How to Use Dynamic Creative Optimization (DCO) to Scale Your Facebook Ads

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Running effective Facebook ads is not easy; every brand aims for maximum results, which are possible only when ads reach the right audience. To achieve this, understanding what dynamic creative optimization is helps automate multivariate testing and reduce ad fatigue. To ease this hassle, Facebook has a feature called Dynamic Creative Optimization. 

DCO uses machine learning to combine multiple headlines, images, videos, and CTAs to create the most interesting ads for the audience, enabling instant personalization and targeted advertising. It saves both time and money, while improving performance. DCO has become a breakthrough strategy for personalized and data-driven campaigns in 2025. 

In this guide, we’ll dive deep into the functioning of DCO, how to set it up, track performance, and scale campaigns without wasting money.

What is Dynamic Creative Optimization (DCO)?

Dynamic Creative Optimization is an advanced ad method where Facebook automatically tests different combinations of multiple creative assets to show the best-performing ad version. The purpose of DCO is real-time personalization, higher CTR, better conversions, and improved overall ad relevance. 

Facebook DCO is helpful for advertisers to save time and continuously optimize campaign performance. The algorithm performs testing of many combinations; it combines different headlines, images, videos, and CTAs to determine which combination engages users the most. If you’re keen to master these strategies, you can explore a performance marketing online course to gain practical skills.

Ex: A retail brand used DCO and tested multiple headlines and images, and the CTR improved by 25%.

DCO vs Manual Testing

• Manual testing is time-consuming and involves guesswork, while DCO automates advertisement optimization by selecting the best creative combinations automatically. 
• DCO automatically selects the best creatives and keeps improving them automatically, which generates faster and accurate results. 

DCO vs Dynamic Product Ads (DPA):

• DPA primarily shows feed-based ads or user-specific product ads, whereas DCO focuses on creative asset combinations for better CTR improvement.
• DCO is adaptable and focused on creativity, and doesn’t depend on a product catalog.

Ex: Retail DPAs show users the products they have previously browsed, whereas dynamic creative Facebook ads test multiple creative assets like images, headlines, and CTAs to optimize overall ad performance.

In short, DCO helps advertisers test more creatives in less time, improve CTR and ROAS optimization, and scale their campaigns effectively.

How Does DCO Work on Facebook / Meta?

Facebook’s Meta algorithm uses machine learning to automatically select the best-performing ad by conducting multiple creative combination tests through its automatic testing system. Its main purpose is automation, real-time optimization, and better ad performance so that advertisers can efficiently scale their campaigns. 

The algorithm conducts multivariate testing, continuously testing combinations of multiple headlines, images, videos, and CTA’s for the most useful ads for the audience. Each combination is monitored, and the algorithm displays the one that generates the highest engagement and conversions. 

Ex: If an ad set contains 3 images, 2 headlines, and 2 CTAs, then the algorithm will create 12 combinations and will automatically select the most high-performing version. 

What does optimization prioritize when used for dynamic creatives?

Meta’s algorithm optimizes dynamic creatives based on:

• Engagement Rate: Creatives that interact the most with the users. 
• CTR (Click Through Rate): Combinations that generate clicks. 
• Conversion Probability: The creatives that motivate the user to take the desired action. 
• Audience Relevance: The Relevance of the ad to the target audience. 
• Cost Efficiency: Better results while saving money. 

Limitations of DCO on Meta

Studying the following limitations helps advertisers avoid mistakes and set realistic expectations for their campaigns:

• Not all campaign objectives support DCO (like an awareness campaign).
• Limited or too many creatives per ad set can confuse the algorithm. 
• Even with automation, manual checking and high-quality creatives are essential. 

In short, in dynamic creative optimization, Meta uses machine learning to continuously test and optimize, improving advertisers’ CTR, ROAS, and ad relevance.

Setting Up Dynamic Creative Ads in Facebook Ads Manager

When you use Dynamic Creative Optimization (DCO), setting it up correctly is very important. If Ads Manager is properly configured, Meta’s algorithm smartly tests your creatives and shows the best combinations. In this process, you just need to follow a few simple steps. 

Step 1: Enable Dynamic Creative 

Firstly, go to the Ad Set Level in Ad Manager, where you’ll find a toggle of ‘Dynamic Creativity’, turn it ‘ON’. This step allows you to upload multiple creatives, and the algorithm automatically mixes, matches and tests them. Enable this feature only when you have multiple creatives ready to test. 

Step 2: Upload Creative Assets

After enabling the toggle, you have to add your ad assets. It’s important to follow best practices:

• Images: 1080×1080 square or 1080×1920 vertical formats recommended. 
• Videos: Short and crisp videos(15 sec or less) bring the most engagement. 
• Headlines: Write small, catchy, and benefit-driven lines. 
• Descriptions: Optional, but you can try different tones (formal, casual, direct). 

Ex: A commerce brand uploaded 3 product images, 2 headlines, and 1 short video, and the algorithm picks the best combo of these to boost the CTR. 

