No doubt you’re familiar with SEO, the process of optimising web content to rank higher in organic search results. Now there’s an equivalent approach for paid traffic: Ad Engine Optimization, or AEO for short. And it can have a big impact on revenue and Customer Acquisition Costs for brands and retailers selling direct to consumers.

The concept is similar to SEO, yet different at the same time. And it doesn’t replace SEO.

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, driving more paid traffic by increasing advertising bid effectiveness.

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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.

Benefits of Ad Engine Optimization

Better landing experiences increase traffic by 28%

In a recent A/B test we ran for a fashion brand, the same ad was shown to all traffic, but half the traffic was sent to a Product Page, while the other half was sent to an AI optimized campaign microsite. The optimized microsite was the clear winner, driving 99% more revenue for the same ad spend. Digging into the metrics revealed that the AI optimized experience had a 28% lower CPM, and consequently 28% more traffic for the same ad spend. A lower bounce rate, higher conversion rate and average order value compounded this lift resulting in a 99% increase in revenue and Return on Ad Spend.

In the chart above you can see how once the ad engine has completed its learning period, CPM drops much faster for the AEO optimized site.

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How AEO drives more traffic

Whether you’re using Performance Max from Google, or Advantage + from Meta, or setting up your own manually targeted campaigns, you’re likely using a bidding engine to buy ads. Bidding is a competitive process so the CPM prices paid will fluctuate based on supply and demand.

But the bidding process is more nuanced as well. Bidding engines optimize around a goal, which in e-commerce is typically a conversion. To drive conversions, you need consumers to click through and to buy on your ecommerce site. Poorly performing ad creative getting lower click rates will get penalised, driving CPM up. Poor landing experiences drive CPM up as well because the bidding engines rank the quality of pages that the traffic is sent to (similar to Google's Page Rank for organic search).

This means that if two advertisers both bid the same amount for the same audience, the one with the better performing landing experience will get the impressions, and the poor experience will inevitably pay more to get its ads served. This is all done automatically by the bidding engines, but can be seen with higher CPM’s, basically meaning that you pay more for each impression, and your budget doesn’t go as far. Higher CPM’s mean less traffic, and a lower overall Return on Ad Spend.

So the levers you can pull are increasingly focused less on targeting, (because the algorithms are doing this for you), and focusing more on creative and landings.

Ad Engine Optimization basics 

The A/B test above illustrates that sending ad traffic to standard ecommerce pages is problematic, even though this is the norm in the industry.

Top of funnel paid social traffic typically suffers from high bounce rates (more than 70%) and low conversion rates (1% or less). Yet despite this more ad traffic from social is sent to product pages than anywhere else, with only 7% of brands building custom landing pages. It’s obvious why - manually creating landing pages is a time-consuming process which consequently doesn’t happen for most campaigns. Larger brands are running hundreds of different, short lived ads on social media every month so creating custom pages is simply not viable.

Automation can help here significantly. Using the ad as input, pages can be generated to create a smooth continuation of the advertising message on landing, reducing bounce rates. AI can ensure that the right content for this particular ad is shown, getting shoppers to engage and getting the next click. This Automation and AI together approach is what was used in the A/B test above, which in this case drove 99% more revenue for the same ad spend. This is not atypical – we have seen other A/B tests which generate 500% or more revenue for the same ad spend when using an AI powered microsite.

Manual or Automated AEO?

A 70% (or higher) bounce rate for traffic from social media tells us that the experience is poor. The key is to engage consumers with an experience relevant to the ad they just clicked on and get shoppers to engage. With a manually created landing page this is a hit and miss process unless extensive testing is done. These are static pages, built to drive sales of a specific product or category. But consumers can interpret your ad in different ways.

For example, an ad showing a model on a beach wearing a tee shirt, shorts and a hat could drive interest in the specific tee shirt being promoted, other tee shirts, shorts, hats, summer or beachwear. If your landing experience is a typical conversion-focused landing page, then its sole focus will be on the promoted tee shirt. For bottom of funnel traffic that searched for the specific tee shirt this may work, but for everyone else it’s likely to be a miss for a significant portion of the traffic.

There’s another difference with custom landing pages as well, which tend to be solely focused on conversion. By contrast AEO focuses first on getting more of the landing traffic to engage by showing relevant content. Given the short lifecycle of ads, this is best done by an AI engine that automatically tunes the content to what customers are actually engaging with. This may be different from any products shown in the ad. This is also one reason with AEO done well will reduce Customer Acquisition Costs because it is especially effective for net new visitors that would otherwise bounce.

Conclusion

Ad Engine Optimization is a relatively new technique to optimize landing pages for paid media traffic. By increasing the relevance of the landing page, more traffic engages and ad engines reward better experiences with lower ad prices. The combination of more traffic and better experiences can double or triple revenues and Return On Ad Spend (ROAS).

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Frequently Asked Questions on AEO

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.

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Does Ad Engine Optimization (AEO) replace Search Engine Optimization (SEO)?

No, these are complementary techniques.

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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.

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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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Learn more

Read our in-depth Frequently Asked Questions on Ad Engine Optimization here

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