Optimizing Ad Campaigns for Better Results:
‍A Programmatic Approach

As we progress into our programmatic advertising journey, let’s dive into the critical optimization strategies that can take your ad campaigns to the next level. This week, we'll focus on fine-tuning your programmatic efforts to ensure they're not only effective (meeting campaign objectives) but also efficient and scalable.

Optimizing ad campaigns for better results means going beyond set-it-and-forget-it strategies. It involves ongoing programmatic campaign optimization through data-driven insights, structured ad campaign testing, and continuous refinement. By regularly evaluating performance and adjusting creative, targeting, and delivery tactics, you ensure your campaigns stay effective, efficient, and scalable in a competitive digital landscape.

Understanding the Foundation of Ad Campaign Testing

Testing in programmatic advertising isn't just about trying different things randomly—it's about systematic experimentation that drives programmatic campaign optimization. Think of your programmatic ad campaign as a living organism that needs constant nurturing, strategic ad campaign testing, and adjustment to thrive in the ever-changing digital ecosystem. By consistently running ad campaign tests and analyzing the results, you can unlock insights that fuel smarter decisions and long-term success.

A/B Testing

A/B testing is your go-to tool for making sure your ads are hitting the right notes. Imagine you've got two versions of an ad: one with a blue button and one with a red button. You can serve both and see which one performs better. It can be as straightforward as that!

The beauty of A/B testing in advertising lies in its simplicity. You're essentially running controlled experiments by testing different variables, whether it’s ad creative, inventory sources, audience segments, or geographic targeting, to determine what drives the best performance. Maybe your audience responds better to a blue CTA button because it pops, or perhaps a red one grabs their attention more effectively. The result? Smarter decisions, stronger engagement, and continuous improvement in overall campaign performance.

Measuring the True Impact of Your Ads: Incrementality Testing

Incrementality tells you whether your ad campaign is truly driving conversions or just capturing actions that would’ve happened anyway.

Testing Methods to Measure Incrementality:

• Geo-holdouts (control vs. exposed regions)
• Holdout audiences (existing vs. new creative)
• A/B tests (two ad variants, randomized split)
• Multivariate tests (multiple elements tested simultaneously)
  

1. Geo-Holdout Testing: Methodology

Geo-holdouts are one of the most effective ways to measure ad impact while staying compliant.

How It Works:

• Divide your market into two geographically similar regions.
  
  • Test Group: Receives your ads.
  • Control Group: Does not receive any ads.
    
• Run the campaign in the test area only.
• Compare key metrics (sales, store visits, site traffic) between the two.
  

When to Use:

• When your campaign is regionally focused
• When you need a clean testing environment
• When the budget is limited and A/B testing across platforms is too complex
  

Why It Works:

• Isolates the effect of ads from external variables like seasonality, events, or competitor activity
• Helps you validate your campaign's true incremental lift

2. Understanding Lift: Your Success Metric

Lift measures how much more likely someone is to convert because they saw your ad, not just because they were already going to buy.

Formula:

Lift = ((Test Group Conversions – Control Group Conversions) / Control Group Conversions) × 100

Example:

• Test group: 750 purchases
• Control group: 500 purchases
  Lift = ((750 - 500) / 500) × 100 = 50%

That 50% lift means your campaign directly caused half of those additional purchases.

Why Lift Matters:

• Validates your ad strategy
• Justifies budget increases or reallocations
• Highlights which creatives, audiences, or channels work best

3. Holdout Audiences: A/B + Creative Testing

Unlike geo-holdouts, holdout audience tests happen within known groups—often customers or retargeting pools.

Example Use Case:

Creative Testing

• Group A: Sees the old creative.
• Group B: Sees the new creative.
• Compare performance (CTR, conversions, ROAS) to see what resonates.
  

Trade-Off:

Running both creatives at scale requires more spending, but it’s worth it when optimizing for long-term campaign success.

4. Multi-Variant Testing with Holdouts

Multi-variant testing (MVT) allows you to test combinations of campaign elements at once.

