Ad Engine Optimization FAQ
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What is Ad Engine Optimization (AEO)?
AEO, or Ad Engine Optimization, is the practice of optimizing website landing pages to improve their relevance to a specific advertisement, to drive more paid traffic by increasing advertising bid effectiveness.
AEO is a post-click process, i.e. given a specific ad, how can the relevance of a given landing experience be improved to maximise consumer engagement for each click on the ad? It can be a manual process where custom landing pages are designed, tested and optimized, or automated using artificial Intelligence creating a complete campaign specific microsite.
How is Ad Engine Optimization (AEO) different from Search Engine Optimization (SEO)?
SEO is the process of optimising web content to rank higher in organic search results. AEO is an equivalent approach for paid traffic where website landing pages are optimized to improve their relevance to a specific advertisement, to drive more paid traffic by increasing advertising bid effectiveness.
Does Ad Engine Optimization (AEO) replace Search Engine Optimization (SEO)?
No, these are complementary techniques.
How are Google’s Ad Rank and Meta’s Quality Rank used as part of the ad bidding process?
Many advertisers bid within an auction for the ability to display an advertisement impression opportunity. The rank of each bid orders advertisers in terms of price, performance and quality. The top ranked advertisers are the ones that win the auction.
What is the formula that is used to calculate an advertiser rank?
The ad rank is determined by an auction but the full formula used is complicated and designed to prevent an advertiser from gaming the system. The simplest approach is a generalised ‘second bid auction’ where the winner of the auction pays 1 cent more than the highest losing bid. More complicated approaches such as the one that Meta uses determines the total amount of loss in the system when a bidder wins and aims to minimise this loss. The goal of the meta approach is to favour long-term revenue over short term profit.
These are complex and proprietary algorithms but we can generalise and simplify using the following formula:
Total Value of Bid = (Advertiser’s bid x Estimated Action Rate) + Experience Performance
Where:
Advertiser’s Bid includes ‘Bid amount’, ‘Bid Type’ and ‘Daily Budget’
Estimated Action Rate includes estimated click through and conversion rates
Experience Performance includes ‘Ad Engagement (+ve or -ve)’ and ‘landing page experience’
From these definitions, it can be seen that the highest bid does not necessarily win the auction, and poor landing experiences or conversation rates will cause the bid to fail, driving up ad costs on future bids. Note large values are used to illustrate the principle using a second bid auction approach.
How is Ad Engine Optimization (AEO) different from Landing Page Optimization (LPO)?
Landing Page Optimization is the process of testing and tuning custom landing pages to maximize conversion. This can be considered a part of AEO, since conversions send signals to ad engines, however AEO is more broadly focused on getting traffic to engage. Landing Pages are typically ultra-focused on selling one specific item, and while this works well for bottom of funnel traffic, it doesn’t address the very high bounce rates and low conversion rates seen by ad traffic.
By contrast, AEO is focused on increasing the relevance of a given landing experience to the traffic coming from a specific ad to get more consumers to engage. This typically looks different from a typical conversion-focused landing page because it provides lots of navigation paths away from the initial landing page to encourage traffic to explore the whole product catalog. This makes it much more suitable for top-of-funnel traffic or mixed traffic with different levels and types of intent.
AEO is similar to Landing Page Optimization in that it uses conversion optimization techniques to maximize conversion as well as engagement.
How is Ad Engine Optimization (AEO) different from Conversion Rate Optimization (CRO)?
AEO works at the top of an ad landing funnel to engage landing traffic and prevent traffic bouncing.
Conversion Rate Optimization works at the bottom of the funnel, seeking to maximize conversions for engaged traffic.
Both work together, and each sends signals to the ad engine. In a perfect scenario AEO and CRO work together to drive revenue through the whole ad landing funnel from engagement through to conversion, in the first or subsequent sessions that a visitor makes.
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Can Ad Engine Optimization (AEO) be a manual process?
Although it's possible to optimize product pages for ad engines, many brands are hesitant to do so for two reasons. First, these pages are optimized for conversions, not discovery, and altering them could negatively impact conversion rates for direct traffic. Second, continuously updating product pages for each new ad campaign is impractical, particularly for brands with extensive product lines.
Custom landing pages offer a traditional alternative, but they too have limitations. The process is labor-intensive, and the sheer volume of ads—particularly on social media—makes it difficult to scale.
Does Ad Engine Optimization (AEO) use Static Pages or Dynamic Pages?
A simplistic approach can use static pages, but static pages only generate limited lift over product pages. Static pages assume that there is one winner - i.e. one page that is consistently better than all other potential page variants.
This usually isn't the case, and this is illustrated in the test results below. Over the course of four weeks, five different page variants were tested for a specific ad campaign running on Meta. This shows that engagement in week one Variant D (Green) is the winning version. In week 2 however it's Variant A (Blue) and in Week 3 it’s Variant E (Orange) before Variant A (Blue) emerges as the winner for the last two weeks of the campaign.
The implications of this are quite profound. While you could get lucky and pick Variant A (Blue) at the outset, you're still missing out significantly because traffic is not uniform, so different pages will perform better at different points in the campaign. This is because the ad engine is continually learning and as more customers engage it taps into different pools of traffic. The solution to this is to run a continuous optimization using machine learning which will maximize lift throughout the campaigns lifecycle.
How does Ad Engine Optimization (AEO) fit into the wider process of running digital ads?
Digital advertising comprises Campaign design & deployment, pre-click operations and post-click operations. AEO belongs in the post-click operations element of the process and is primarily responsible for high engagement, low bounce and post-click performance monitoring, which, in turn, helps to manage effective pre-click operations.
