Dynamic creative optimisation (DCO) is software that builds each online ad from separate parts, such as the product, the offer, the image and the language, to suit the person who will see it. In advertising, the ad itself, meaning its picture, video and words, is called the creative. "Dynamic" means that the ad is put together at the moment it is shown, instead of being designed once in advance. "Optimisation" means that the software learns which versions work best and shows them more often.
An ordinary campaign might have three or four finished banners. A DCO campaign has a template and a set of parts. The template fixes the layout: where the logo goes, where the photo goes and where the button goes. The parts fill those places. The software stores rules that decide which part goes into which place, for which viewer.
Consider an online fashion brand that sells kurtas. Its DCO template has 3 photos, 4 offers and 3 languages, which makes 36 possible ads. A viewer in Bhubaneswar opens a news app at 8 p.m., and the brand's bidding software wins the chance to show her an ad. The DCO system receives a few facts. The phone's language setting is Odia. The brand's customer data platform (CDP) reports that this person looked at cotton kurtas on the brand's site last week, but did not buy. So the DCO system picks the photo of a cotton kurta, the line "₹400 off on your first order", Odia text and a "Shop now" button. It assembles this ad in a few milliseconds. Another viewer who has never visited the site may instead see a festive photo in English, with free delivery.
Over the following days, the software counts how often each version is tapped, and how often a tap leads to a sale. It then shows the better versions more often, and drops the weak ones.
The parts are made elsewhere. Designers make the templates in graphic design software. More and more, the photos and lines are produced by generative AI for marketing content. The finished ad is delivered through a demand-side platform (DSP), the software that bids for ad space. Some versions are shaped to look like the articles around them, in the formats of native advertising.
DCO works best with first-party data, which is data the brand has collected itself. With it, the brand can use what it knows about its own visitors, without following them across other websites.