Example:

• Group A: Headline A + Image A + CTA A
• Group B: Headline B + Image A + CTA A
• Group C: Headline A + Image B + CTA B
• Group D: Control (original creative)
  

When to Use:

• When you have a budget to support broader experimentation
• When optimizing creatives for different personas, products, or geos
  

MVT helps identify not just which single asset wins, but which combo of elements drives the most conversions.

Testing Comparison Table.

Game Plan for Metrics: From Clicks to Conversions

When optimizing ad campaigns for better results, you need to understand which metrics matter and how to act on them. Here's your performance metrics playbook—clear, direct, and ready for action.

1. Impressions

What it is: Number of times your ad is shown.

‍Why it matters: It indicates reach.

‍Watch for: High impressions but low engagement = weak creative or irrelevant targeting.

2. Pacing

What it is: How fast your campaign is spending its budget.

‍Why it matters: Ensures your spend aligns with the campaign duration.

‍Watch for: Overspending early = pacing too fast; slow spend = underdelivery or poor bidding.

3. Frequency Capping

What it is: Limits how often the same person sees your ad.

‍Why it matters: Prevents fatigue and improves user experience.

‍Best practice: Cap retargeting ads at 3–7 impressions per day per user.

4. Click-Through Rate (CTR)

What it is: Clicks ÷ Impressions × 100

‍Why it matters: Shows how well your ad compels action.

‍Watch for: Low CTR = misaligned message, poor creative, or weak CTA.

5. Cost Per Acquisition (CPA)

What it is: Total spend ÷ Number of conversions

‍Why it matters: Reveals how efficiently you're acquiring customers.

‍Fix high CPA: Improve creative, narrow targeting, or optimize landing pages.

6. Customer Acquisition Cost (CAC)

What it is: Total marketing + sales spend ÷ New customers

‍Why it matters: Includes full customer cost, not just media.

‍Fix high CAC: Streamline funnel, boost AOV, or improve retention.

7. Conversion Rate (CVR)

What it is: Conversions ÷ Clicks × 100

‍Why it matters: Measures how well your landing page converts traffic.

‍Watch for: High CTR + low CVR = disconnect between ad and landing page.

8. Customer Lifetime Value (CLV or LTV)

What it is: Average revenue generated per customer over time

‍Why it matters: It informs how much you should spend to acquire customers.

‍Boost CLV: Loyalty programs, upsells, personalized follow-ups.

9. Average Order Value (AOV)

What it is: Total revenue ÷ Number of orders

‍Why it matters: Higher AOV = more revenue per customer interaction.

‍Boost AOV: Offer bundles, cross-sells, and premium options.

10. Return on Ad Spend (ROAS)

What it is: Revenue ÷ Ad Spend

‍Why it matters: The ultimate profitability metric.

‍Fix low ROAS: Optimize targeting, creatives, bidding, and use multi-channel support.

🚀Want to learn more? Read this > 53+ Cannabis Dispensary KPIs (Key Performance Indicators) to Watch.

To improve ROAS in programmatic advertising, focus on refining audience targeting or inventory, optimizing creative elements through A/B testing, and incorporating a more full-funnel channel marketing mix.

Bonus: Don’t Rely on One Channel

Programmatic alone won’t carry your campaign. High-performing cannabis marketers integrate:

• Display
• Video (OLV)
• Search
• Social
• Email
• DOOH

💡Pro Tip: Omnichannel drives better engagement across the funnel and improves ROAS.

Audience Segmentation: Tie It All Together

All metrics improve when you target the right people. Use:

• First-party data for retargeting
• Lookalikes for prospecting
• Behavioral and geographic data for personalization

Segmented campaigns lead to higher CTR, lower CPA, and stronger lifetime value.

