Dynamic Product Ads: How They Work + Setup Guide

Dynamic product ads are a Meta ad format that uses templates, product feeds, and user behavior to generate targeted ads for a high-intent audience automatically. Learn how to build DPA campaigns that attract and convert customers (checklist included).

How long would it take to manually create Facebook ads for every product in your catalog?

Dynamic product ads (DPAs) automate that process, using real-time data to deliver highly relevant ads that convert.

So, are dynamic product ads a good fit for your brand? In this guide, we’ll show you how to build and optimize DPA campaigns that scale effortlessly.

What are dynamic product ads?

Dynamic product ads are ad formats offered through Meta that use data feeds and ad templates to automatically generate highly targeted ads.

Although they’re built with automation tools and product catalogs, these advertisements look like any other image, video, or carousel ad.

Unlike standard ads, dynamic ads are tailored to prospects based on their browsing or shopping history. Dynamic product ads often feature a carousel of items that prospects are already thinking about buying.

However, DPA only works for items eligible for Meta product catalogs.

Benefits of dynamic product ads

Dynamic product ads aren’t the right fit for every advertiser or campaign. But these social media ads are worth it when you want to achieve the following goals.

1. Create ads more efficiently

Meta Ads Manager uses your inputs to generate ads at scale. Since it connects to your product feed, it uses current data to make real-time adjustments.

That means you don’t have to worry about pausing ads or wasting ad spend on out-of-stock items.

2. Generate relevant ads automatically

Dynamic product ads typically feature items people have recently viewed or products related to their recent purchases.

Since they’re more relevant, they’re more likely to appeal and convert, similar to Google’s dynamic search ads.

3. Retarget engaged prospects

Instead of building custom or broad audiences, dynamic product ads can easily retarget engaged prospects. As a result, these ads can reach prospects throughout the buyer’s journey.

“Dynamic product ads can be highly effective if implemented correctly,” says HawkSEM co-founder and CEO Sam Yadegar.

“They’re a great [asset] for remarketing campaigns and can really increase sales and ROAS. It’s essential to have an experienced partner or Facebook ads consultant managing your dynamic product ads to ensure they’re getting the desired ROI.”

How DPAs work

Dynamic product ads work by using automation and real-time data to create personalized ads at scale.

First, the advertiser uploads a product catalog to Meta through Commerce Manager and installs the Meta Pixel on their website to track actions, like viewing products or adding items to a cart.

Meta then stores this behavior data and matches users with products they’ve interacted with. Later, you can retarget these users, upsell related products to recent buyers, or reach new customers with similar behavior.

Back inside the Meta account, the advertiser builds an ad template, such as a carousel or single image. This includes dynamic fields like product name, price, and product description.

Meta then automatically updates the ad content and delivers tailored ads across Facebook, Instagram, Messenger, and the Audience Network to those users who were tracked by the Meta Pixel.

Who should use dynamic product ads?

Dynamic product ads are best for businesses with a large rotating inventory of products. This often includes:

• Ecommerce businesses
• Realtors, real estate agents, and real estate agencies
• Auto sellers
• Travel and hospitality businesses

Who shouldn’t use dynamic product ads? Any business with a small product catalogue, minimal resources, or limited online presence wouldn’t benefit from this type of ad.

How to build a dynamic product ad campaign

To run dynamic product ads, you’ll need a product catalog, a Meta Pixel, and an ad campaign. Here’s how to get started:

1. Install a Meta Pixel

The Meta Pixel is a snippet of code added to your site that tracks user behavior on your website.

• Open Meta Events Manager and select your ad account from the dropdown in the upper right corner
• Click “Connect Data” and select “Web”

• Click “Setup Meta Pixel” on your Events Manager dashboard
• Follow the instructions to add the code to your website

Pro tip: Meta recommends installing Conversions API alongside a Meta Pixel. This workflow creates a direct connection with your server, which results in more accurate data. To do this, click the “Set Up Conversions API” button and follow the instructions.

2. Set up a Meta product catalog

If you’re new to advertising with a product catalog, open Meta Business Manager and navigate to Meta Commerce Manager.

