Facebook is making an update to their Dynamic Ads that will better display relevant ads to users. The technology behind this update is similar to how pay-per-click ads are shown to users based on search results and keywords. Advertisers will be able to remarket even more effectively to users based on actual purchase intent.

Updates are a frequent thing with digital companies like Facebook, and most of the time both marketers and users can be thankful for them. This is certainly the case with this Facebook update. There’s a handful of pro’s and one pretty big con, but overall I’m sending a thank you letter to Facebook for this update.

Let’s get down to the nitty gritty details of the update.

What Are Facebook Dynamic Ads?

This type of Facebook ad is designed to help customers who need a little extra push to move forward at the checkout page. It showcases an ad of a product on Facebook to people who recently expressed interested on either your website or app.

Advertisers upload a product catalog to their Facebook ad account which includes product images, titles, and descriptions. These products are then shown to users on Facebook after a user has made the initial interaction on either the company’s website or app.

For example, I shop for shoes online pretty frequently. Let’s say that I found a pair of Nike’s on the Nike website, looked at the shoe in a few different colors, but didn’t commit to actually buying. Then, I leave the Nike website and decide to go to Facebook to check on client accounts and browse through my Newsfeed.

BAM!

The Nike shoes that I was just looking at appear as a sponsored post in my Newsfeed. I click on the ad and look at the shoes just one more time and find myself a week later running in them.

Dynamic Ads on Facebook are extremely powerful for retailers and allow retailers to reach more shoppers through retargetting. Rachel Kwan from The Honest Company and and Zach Greenberger of adMixt saw huge results from Dynamic Ads.

“Dynamic ads helps us connect our large product catalog to each unique shopper with relevant and timely product ads. We’re seeing strong results, including a 34% increase in click through rate and a 38% reduction in cost per purchase.”

What is Changing About Dynamic Ads on Facebook?

With such a great ad type, why change it? Well, Facebook is all about “user experience”. Their newest ad update is designed to improve the user experience by better displaying Dynamic Ads to a larger audience based on their online activity. The point is to advertise to users who display a true intent to purchase, whether that’s shown from website activity, demographics, or engagement.

So, instead of me going directly to the Nike website and being retargetted with a Dynamic Ad from only Nike on Facebook, other retailers who sell Nike shoes will have the opportunity to advertise their shoes to me.

Any business advertising on Facebook that has uploaded “Nike shoes” as one of their products for Dynamic Ads has the potential of displaying their ad to me on Facebook – not just Nike. Hello, competition! 

The online furniture retailer Wayfair tested the new Dynamic Ads and claimed they are 20% more effective than other types of acquisition advertising.

“We can automatically reach a huge audience with personalized recommendations from our catalog of more than seven million products,” said Wayfair’s director of marketing Jessica Jacobs in a statement. “With Dynamic Ads, we are beating our customer acquisition efficiency target by more than 20 percent at a scale that is meaningful to our business.”

This Seems Like a Good Update, But What’s the Catch?

The catch is that your’re going to be competing with your competition even more now. Any retailer that sells Nike shoes and has uploaded it as a product in their Dynamic Ad catalog has the potential to display their ad to me, not just Nike. This is where competitive pricing, special offers, and promotions are going to come to play.

You also need to have the best ad out there. Does your product photo display the pair of shoes the best? What does your ad text tell me to do? Is it compelling enough? Although it can be a little overwhelming, and scary, that you have to compete even more with your competitor, it all comes back to the basics. Create compelling ad content that your audience wants to engage with.

A/B test your ad sets using multiple product images, videos, and slideshows to see what your audience likes best. Then, run with it. Sometimes you’re going to lose to your competitor and it may be for reasons you just can’t control. So, do what you do best and create the most compelling Dynamic Ads.

When is the Update Taking Effect?

Like most updates, only a select few get access first. There’s a group of eCommerce advertisers in North America who use Power Editor and the ads API who get to test the update out first.

Check with your Facebook ad rep to find out when you’ll have access to the update, but you can expect to wait a few more months according to Facebook.