If you missed it, check out our Cannabis Target Audience Academy

Audience Segmentation

Example: Imagine you're launching a new line of organic baby food. Here's how you might define your ideal customer:

• Demographics: Parents aged 25-40, living in urban areas, with a medium to high income level.
• Psychographics: Health-conscious individuals who value organic and natural products.
• Pain Points: Concern about the quality and safety of baby food products.
• Customer Persona: "Emily, the 32-year-old health-conscious mom who lives in a city and prefers organic products for her baby."

Segmentation is Key

Instead of casting a wide net, segment your audience into smaller, targeted groups.

Criteria for Segmentation

In our previous lesson, we discussed the key criteria for audience segmentation to refine your cannabis programmatic advertising. Here's a quick summary:

🚀Learn More About Demograph Audience Builder

Segmentation Strategies in Action

Here's how segmentation can be effectively applied in regulated industries to enhance programmatic advertising:

To Drive Advocacy: Upload CRM lists, segmented by location, and:

• Product Category/Product Purchases
• High AOV
• High Loyalty/Frequent Purchasers
• High Loyalty/Infrequent Purchasers
• Low Loyalty/Infrequent Purchasers
• 1st Time Buyers
• Email Subscribers
• Email Subscribers who do not Open Emails

Build repurchase, upsell, and cross-sell messages to:

• Drive repeat purchases with existing customers
• Run surveys to understand the drivers for Infrequent Purchasers and build promotions and to move them into more loyal buckets

To Drive Conversion: Build Lookalikes & Find Active Shoppers

• Place Key Planning Tool Pixels
• Build Test Audiences using planning tools to find audiences that index high for propensity to be interested in your product or service

To Drive Consideration:

• Build Lookalikes off of CRM lists
• Build Lookalikes off of the Purchase Pixel
• Take your keyword list from SEM and work with partners to build search-powered audiences, which are programmatically targetable audiences curated based on their recent search queries

💡Pro Tip: Do this with your branded, non-branded, and competitor conquesting keywords!

• Target in-market behavioral segments of users showing high purchase behavior intent for your service or product category, or very adjacent products

To Drive Awareness:

• Use third-party audiences that index high for propensity to be interested in your product
• Activate the semantic contextual targeting test, which uses AI technology to qualify content on a publisher and align your ads with turnkey, relevant, or adjacent topics

💡Pro Tip: While segmentation offers many benefits, it can also present challenges. Here are some common issues and how to address them:

Take a minute to think about your top three customer groups. How would you segment them to improve your next campaign?

Inventory Refinement

In programmatic advertising, inventory refers to the various spaces where your ads can appear across websites, apps, and digital platforms. Inventory refinement involves strategically selecting the publishers to ensure your ads reach the most relevant audience.

Think of it like choosing the ideal location for a new café—the right spot can significantly impact your success.

Steps for Effective Inventory Refinement

Choosing the Right Publishers

Not every publisher will be suitable for your ad campaigns. For regulated markets, it's crucial to choose inventory that is compliant and aligns with your target audience's interests.

Whitelisting and Blacklisting

Whitelisting involves selecting specific sites where you want your ads to appear, ensuring your brand is showcased in the right environment. Blacklisting involves excluding sites that don't align with your brand's values or target audience. 

Optimizing Inventory Budgets

To maximize the effectiveness of your ad inventory, continuously optimize ad campaigns for better results and adjust placements based on what's working. If you notice that your ads are performing exceptionally well on a specific industry news site, consider increasing your budget for that placement. Conversely, if certain placements aren't delivering the expected results, reallocating your budget to more successful sites can improve overall campaign performance.

It's all about really knowing what makes your target audiences tick. Where do they spend their time online, and what other topics are they interested in.

It's essential to evaluate your ads' performance regularly across various platforms. Specifically, compare how your ads perform on different types of inventory.

If you find that health sites generate significantly better engagement and conversion results, you should allocate a larger portion of your budget to them.

💡Pro Tip: Your ideal audience might be spending time in unexpected places—gaming apps, dating platforms, or niche content sites. Start with a broader targeting strategy, then refine based on performance data to uncover where engagement truly happens.