• From the main dashboard, click “Add Catalog”
• Choose a relevant catalog type

The next steps will vary a bit depending on the catalog type you select.

If you opt to set up an ecommerce catalog, for example, you’ll see an option to upload product info or to connect an ecommerce platform like Shopify or BigCommerce.

By default, all items in your catalog will appear in a single “All Products” set. In some situations, you may want to advertise all your products for optimal retargeting.

But more often than not, you’ll want to advertise certain categories — especially if you have a large inventory.

To configure product sets:

• Go to your Commerce Manager dashboard and open the “Catalog” dropdown menu
• Select “Sets”
• Click the green “Create Set” button in the upper right corner
• You can either select items manually or create filters to select items automatically

3. Create your campaign

After you set up a catalog and Meta Pixel, you’re ready to build a dynamic product ad campaign.

• Open Meta Ads Manager and create a new campaign
• For the objective, choose “Sales” (formerly “Catalog Sales”)
• If you see an option to create an Advantage+ Shopping Campaign or use the manual setup, choose the latter

• At the campaign level, toggle on the option to use a catalog
• Choose the right catalog from the dropdown menu
• If you’ve opted to budget by campaign rather than by ad set, input a daily or lifetime budget; otherwise, you can do it at the ad set level

• At the ad set level, select a specific product set if you plan to promote certain items only
• If you want to set up Facebook retargeting ads for your entire catalog, proceed with the default All Products set

Here, you can also choose a performance goal and a conversion event. When choosing a performance goal, you must decide between targeting conversion value or number of conversions.

For a pixel event, choose “Purchase” if you want to optimize for sales.

4. Choose an audience targeting option

When you run dynamic product ads, Facebook always allows you to target new prospects.

If you pick “Find prospective customers even if they haven’t interacted with your business,” you can access the same audience targeting options you’d have with any other Facebook campaign type, including demographics, interests, and behaviors.

But one of the biggest benefits of dynamic product ads is the extra targeting option you won’t get with other campaign types. To do this:

• Choose “Retarget ads to people who interacted with your products on and off Facebook”

• Choose whether to retarget product viewers or people who completed an “add to cart” conversion — or if you want to up-sell or cross-sell similar products to existing or potential customers

You can adjust the retargeting windows to ensure you reach the right audience.

5. Set up a dynamic product ad

The ad setup is relatively easy because you’ve already selected a catalog and product set. All you have to do is choose the ad format (carousel, single image, or collection) that best fits your marketing strategy.

Meta will automatically pull product images or videos from your product feed, so there’s no need to upload additional ad creatives. However, you can make some minor edits to all creatives in the ad:

• Click the “Edit Creative” button and select an option (for example, you can opt to crop catalog images or add frames)

• Configure the primary text and headline fields

Pro tip: You can certainly write unique ad copy for any of these fields. But you can always populate these fields dynamically by clicking the plus icon and selecting one of the options from the dropdown menu. For example, you can dynamically insert the product name, price, or brand.

With dynamic ads, Facebook typically defaults to Advantage Destination. This option enables Meta to send potential customers to your website or mobile app when they click or tap on your ad.

Make sure to input all relevant destinations before publishing the ad.

Best practices for dynamic product ads

Now let’s go beyond the basics. Use these best practices to optimize your dynamic product ads.

1. Enable all ad placements

As a general rule, Meta can deliver ads more efficiently with fewer restrictions in place. One of the easiest ways to optimize ad delivery is to allow Meta to use all available placements.

At the ad set level, make sure to select Advantage Placements. This option enables all available placements for the ad objective and format — including the Audience Network.

Once you run dynamic product ads, pay attention to the placement reports. If you notice an underperforming placement, consider removing it from the ad set in question.

Just make sure to keep as many placements as possible enabled — at least six.

2. Exclude audiences strategically

For advertisers, it’s easy to focus on building audiences and adding relevant segments to dynamic product ads. However, it’s just as important to exclude audiences strategically.

The most important segment to consider excluding is people who recently bought from the product set you’re promoting.

If they’re unlikely to make another purchase in the near future, including them in your audience will only lead to wasted ad spend.

