Dynamic creative optimization (DCO): what it is + 10 steps

Quick answer: what is dynamic creative optimization?

Dynamic creative optimization (DCO) is a way of building display ads that assemble in real time, so each viewer sees the version most relevant to them. It pulls live data (audience, behaviour, and feeds) into a master creative, swaps elements like imagery, offers, and copy on the fly, and keeps optimizing which combinations perform while the campaign runs.

Dynamic creative optimization (DCO) - it’s a concept many in marketing may be aware of, but how many of us have really grasped it? Implemented it? Mastered it? It’s next-level programmatic creative – it’s the beating heart of the display ads of your dreams, if you dream about that sort of thing, that is.

DCO marketing is all about assembling ads in real-time, tailored for each specific person based on user behavior. But how do you execute it? 

Let’s explore what you need to know about DCO, why it’s the future of marketing, and dive into our step-by-step guide on how to do it the right way.

What is dynamic creative optimization (DCO) advertising?

Display advertising isn't shrinking: US display ad revenue hit $81.6bn in 2025, up 9.8% year over year, and programmatic spend grew even faster, up 20.5% to $162.4bn, on track to pass $200bn in 2026. Globally, ad spend is set to cross $1 trillion in 2026 for the first time. Nielsen's 2025 Annual Marketing Report found that 71% of brands spending $1bn or more on advertising now rank AI for personalization and optimization as their top trend. DCO is the sharpest expression of that shift: using data to decide what a creative should look like, not just where it should run.

DCO is personalized advertising that converts. It’s about using real data sources to enhance your banner ads and inject them with live analytics, real-time testing, and creative optimization.

The result? Hyper-relevant dynamic display ads - personal to your customers. It’s creativity and data combined for maximum impact.

DCO uses live data to shape each ad. DCO platforms enhance banner ads with real-time analytics, testing, and creative optimization, producing tailored ads that appeal to individual viewers. The result? Hyper-relevant, data-driven ads that align with viewers’ unique preferences.
DCO banners, for instance, can adapt to show the most relevant offers or imagery based on the viewer’s past browsing data, bringing DCO capabilities to life through responsive ad design.

Your ad-tech stack in harmony

What’s more, DCO works with all of your tech stack in harmony. It combines inputs from your creative automation platform (CAP), data management platform (DMP), and demand-side platforms (DSPs) using an algorithm. It picks the best combination of creatives to put in front of a viewer, based on first- and third-party data sources. DCO even optimizes this combination of elements as the campaign progresses automatically.

And just like any other campaign, rules can be programmed via a DSP. For example, if a click-through rate (CTR) in one ad version is lower than another, it’ll stop showing a particular combination of creatives.

Are banner ads dead? Find out and decide for yourself.

Types of DCO

Dynamic: pre-made dynamic ad variants, featuring data-fed elements. This type allows for more engaging, rich DCO media designs and creative optimization using a CMP.

Static units: a single DCO-powered ad that uses an algorithm to select the creative displayed in real time. This approach requires more manual setup (plus coding knowledge), but can still be effective for personalized DCO advertising.

Rather than relying on a CAP that is not optimized for DCO, why not rely on one that is? Creative automation platforms that excel in DCO ad production, such as Bannerflow, offer the same awesome versioning and rich media capabilities of the best HTML5 display campaigns – code-free. 

Why use a CAP for DCO?

A CAP is your production engine for DCO, enabling you to produce and control ad variations needed for a DCO campaign. CAP-driven DCO solutions simplify the process by managing multiple creative assets and allowing you to set up data feeds that bring dynamic creative optimization examples to your campaigns. Platforms like Bannerflow support DCO solutions with no-code, dynamic ad production. See how Bannerflow does DCO without code.
Choosing a platform to run it? Compare the main options in our guide to the best creative automation platforms in 2026.

DCO vs personalization vs creative versioning

These three terms get used interchangeably, and that's part of why DCO is so often misunderstood. Here's the actual taxonomy:

In short: versioning is what you do without a system, personalization is a fixed set of rules, and DCO is the version of both that keeps learning while it runs. If you want the fuller picture of where DCO sits alongside CMPs and creative automation generally, see what creative automation actually is.

Do you need a DSP to run DCO?

No, and this is the most common misconception about DCO. A DSP (demand-side platform) is how you buy and place media. DCO happens at the creative and ad-serving layer: it decides what the ad looks like once it's been served, not where or how much you paid for the impression.

You can run DCO through:

• A DSP's native dynamic creative tool — convenient if you're already buying programmatically through one DSP, but it usually locks your creative logic to that DSP and makes cross-channel consistency harder.
• A creative automation platform (CAP), DSP-agnostic — you build and control the DCO logic once, then serve the resulting creative to whichever DSPs, ad servers, or channels you're using. This is how Bannerflow approaches DCO and dynamic ads.