Step 3: Define Target Audience & Placement

Audience selection is the backbone of DCO success. Using first-party data and lookalike audiences enhances targeting and campaign scaling.

• Broad Audience: It gives the algorithm more room for testing. 
• Lookalike Audience: Useful for scaling when you have first-party data. 

Choose the automatic placements option, then Meta itself will decide whether the ad performs best in the Facebook feed, Instagram story, or reel.

Step 4: Budget & Optimization

Budget optimization is equally important; if your budget is low, the campaign gets stuck in the learning phase. Ensure sufficient budget so that the algorithm gets enough data and keeps results steady. Clearly link your optimization goal with your budget (CTR, conversions, or ROAS). 

By following all these steps, you can effectively launch and optimize your DCO campaigns. Now, the next step is to improve and measure the performance for long-term scaling. 

How Can You Optimize and Measure DCO Performance?

The true power of dynamic creative optimization is realized when its performance is regularly optimized and measured. Running ads alone is not enough; look for creatives that add the most value and the ones that should be replaced. 

Firstly, focus on the key metrics that matter:

• CTR (Click-Through Rate): This shows the number of users who clicked after seeing the ad. 
• CVR (Conversion Rate): Indicates the number of clicks being converted into customers. 
• ROAS (Return on Ad Spend): Shows whether your ads are generating profits or only spending. 
• Quality Ranking: Shows the user value and relevance of ads as per the Meta algorithm. 
• Frequency: Showing the same ad to the same user repeatedly can cause ad fatigue. 

To understand performance, use the “Asset Performance Breakdown” in Ads Manager. This feature clearly shows the headline, image, video, or CTA with the most impact. Then you can eliminate the low performer and give more budget to the high performer. 

Additionally, maintaining refresh frequency is also an important practice. If you do not update creatives on time, the audience loses interest, and your CTR improvement will decline. Introduce new creatives every 2-3 weeks. 

Lastly, combine DCO with A/B testing. DCO provides you with auto-optimized combinations, whereas A/B testing clearly states the creative format (static images/videos) that is best for your audience, ensuring ads are updated regularly.  

In this way, through continuous monitoring, smart budget allocation, and regular refresh, you can make DCO campaigns long-term profitable and scalable.

Scaling Your Facebook Ads with DCO

While running a DCO campaign, the initial focus is on testing and achieving stable performance. Once you start generating consistent results, the next step is scaling. It doesn’t just mean increasing the budget; it’s about growing your ads step by step to reach a wider audience without losing profitability. A social media marketing online course can guide you with the right step-by-step methods to scale effectively.. 

When is the Right Time to Scale a DCO Campaign?

Scaling always demands the right timing. If you scale without any signals, the algorithm goes back to the learning phase. That’s why it is important to first check whether the campaign is stable or not. The following signs indicate that now is the right time for scaling:

• Stable CTR: A stable CTR demonstrates consistent engagement. 

• Good ROAS: A good ROAS shows healthy returns. 

• Consistent Cost Per Sale (CPS): A consistent CPS indicates that the acquisition cost is predictable and under control. 

How to Scale

When you know the campaign is ready to scale, the next step is deciding how to approach scaling. Doubling the budget alone is not enough; having the right approach is essential:

• Gradual Budget Increase (20–30% rule): This implies that you should gradually increase the budget so the algorithm isn’t disturbed.
• Audience Expansion: This proposes to build lookalikes and test new geographies for fresh growth. 
• Use DCO Platforms: Bannerflow, Hunch Ads, or Smartly.io are some DCO platforms that simplify automation. 

Scaling Creatives 

Creatives are a major factor after budget and audience scaling. Unchanged ads lead to ad fatigue, emphasizing the importance of creative refresh. Hence, creative scaling is equally important. Here are some proven strategies to effectively scale creatives:

• Creative Refresh: Introduce new creatives at regular intervals to keep your ads fresh.  
• AI Templates & Variants: Create AI-based templates and variations for fast production and testing. 
• Multiple Formats: Keep a balanced mix of videos, images, and carousels to engage a diverse audience. 

In short, scaling follows a three-step flow: identify the right timing, systematically scale the budget & audience, and refresh creatives to sustain performance. This approach ensures sustainable and profitable Facebook ad growth.

What Are the Most Common Mistakes with Dynamic Creative Optimization? 

Dynamic Creative Optimization is a strong tool that makes ads more personalised and efficient. But often, marketers make some basic mistakes that prevent the algorithm from performing properly. If you avoid these common mistakes, then DCO campaigns become more stable and profitable.