Ad Frequency

Imagine you're listening to a new song on the radio. If it plays only once, you might not remember it. However, if it plays repeatedly throughout the day, it could become annoying rather than memorable. 

Similarly, if your audience sees your ad too few times with digital ads, they might not remember your brand or take action. Conversely, if they see it too often, they could experience ad fatigue, leading to negative perceptions or ignoring the ads altogether.

Finding the Right Frequency

The goal is to find the "Goldilocks Zone" for your ad frequency—not too little, not too much, but just right. Research often suggests that seeing an ad 5-7 times within a specific period is optimal for brand recall and engagement. This frequency helps ensure that your audience remembers your brand without becoming irritated.

Unlocking Premium Ad Inventory: The Power of Private Marketplaces (PMPs)

A Private Marketplace (PMP) is a type of digital ad buy where publishers offer their premium ad inventory to a select group of buyers in a private and controlled environment. Unlike public ad exchanges, where anyone can bid for ad space, PMPs provide a more exclusive and curated marketplace for buying and selling ad space.

A Private Marketplace (PMP) in digital advertising is like gaining VIP access to an exclusive club. While most people can enter the general area (the open marketplace), only select advertisers with the right connections and resources are granted entry to the VIP section. In this VIP section, you get to choose the best seats (premium inventory) and enjoy a more tailored experience (greater transparency and control over where your ads appear).

Exclusive Access

In a PMP, publishers make their high-quality ad spaces available only to a limited number of advertisers, often through invitation or approval. Imagine a luxury car brand wants to advertise on a prestigious website. Instead of competing in a public auction with all advertisers, they can access a PMP where only select brands are allowed to bid on premium ad spaces.

Private Deals

Advertisers negotiate directly with publishers or through intermediaries to agree on terms such as price, ad placement, and targeting options.

When to use PMP

Launching a New Product or Brand: Establishing a strong and safe brand presence in the market. With the need to make a significant impact and ensure brand safety, PMP's exclusive access to premium, cannabis-friendly inventory is ideal. It guarantees that your ads are shown in the right context, protecting your brand from being associated with inappropriate content.

Targeting a Specific Niche Audience: Reaching a highly specific audience, such as medical cannabis patients or luxury recreational users. When your campaign is focused on a niche segment, PMP allows for precise targeting and customization. You can select inventory that aligns perfectly with your audience's interests and demographics, ensuring your message resonates deeply.

Launching a Premium or High-End Product Line: Reaching an exclusive, high-value audience with a premium product. If your product is positioned as a luxury or high-end offering, PMP's premium placements ensure that your ads are served to, discerning audience that values quality and exclusivity.

When not to use PMP (go with programmatic instead)

Launching Early-Stage Brand Awareness Campaigns: Quickly spreading brand awareness to a broad, general audience. In the early stages of brand building, the need for broad reach might outweigh the benefits of PMP's premium but limited scale. Other programmatic options with wider reach might be more effective for mass exposure.

Operating with a Limited Budget: Maximizing visibility with constrained resources. When budget is a concern, the higher costs associated with PMP might not be justifiable. Open exchanges or other programmatic channels can provide more impressions for less, helping stretch your marketing budget further.

Focusing on Rapid Growth and Scaling: Quickly scaling your cannabis marketing efforts to capture a larger market share. PMP's limited inventory and higher costs can make it challenging to scale campaigns rapidly. For growth-focused objectives, channels that offer broader reach and faster deployment might be more suitable.

Promote Standard Product or Service Offerings: Marketing products or services that don't require niche targeting or premium placements. If your campaign doesn't demand the tailored, high-quality placements that PMP offers, more general programmatic options might be just as effective and more cost-efficient.

Remember that optimizing ad campaigns for better results entails a continuous refinement process that is key to maximizing your campaign's effectiveness. Keep fine-tuning your approach to ensure you're always reaching your target audience with precision and impact.

Be sure to head to the next lesson, where we'll explore the components of a full e-commerce marketing funnel and how to build a media plan for your cannabis business. 

You won't want to miss it!