If your team runs media across more than one DSP, or wants to extend the same dynamic logic to owned channels like your own website, keeping DCO at the CMP layer rather than inside a single DSP is what makes that possible. See the full comparison in our creative automation platform overview.

Onsite DCO

DCO doesn't have to stop at paid media. The same logic, real-time creative assembly driven by live signals, works just as well on your own website or app, where it's usually called onsite personalization or onsite DCO.

Instead of swapping display ad elements for an anonymous viewer, onsite DCO swaps hero banners, product recommendations, or promotional messaging for a visitor based on what you already know about them: referral source, location, past browsing, or where they are in a returning-customer journey. The production logic is the same as paid DCO — a master creative, live data feeding it, continuous optimization — just pointed at your own traffic instead of bought impressions.

For e-commerce and retail teams especially, this closes a gap that paid DCO alone leaves open: the ad can be perfectly personalized, but if the landing page it points to isn't, the personalization stops at the click. Our creative personalization product and Create ads that perform extend the same creative logic across both.

Benefits of DCO in digital marketing

DCO taps into the growing trends of data-driven advertising and in-house marketing.

It enables targeted personalization by showing ads relevant to each user’s preferences, leading to increased engagement and better ROI. It also ensures that DCO ads are optimized based on audience behavior, driving improved performance in your media campaigns.

In practice, that shows up in results: CMC Markets lifted post-click conversions 23% with topical, data-driven display messaging built in Bannerflow. See the full story.

Audience perception of personalization is changing

Consumer participation and a better understanding of advertising indicate that viewers are eager for greater personalization. According to eMarketer research, “Epsilon found that four-fifths of consumers are more likely to make purchases when a brand gives them a personalized experience”. Additionally, according to that same research, 71% of all consumers are “frustrated that their shopping experiences were too impersonal”, demonstrating a strong yearning toward personalized ads from the average consumer. 

What does this mean for marketers?

If ever there was a time (and a need) for relevant, high-quality DCO media - it’s now. Viewers are aware of personalized advertising but seem to be unhappy with the quality of the ads they receive. And in an era of ad blockers, getting this balance right is important.

Keep customers in mind

Strive to remain relevant to your audience through personalization. Retargeting, for example, doesn’t have to be abrasive and static. DCO – particularly the type produced and controlled via a CMP – offers greater personalization with nuance and creativity. Data informing the creative process – rather than dominating it – is the ideal outcome.

Stay creative and engaging with your use of DCO

Template-free, dynamic creatives produced and controlled by a CMP offer the minimum requirement for sophisticated display advertising campaigns. CMPs enable you to be more creative in your DCO approach.

A tip? Try using different banner designs for different target audiences, which aren’t variations of a standard template. CMPs like Bannerflow enable you to use entirely different types of layout, design, or interactive elements for specific audience segments. There’s no limit to your creative ambition.

Step-by-step guide: how to set up a successful DCO campaign

Wondering where to start? Follow these steps to effectively set up your DCO campaign.

First, though, you’ll want to start with a solid data foundation. Audience data is essential for targeted messaging and optimization. Without it, a DCO campaign risks being too broad and ineffective.

Step 1: Define your audience

Create detailed buyer personas for each target segment, considering factors like demographics, job roles, media habits, and shopping preferences. This helps to define where and how to reach each audience effectively.

(Wondering how to create these? Read more about buyer personas with Hubspot’s guide.) 

Step 2: Understand their interests and online habits

Identify the platforms and sites your audience visits throughout their purchase journey, including relevant comparison sites and your website. This gives insight into where they’re likely to see your ads.

Step 3: Optimize device and location targeting

Analyze historical data to determine the devices your audience uses most and adjust targeting accordingly. For example, brand awareness may perform best on mobile, while conversions may be higher on desktop. Additionally, use geo-targeting to refine relevance even further.

Step 4: Leverage customer data

Draw insights from your CDP to understand which targeting strategies and CTAs resonate best with your audience. The more data you have, the better you can refine your targeting approach. 

Step 5: Map messaging across the buyer journey

Remember, consumers often interact with multiple touchpoints (2.8 on average) before converting. Tailor your messaging to align with each stage of the buyer journey, highlighting your unique selling points (USPs) and differentiators.

Applying DCO to your display campaign

Halfway there! With your data and targeting strategies in place, you’re ready to set up your DCO campaign. Out of the two main approaches, creative-driven DCO with a CMP or template-driven DCO requiring coding expertise, we’ll focus on the creative approach:

Step 6: Integrate with your DCO platform

Connect your DCO platform to your DMP and CRM to ensure audience data feeds into your campaign, enabling precise personalization.

