CTV advertisers need to put DCO back in the spotlight
Opinion
Dynamic creative optimisation’s many advantages are barely noticed now — but the ongoing deprecation of third-party cookies and growing data privacy limitations could change that.
In the early connected TV (CTV) boom, advertising focus centered on its potential to bring digital-level targeting to the big screen and few discussions were complete without a nod towards the personalisation power of dynamic creative optimisation (DCO).
But while enthusiasm for precise reach is still high, DCO appears to have stepped out of the spotlight.
Research showing 90% of advertisers are using DCO across their video activities indicates that adoption is stronger than ever. But the ability to flexibly adjust ads in line with detailed audience data seems to have become so ordinary that it’s barely noticed.
The ongoing deprecation of third-party cookies and growing data privacy limitations, however, could change that.
With traditional data signals fading by the day — regardless of whether Google support is removed or not — the importance of contextual and first-party data is rapidly increasing, as is the scope for DCO to shine once again.
Revisiting CTV’s nascent era
It’s easy to forget the real state of nascent CTV targeting accuracy. It’s better than linear — but not by much.
Although no longer aimed at broad demographics, ad delivery has been focused on households instead of individuals. Since the number of platforms offering ad spots was small, so were targetable audiences — this meant the more layers of segmentation advertisers applied, the more their reach shrank.
Then came the tipping point where evolution went into hyperdrive. In 2020 alone, US viewers upped their CTV intake by 39% year on year, while over-the-top subscriptions saw a 37% hike, with daily engagement climbing to a respective 18 minutes and more than one hour.
As swelling audiences triggered the multiplication of streaming outlets, advertisers enjoyed an influx of data that allowed them to better refine targeting. In addition to connecting internet protocol (IP) addresses to device IDs, that included enhanced ability to leverage tracked behavioural data and insight about authenticated logged-in users.
It was also around this time that DCO started to pick up steam.
DCO: A forgotten efficiency hero
Adding further personalisation to improved precision, dynamic ads allowed CTV to switch from chiefly driving awareness to a fully fledged performance marketing channel capable of driving high- and lower-funnel conversations, while boasting an expanded range of benefits.
With automated tools making it easy to build creative iterations at speed, advertisers were able to cut production time and boost experimentation, including running A/B tests with traceable components, such as QR codes and localised offers, across audience segments.
On top of this, the capacity to adjust creative approaches based on mid-flight performance data also helped to curb the amount of spend wasted on ineffective ads.
As these capabilities gained widespread use, however, DCO slipped into the shadows. As well as losing its novelty status, an integral reason is that DCO solutions have traditionally come as add-ons within black-box systems, meaning advertisers had little visibility into the value they create.
A naturally cookieless diet
Today, CTV has matured into one of the most powerful forces in advertising, keeping US viewers hooked for over 120 minutes per day and accounting for one in every 10 ad dollars. Alongside a strong hold on audience eyeballs, perhaps its biggest ace has been cookie-free targeting.
This advantage now has particular relevance as Google’s deprecation forges ahead, despite opposition from the UK’s Competition & Markets Authority and a less-than-glowing review of its Privacy Sandbox proposals from the IAB. Moreover, there is growing scope for fresh advances in DCO to help maintain scalability, as privacy focus switches to IP addresses.
These data signals have become essential staples of CTV ad targeting and attribution, but their future is looking uncertain. While content providers and adtech vendors have taken steps to retain access by complying with privacy laws (especially acquiring opted-in consent), core use cases are facing increasing challenges.
For instance, following Apple’s move towards automatic obfuscation, Google has stopped logging or storing IP addresses in G4 and also made consent mandatory for sharing data collected about EU-based users (including IP addresses) in response to the Digital Markets Act.
As it becomes increasingly difficult to link devices within households using IP addresses, the industry is, unsurprisingly, already hard at work building solutions: from alternative universal IDs to packaging IP addresses with anonymised identifiers.
The efforts of tech innovators, however, aren’t changing the probable future reality that IP addresses will become another targeting signal with varying availability. Consequently, there will soon be an even greater need for versatile personalisation — and that is where intelligent, content-centric DCO will come in.
Contextual 3.0 meets DCO
So far, DCO’s remit has covered adapting a selection of key parameters, such as images, colour palettes and call-to-actions, according to what resonates best with real-time viewers.
AI has, of course, been involved in this process for some time, with semi-autonomous algorithms playing an important part in driving data-based adjustments for scaled programmatic delivery. But continuing developments are augmenting these abilities by extending input data to include contextual signals.
Comparisons with traditional programme-led TV targeting are unavoidable here, yet the infusion of DCO and AI is due to keep modern interpretations firmly in the 21st century. Although ads will be aligned with content, they won’t be static messages chosen according to basic topic themes.
Instead, intelligent tools will make instant and complex optimisation decisions using multiple sources of data; mapping advertiser audience requirements against data from content providers to select exactly the right slot, before building and immediately serving the perfect creative mix.
Agile by design, this approach will be a future-proofing essential for CTV. It equips advertisers to use non-personal contextual data in combination with whichever compliant audience-level data is available — be that publisher-provided IDs or opted-in insights shared by viewers — to provide an engaging and impactful in-the-moment experience.
As DCO gets smarter, it’s possible that aspects of CTV programming could start featuring in ad creative, helping to form deeper connections with content and audiences. On a near-term basis, that will likely mean adopting recognisable phrases or visual motifs, but longer-term use could see further blurring of the lines between promotions and programmes, with integrated sponsored spots featuring branded products.
The problem with well-worn tools isn’t just that they go unappreciated, it’s that users also frequently fail to see the potential for other applications.
DCO’s slide into obscurity has prevented many advertisers from recognising its capacity to help meet rising CTV challenges and expectations, especially when it comes to balancing personalisation with privacy.
Quietly but steadily, DCO has continued to grow, gaining smart new contextual abilities that will be invaluable for driving powerful privacy-first ads.
So let’s turn the spotlight back on, so advertisers can see and harness it.
James Grant is senior vice-president, advanced television, at Equativ