🚀 daydream acquires Positional (YC S21)

What Are Dynamic Display Ads And How Do They Work?

Learn what dynamic display ads are, how they work, and how they can help you deliver personalized advertising content to boost conversions and engagement.

October 17, 2024
Written by
Matt Lenhard
Reviewed by

Join 2,500+ SEO and marketing professionals staying up-to-date with Positional's weekly newsletter.

* indicates required

Dynamic display ads are a form of online advertising that serve personalized content to users based on their previous interactions with your website or app. Unlike traditional display ads, which show the same static message to every user, dynamic display ads adjust their content on-the-fly. This makes dynamic ads highly relevant to the specific user, boosting engagement rates and ultimately increasing conversion potential.

How Do Dynamic Display Ads Work?

At the heart of dynamic display ads is automation. By leveraging user data collected through various interactions—such as pages visited, products viewed, or abandoned carts—advertisers can modify the creative elements, such as product images, pricing, and sometimes even promo codes, in real-time.

They work primarily through a code snippet or pixel planted on the advertiser's website or app. This pixel identifies users and tracks their behavior. For example, if a user visited an e-commerce site but did not make a purchase, a dynamic display ad can show that very user the items they viewed, sometimes even bundling them with similar products or related offers.

Here’s how the process typically looks:

  • Data Collection: The website records what pages users visit, which products they view, and how long they stay on specific sections. Data is collected using various tracking tools such as cookies, scripts, and pixels.
  • Ad Creation: Rather than manually designing different ads for each product, a template is used. The template automatically populates the ad with dynamic content such as product images, text, current pricing, and special offers.
  • Bidding: Once a user's behavior qualifies them for remarketing, real-time bidding systems evaluate the likelihood that the user will convert. Platforms like Google Ads use various factors to determine when and where to serve the ad, based on the available ad inventory.
  • Ad Delivery: The user is then shown an ad that reflects their previous actions, such as a reminder of a product they added to their cart but didn’t purchase.

What makes this especially powerful is that you don’t have to manually create thousands of display ad combinations—dynamic display ads will automatically generate the best possible ad for each person viewing the ad across different platforms and devices.

The Benefits of Dynamic Display Ads

Using dynamic display ads offers several key benefits for advertisers looking to maximize their digital marketing efforts. Below are a few reasons you might want to incorporate this strategy into your marketing campaigns:

1. Increased Relevance for Users

Generic ads tend to get lost in the noise, but when users encounter ads that feature personalized content, they're much more likely to engage. When a visitor who viewed a specific product in an e-commerce store sees it reappear in an ad, they are reminded of their initial interest—making the ad seem both timely and relevant.

2. Better ROI on Ad Spend

Dynamic ads are designed to minimize wasted impressions by delivering hyper-targeted messages. Instead of mass-marketing one ad to thousands who may or may not find it relevant, dynamic display ads focus your ad spend on users who are more likely to convert. Combined with automated bidding strategies through platforms like Google Ads, dynamic ads bring improved return on investment (ROI).

3. Easier Ad Management

One of the standout advantages of dynamic display ads is the efficiency in management. Instead of continually creating different banners for various user segments, you just need one dynamic template. The advertiser uploads different assets (images, text, and links) into the template, and the ads automatically change depending on which user views them. Essentially, with dynamic display ads, you don’t need to create hundreds or thousands of ad variations by hand – the system does most of this work automatically.

4. Improved Remarketing

According to [WordStream], remarketing improves click-through rates by as much as 400%, which shows the power of reminding users about products they’ve shown interest in. Dynamic display ads specifically excel at remarketing because of their ability to retarget users with the exact products or services they have already interacted with.

Platforms That Support Dynamic Display Ads

Not every platform supports dynamic ads, but several major players in the advertising space offer tools that make it easy to launch dynamic display campaigns. Below are some common platforms where you can run dynamic ads:

Platform Description
Google Display Network Offers dynamic remarketing, allowing advertisers to tailor ads to user actions such as site visits, abandoned carts, and form fills.
Meta (formerly Facebook) Audience Network Facebook and Instagram both support dynamic ads, enabling brands to show personalized, behavior-driven content to users.
Microsoft Advertising Though lesser-known than Google and Facebook, Microsoft’s ad platform also supports dynamic ads with a focus on search partners like Bing.
Criteo Specializes in dynamic ads and provides solutions for retailers looking to optimize retargeting.

Challenges of Dynamic Display Ads

While dynamic ads offer a multitude of advantages, there are some challenges that come with implementing them successfully.

1. Requires Good Data

Dynamic display ads are only as good as the data feeding them. If your site hasn’t properly tagged its pages or if there’s inaccurate tracking, the ads may show incorrect or irrelevant information to users. Poor data can lead to a worse user experience and wasted ad spend, as your ads may target users with content that no longer applies.

2. Design Limitations

Because dynamic ads often rely on templates, they might not carry the same level of visual creativity as custom banners designed individually. While platforms like Google Ads offer some customization options, you're usually limited to a specific structure—this can hinder your ability to design fully customized campaigns.

3. Frequency Fatigue

One risk of dynamic display ads is overexposing users to the same content. Showing someone the exact same product repeatedly could lead to ad fatigue and result in a negative brand experience. To counter this, advertisers should set frequency caps to ensure the ads don’t overwhelm the user and turn them off from the brand entirely.

Best Practices for Dynamic Display Ads

To ensure your dynamic display ads are as effective as possible, there are a few best practices to consider:

  • Optimize Your Feed: If you're running product-focused dynamic ads (like for an eCommerce site), ensure that your product feed is up to date with the most recent images, prices, and product information. Missing or outdated data will lead to poor user experiences.
  • Use high-quality images: Dynamic ads might automatically pull images from your product catalog, so make sure your product images are crisp, clear, and compelling enough to attract attention.
  • Ad Frequency Caps: As mentioned earlier, avoid bombarding each user with the same ad. Set frequency caps so users aren’t overwhelmed.
  • Test Ad Variations: Dynamic ads can still benefit from A/B testing. Try different templates, headlines, and call-to-action buttons to determine which combinations generate the best results.
  • Maintain Brand Consistency: Ensure that even if your display ads are dynamic, they still align with your brand's colors, fonts, and messaging style.

To get started with dynamic display ads, it’s essential to understand both the benefits and challenges that come with this advertising method. Dynamic ads provide a personalized experience that can boost engagement, improve remarketing efforts, and give businesses a huge edge in terms of ROI. However, success relies heavily on the quality of your tracking and how well you can craft and optimize templates to create relevant, engaging ads.

For more information on implementing dynamic display ads, resources like the Google Ads Help Center offer comprehensive guides on setting up your campaign.

Matt Lenhard
Co-founder & CTO of Positional

Matt Lenhard is the Co-founder & CTO of Positional. Matt is a serial entrepreneur and a full-stack developer. He's built companies in both B2C and B2B and used content marketing and SEO as a primary customer acquisition channel. Matt is a two-time Y Combinator alum having participated in the W16 and S21 batches.

Read More

Looking to learn more? The below posts may be helpful for you to learn more about content marketing & SEO.