Online marketing is notorious for going through fads faster than you can say, click. But for many industry veterans, dynamic creative optimization (DCO) was different. It seemed like the real deal. Companies like Tumri and Teracent pioneered this new technology back in 2008, and ushered in an exciting change and opportunity for advertisers. The promise of self-optimized campaigns where machine learning algorithms shoot millions of ad variations into the virtual ether and ensure that consumers get the most relevant messages seemed to have marked the beginning of a new era. This really was the "next big thing."
But was it all for naught? Even with all the buzz, creative optimization never really outgrew its awkward teenage phase; today, it's still more of a niche solution. There are no formal figures that exist for this market, but our recent analysis looked at the commonly accepted categories of creative optimization: targeting, retargeting, and optimization/testing and estimated revenue for companies that provide solutions for each. This rough analysis suggested that in 2010 the combined revenue of these companies totaled around $100MM -- $120MM, which doesn't really spell success. (If you come up with different figures, I would love to see them.)
The only segment of the creative optimization market that seems to flourish these days is optimized retargeting (i.e. optimizing messages that are delivered to consumers who visited the advertiser site but didn't buy.) Companies such as Criteo, FetchBack, and others target pure performance advertisers with pay-per-click or pay-per-action models, but even these still capture relatively small portions of the advertisers' budgets.
So, what happened? Does creative optimization suck? Will it always stay a niche segment?
I believe that the answer lies in two words that aren't nearly as sexy as the word performance. These words are: ad ops and skill set. Welcome to the real world. To most, creative optimization campaigns are a real pain to plan, execute, and analyze. So while they do achieve impressive results, the time and investment associated with running them can sometimes make the whole process anything but economical.
When the workflow isn't streamlined, every campaign takes the back seat.
The majority of DCO tools still aren't integrated into the main ad servers and require agencies and advertisers to adapt to a separate workflow that isn't streamlined with the rest of their marketing activities. Why does integration matter? And how much of a difference will it make? Well, imagine that you just joined a new state-of-the-art gym that is located about an hour away from your home. How often would you go once the initial excitement wears off? Now, let's imagine another gym that is conveniently located inside your building. How often would you go now? Bingo. It's no wonder that more companies are looking to offer an integrated platform or solutions that optimizes and delivers ads across all formats and inventory.
Creative optimization campaigns require a different skill set and approach.
Sophisticated creative optimization campaigns with thousands of different ad variations are still a new and unfamiliar territory that advertisers and agencies alike don't always know how to handle. In many cases, they would take "traditional" online display campaigns with a limited amount of creative concepts and try to translate them into dynamic creative implementations. As expected, this strategy didn't always yield the anticipated results.
What we are seeing in the market right now is that many of the creative optimization vendors offer full service optimization solutions in order to bridge these gaps. Over time, I believe that agencies and advertisers will incorporate this new skill set in-house.
Getting the most from creative optimization tools:
- Integration -- While using a niche vendor can be great to test and experiment with new technologies, when you interview vendors for your long-term strategy, make sure that they are well integrated into your ad server.
- Optimization doesn't replace strategy -- Yes, all dynamic creative optimization companies have the fancy optimization algorithms built by NASA engineers, but you know your audience better than they do. Strategize first, optimize later.
- Plan a target audience messaging strategy -- What do you know about your target audience and their preferences? How can that be translated into many different offers and messages?
- Follow your audience through the funnel -- Where in the funnel can your target audience be? What messages will work there? What promotion will drive a conversion or take your audience to the next step in the funnel?
- Keep it fresh -- DCO enables you to keep messages and promotions fresh and react in real time to ongoing events. Plan on using that.
- Big brother alert -- Don't get too creepy. Seeing a message like, "Hi David, don't you want to buy that beautiful sofa you just saw?" can make someone really uncomfortable. Even if you don't step out of the acceptable personally identifiable information lines, don't get too carried away...
On Twitter? Follow iMediaConnection at @iMediaTweet.