• by Paul Knegten , March 1, 2010

DSPs and dynamic ads can optimize your performance away

Demand side platforms (DSPs) are a giant leap forward for Adkind. They put the power back in the hands of the marketer to decide how much to pay for each audience segment, target them in real time, and hyper-optimize the campaign with the help of ingenious black boxes with Einstein-quality math equations inside.

Dynamic ads are the other superheros. They empower marketers to tailor their message or offers based on performance (among other factors). More math equations that put more dollars into marketers' pockets!

Put them together and you get super-hyper-mega-optimized performance, right? Wrong! You get a mess. Here's why: The DSP is optimizing against a specific creative. Let's call it Big-Box Retailer Creative X. As the DSP sees a gradient of performance across different audiences shown Creative X, it optimizes your media buy to bid for more of those audiences. This scenario works great.

Dynamic ads complicate this scenario in that Creative X is undefined. Put simply, the execution of the creative is determined by optimization performed behind the scenes, and whether that means showing pictures of a DVD player or a washing machine is determined each time the ad loads.

So, when the DSP hits on a good audience that it thinks is responding well to Creative X, it doesn't know whether that's actually Creative X.DVD, Creative X.WASHER, or any of the literally millions of combinations possible with dynamic ads. Even if the DSP was able to foresee all the creative executions possible, it would unlikely be able to find enough volume for each micro-segment.

And there you have it: optimization overdose. Neither technology stops spinning plates long enough to get a good read on what the other is doing.

Luckily, there are ways you can avoid this problem and exploit the synergy between DSPs and dynamic ads:

1) Make sure your DSP and dynamic ad provider are talking to one another (programmatically). Essentially, the DSP has to pass audience information through, and the dynamic ad provider has to pass which creative execution it will show. Ask a lot of questions to make sure this is being done.

2) Stay away from non-product centric dynamic ads. It's much easier for a DSP to scalably find audiences responding to DVD players vs. washing machines than "logo position=3X390F" vs. "logo position=3X939Q." Why? Because with good product taxonomy, the DSP can always instruct the dynamic ad to tone down the granularity a step. Instead of "product=DVD player," the ad can be requested to show "category=consumer electronics," so that a broader audience can be targeted if necessary. What's the broader audience for "logo position=3X939Q"? Yeah, I don't know either.

3) Test your DSP with a static control to establish a baseline. Then you'll have a frame of reference when you add the dynamic ad functionality to the mix.

For marketers, myself included, this is a lot to think about at a time when we have a lot to think about. But this is the future of display ads, and each day more marketers uncover the incredible performance (at scale!) that DSPs and dynamic ads (separately or together) enable. Let's make sure the next one is you and not one of your competitors, okay?