“…we use the information from our customer relationship management (CRM) and data management platform (DMP). This means we can build creatives that are more focused on the users’ needs. By doing this, we can reach our goal of even greater ad personalisation and increase ROI.”

Sergio Fernández Vidal, Digital Design and Production Specialist.

Step 7: Build decision trees for ad delivery

Set up a decision tree within your DCO platform to determine which ad variants display for specific audience segments. This helps to guide users through a personalized journey.

Step 8: Pair creatives with user journeys

Use a CMP to create customized ad versions for each stage in your decision tree, enhancing your DCO capabilities.

Step 9: Automate and scale with a CMP

A CMP enables you to produce and scale multiple DCO creative variations, incorporating data feeds and design guidelines for optimized delivery.

Step 10: Launch and continuously optimize

Once your campaign is live, monitor performance and optimize elements such as messaging and creative assets. A/B testing throughout the campaign can enhance effectiveness and drive better results.

Does DCO actually work? Real results and when it doesn't

The results case is real, but it's worth being honest about where it comes from. Nielsen's Project Apollo found that creative itself drives roughly 65% of sales lift in a campaign, more than targeting or media spend combined. That's the underlying reason DCO works when it works: it's optimizing the single biggest lever, not a secondary one.

For example, Carglass ran a dynamic remarketing test with Google and saw a 2,901% ROI, four times the return of the static version of the same campaign. Bannerflow customers see a similar pattern in CMC Markets' 23% lift in post-click conversions from topical, data-driven display messaging.

Where DCO underperforms, it's rarely the technology. The common failure modes are:

• Thin data. DCO optimizes against the signals you feed it. Weak audience data produces weak personalization, no matter how good the engine is.
• Too many variants, too little volume. If a combination doesn't get enough impressions to reach statistical confidence, the optimization loop never actually learns.
• Creative that isn't built to flex. A master creative bolted together as an afterthought limits what the engine has to work with. DCO amplifies the quality of what you feed it, in both directions.

Get those three right and the upside is well documented. Skip them and DCO becomes an expensive way to run the same ad you'd have run anyway.

DCO after third-party cookies

Third-party cookies were never the foundation DCO needed — they were just one of several signal sources feeding it. As browsers restrict or remove them, the signals DCO runs on shift toward data you actually own: first-party behavioural data from your own site and app, CRM and loyalty data, contextual signals (what page or content the ad sits next to), and consented data from login or account activity.

In practice, this means less "who is this person across the web" targeting and more "what is this person doing right now, on a channel we control." A DCO setup built on a CMP rather than locked into one DSP's cookie-dependent targeting adapts to this shift more easily, since the creative logic sits above the identity layer rather than depending on it.

The net effect for creative teams: audience data still matters, arguably more, since there's less of it to waste on the wrong message. Tighter data rules reward well-built, flexible creative over broad, low-relevance reach.

The future of DCO and advertising

Dynamic creative optimization is finding its way into all sorts of fascinating applications. Already, streaming services such as Netflix and Spotify are using the same technology to enhance and personalize internal advertisements. Next, we may even expect to see DCO-enhanced voice search ads start to become mainstream. More broadly, DCO is creative intelligence in action: using data to predict which creative will perform, then proving it with results. See how that fits our creative intelligence approach.

Using Creative Automation Platforms like Bannerflow makes it far simpler for in-house teams to embrace DCO.

Looking to set up DCO for your team’s strategy? Get in touch with us for an initial consultation today! 

Frequently Asked Questions

Is DCO the same as programmatic advertising?
No. Programmatic is how ads are bought and served; DCO is what the ad does once it is served. DCO decides which version of the creative each viewer sees, in real time. The two work together: programmatic places the ad, DCO personalizes it.

What is the difference between DCO and dynamic ads?
Dynamic ads pull in live data, like a price or a countdown. DCO goes further: it also chooses which creative combination to show each person, and keeps optimizing those choices as the campaign runs, based on what performs.

What do you need to run a DCO campaign?
Three things: audience data (from a DMP, CRM, or CDP), a set of creative elements to combine, and a platform to assemble and optimize them. A creative management platform handles the production and optimization without custom code.

Does DCO still work without third-party cookies?
Yes. DCO can run on first-party data, contextual signals, and live feeds rather than third-party cookies. If anything, tighter data rules make relevant, well-built creative matter more, not less.

What data does DCO use?
Any live signal you can feed it: audience and behavioural data from a DMP, CRM, or CDP; first-party data from your own site or app; contextual signals like the page or content around the ad; and real-time feed data such as stock, pricing, or weather. DCO doesn't need any one source, it combines whatever signals you have and keeps optimizing based on what each combination does.