display and site URLs
• You can’t change the images in the campaign, only view the performance
• Dynamic audience options are not available if your campaign objective is Conversions, Traffic, or Messages

The bottom line is Facebook’s DCO is great for advertisers looking to get started and companies that don’t want to or can’t spend time, effort, and money on creatives and testing. But, if you are someone looking for granular control, Facebook’s dynamic creative ad experience is not enough.

Use Hunch’s dynamic creative management platform instead. Here’s why:

Facebook’s dynamic creative allows you to create static campaigns based on the product catalog that you upload.

What does this mean? The data you upload is all that you can play around with when setting up the dynamic ads.

With Hunch, you can create active dynamic templates and creatives. The system checks and rechecks the data on a frequency that works for you - hourly, daily, weekly or monthly.

Let’s say you are running a campaign for 10 cities, and you decide to personalize the ad based on the weather, and you want to change it hourly. Traditionally, you would have to find out the weather data for all those 10 cities every hour and then pause or unpause your campaign if the weather changes. If your ad runs for 12 hours a day, that’s a whopping 120 checks you would have to perform every day.

Hunch’s creative studio allows you to automate this entire process saving you time and effort and design resources you would have needed otherwise.

To be fair, the concept of saving time quickly goes out the window because it is challenging to run a large-scale campaign the traditional way. If you had to target 120 cities instead of 10, that’s 1.440 checks that you would have to perform every day.

Try adding another element of localization like language localization to this campaign, and you’ll realize that it is virtually impossible to do it manually.

With Hunch, you can achieve the impossible.

P.S. Check out how Air Serbia uses dynamic flight ads.

What is a dynamic creative vendor?

Hunch can be categorized as a dynamic creative vendor perfect for businesses looking to scale their paid social ads and has 3 pillars: automation + creative + ad spend.

See how it fares against other popular dynamic creative optimization platforms.

Does DCO work? Will it work for me?

This is a common question people ask when introduced to the concept of dynamic creative and DCO.

The answer is YES. Whether you’re just getting started or have experience with paid social advertising, dynamic ads are key to personalization.

According to Salesforce. 97% of marketers saw a rise in business outcomes through personalization.

This suggests that customers like personalization. But, to what end? As per SmartHQ, 72% of consumers reportedly respond to marketing messages exclusively crafted for them.

And now, with the recent rollout of Apple’s ATT update, it'll be more difficult to track user behavior, which means that marketers will have fewer data to personalize their ads with.

Even worse, the new privacy measures are likely to drive up costs for advertisers who want access to this valuable information.

It all falls down to marketers who will need to re-learn measurement and personalization, but the question remains how.

By chance, I happen to have been in similar chaos before and can take you through how to create personalized ads without sacrificing user privacy.

Frequently Asked Questions

1. How does dynamic creative optimization work?

The best answer would be seeing DCO in action. See representative examples of DCO in our case study. 

2. Why is dynamic creative optimization important?

Creating relevant and engaging ads is critical for today's marketers. DCO gives you an opportunity to run highly personalized campaigns, without losing your sleep time, and hiring more people to handle it. 

Ready to switch on personalization and take it up a notch? Our team wants to talk to you and offer you a FREE strategy call that you can use to get more out of dynamic ads.