These are the most common mistakes with Dynamic Creative Optimization:

• Uploading Too Many Creatives: The algorithm gets confused when you upload too many creatives in an ad set. It becomes difficult to identify a clear winner, and the budget goes to waste. 
• Ignoring Data: Ad manager’s ‘asset performance breakdown’ is a gold mine for data insights. But if you don’t analyze, you won’t understand the creatives that drive CTR, CVR, or ROAS. 
• Poor Creative Quality: With weak visuals, unclear copy, or generic CTAs, the algorithm might not generate the best results. High-quality creatives are the foundation of DCA. 
• Small Audience Size: Data signals are required to optimize DCO. With a small audience, the algorithm does not get enough learning, and the performance gets stuck. 
• Not Aligning Ad Creative with Landing Page: Mismatch between the ad and the landing page kills conversions. Keeping the messaging consistent is the most effective approach.

In short, DCO scales when you smartly use creatives, regularly review data, and maintain a consistent user experience.  

Best Dynamic Creative Optimization Tools & Platforms 

Creatives and budget alone are not enough to scale DCO campaigns. Use of the right tools and platforms is equally important, as they provide an automatic system, personalization, and efficiency to your ads. To learn these fundamentals in-depth, enrolling in the best digital marketing course can be highly beneficial. Knowledge and smart use of these can take your campaigns to the next level. Let’s look at the tools and platforms for DCO:

• Meta Dynamic Creative: It is a beginner-friendly dynamic creative optimization tool, directly available in Facebook Ads Manager. Setup is simple and seamlessly integrates with Meta’s algorithm, allowing optimization to run automatically. 
• Third-Party Platforms: Tools like Bannerflow, Hunch Ads, and Smartly.io are useful for advanced advertisers. They generate bulk creatives, while personalized templates enable customization and make the testing process faster and more efficient.
• AI & Automation Tools: AI-driven platforms auto-refresh creatives, reduce ad fatigue, and provide smart scaling solutions. They ensure engaging and up-to-date campaigns. 

By using a smart combination of these tools, you can scale your DCO campaigns in a long-term, profitable way. 

Real-World Dynamic Creative Facebook Ads Examples

Now that we have understood how DCO works and how to set it up, the next step is to look at dynamic ads Facebook examples. These examples show how DCO campaigns practically improve performance, CTR, conversions, and overall ROAS. 

• Retail Example: A retail brand used DCO along with carousel creatives. The algorithm combines various headlines, product images, and CTAs, then selects the most engaging combination. As a result, the CTR increased by 32% and there was a noticeable sales uplift. 
• SaaS Example: A SaaS company deployed DCO with multiple video creatives and CTAs. The algorithm favored the best-performing video + CTA combination, showing it more frequently. As a result, sign-ups increased by 28%, the CPA remained stable, and the ROI improved.

Visualizing these before/after metrics in a table provides an even clearer picture:

Campaign Type	Before DCO	After DCO	Improvement
Retail	CTR 8%	CTR 10.6%	+32%
SaaS	Sign-ups 500	Sign-ups 640	+28%

These examples prove that DCO is not just an automation tool but rather an effective method to scale personalization and performance. Continuous monitoring and creative refresh help get the most lasting results. This ensures the algorithm consistently shows the best-performing combinations, reduces ad fatigue, and keeps CTR, conversions, and ROI high.

Also Read: Advanced PPC Metrics 2025: Boost ROI Beyond Clicks

How to Turn Off Dynamic Creative Facebook Ads

Sometimes campaigns reach a phase where pausing or turning off the DCO is necessary. This usually happens when performance doesn’t meet expectations, when you shift to a manual testing phase, or when the campaign objective changes. 

This process to turn off or pause DCA can be followed in simple steps:

• Step 1: Log in to Ad Manager and select your campaign 

Firstly, open Facebook Ads Manager and locate the campaign where Dynamic Creative is active. Carefully choose the right campaign to avoid affecting other running ads. 

• Step 2: Go to the ad set level

The Dynamic Creative toggle is available only on the ad set level, and not on the campaign or individual level. Select the specific ad set where you want to turn off the DCO. 

• Step 3: Toggle off Dynamic Creative

As you switch off the DCO option, Facebook will automatically stop running the creative combinations and will shift to manual creative control for the ad set. After turning it off, monitor performance closely to ensure your changes don’t negatively affect results.

If in the future, you want to test the same ad set but without DCO, then there is an alternative approach:

• Duplicate ad set

Duplicate the original ad set and disable Dynamic Creative in the new ad set. This allows you to perform manual testing while keeping the original campaign intact.

By following these steps, you can easily turn off or pause DCO and manually test or optimize ad strategies. Always ensure to monitor performance metrics for an easy and safe change. 

Conclusion

Dynamic Creative Optimization helps Facebook advertisers automate, personalize, and scale. With this, you can test different creative combinations, and the algorithm automatically displays the best-performing ad, boosting CTR and overall ROI. 

Before launching DCO, ensure that you have high-quality creative assets, a well-defined campaign objective, a big enough audience size for effective optimization, sufficient budget to complete the learning phase, and a proper tracking setup.

Always remember, just running ads isn’t enough; optimizing with DCO is the real way to achieve sustainable Facebook scaling. To understand how this skill can shape your career in digital marketing, you can book free career counseling at Skillwaala.

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