To exclude this segment, go to the ad set level of the campaign in Ads Manager and select “Create a Custom Exclusion.”

Then customize the number of days based on your average sales cycle.

Keep in mind that this audience segment is dynamic. People will cycle out of it automatically and rejoin relevant audience segments.

3. Create templates you can easily reuse

If you also advertise on TikTok, Snapchat, LinkedIn, or other channels, take time to design dynamic ad templates you can reuse anywhere. Just be sure to check creative specs before uploading your product catalog to each social media platform.

Pay close attention to the templates that work best on each platform. For example, certain designs or text overlays may perform better on some platforms than on others.

“We never include text in our product images because it makes them look too busy and takes away from the strength of the product visual itself,” says James DeLapa, Director of Digital Marketing at Wrike.

“But if we’re including video, we always add closed captioning to appeal to users who might be watching our ads on mute.”

4. Optimize for mobile shoppers

You may design dynamic product ads on a desktop device. However, you should always optimize ads for mobile shoppers.

Not convinced? Check the device breakdown in your Ads Manager reports to see what percentage of your conversions come from mobile users.

“Avoid failing to optimize mobile advertisements at all costs,” advises Jason Wise, editor at EarthWeb.

“A lot of internet shopping is done on mobile platforms. A lack of mobile-first marketing can lead to bad user experiences and repel potential buyers.”

5. Leverage conversion tracking tools

With a third-party tracking tool, you can confirm the validity of Meta’s reports and gain more insight into your conversions.

If you’re advertising across multiple platforms, a tracking tool is also helpful for attributing conversions and optimizing conversion rates.

“Tracking is an essential part of any advertising campaign,” says HawkSEM President and co-founder Rambod Yadegar.

“We use ConversionIQ to ensure we’re tracking all aspects, including dynamic product ads. With these insights, we can see precisely where sales are coming from and how to improve results.”

6. Don’t rely exclusively on dynamic copy

Using dynamic copy in ads can save you a lot of time and hassle. But it’s rarely a good idea to use dynamic copy exclusively, as it can only say so much.

“Writing convincing promotional copy is crucial,” says Wise.

“Product titles and descriptions are dynamically pulled; however, promotional text templates need a human touch.”

He adds that building short, engaging narratives that engage the audience is key. Persuasive calls-to-action (CTAs) are the cherry on top, increasing user engagement and conversion.

Examples of dynamic product ads

Wondering what DPAs look like IRL? Let’s look at real-life examples of the four eligible product categories.

Automotive

With dynamic product ads, auto dealers can easily get the most relevant vehicles in front of interested buyers.

Above, the Flow Volkswagen of Durham ad uses dynamic copy to list the model in each carousel card’s headline and to highlight relevant promotions in each card’s description.

Ecommerce

Dynamic product ads are also popular for ecommerce sites — especially those with dozens or hundreds of products in various categories.

Below, the With Clarity ad features product names in each headline while keeping the creative consistent with a simple white backdrop.

Below, the Cozy Earth ad also features product information in each headline field.

Each creative uses the same overlay, highlighting available savings and a customer quote, but each carousel card links to a relevant product page.

Hotels

Dynamic product ads work just as well for hotels, especially for chains with several options in different cities or categories. Below, the RIU Hotels and Resorts ad displays resort features in the headline and in the primary text.

Each creative features a different hotel. However, the overlay creates a consistent look and provides essential information like hotel names and prices.

Real estate

For real estate agents who frequently promote listings, dynamic product ads can be a huge timesaver.

Below, the Carpenter Realtors ad uses dynamic copy to list bed, bath, and location data in the headline.

As you can see below, many Carpenter Realtors ads use similar primary text, too. But rather than repeating the exact same copy, each ad uses dynamic copy to highlight listing info.

The takeaway

Advertisers with large product catalogs can get impressive value from dynamic product ads. But if you want to save time on setup and maximize your return, you’ll want to partner with a seasoned PPC agency.

Our team is here to help. Book a free consultation to learn how our experienced team can level up your Facebook ads.

This article has been updated and was originally published in January 2024.