What is Contextual Advertising? Why Is It Important?

Contextual advertising is an advertising strategy that makes sure displayed ads align seamlessly with a web page's content. If a user is reading a movie review blog, based on the context, ads could show them discounted movie tickets or subscriptions to a streaming service.

The primary goal of contextual advertising is to provide a better user experience by displaying ads that are more relevant to the user.

AI-powered contextual ads can precisely target internet users with content related to the host website’s content. With third-party cookies cet to be phased out, contextual advertising is set to gain importance in the near future, such that global contextual ad spend is projected to grow by 13.8% per year between 2022 and 2030.

What Is Contextual Advertising?

Contextual advertising is a type of targeted advertising where ads displayed on a website are chosen based on the content and context (keywords) of the webpage. It emerged as an alternative to the traditional method of behavioral targeting, which relies on the browser history or personal data of the viewer to find relevant ads.

In contextual advertising campaigns, the available ads on a network are grouped around specific keywords or broader topics. Ad networks such as Google AdSense scan the content and match it with relevant contextual ads.

For instance, if a visitor is reading an article about makeup tips, there could be ads on the web page related to cosmetics and other fashion products. Likewise, if a visitor opens a page that focuses on golf, the system will show ads related to golf equipment and other related products.

In contextual advertising, ads are displayed based on where the user currently is instead of focusing on where the user has been. This change in focus can help publishers create a more robust and potentially less invasive marketing strategy.

How Does Contextual Targeting Work

Contextual targeting involves assessing the user's interest and intent by leveraging information about session data. This is in contrast to behavioral targeting in which cookies are used to recreate a user's browsing behavior.

Generally, the process works as follows:

1. Choose Keyword or Topic-Based Parameters for Contextual Targeting

An advertising system needs to know what a campaign is about in order to place ads on relevant web pages. In keyword and topic-based contextual advertising, the advertiser relies either on the primary keyword associated with the web page or its topic.

In short, if the keywords or topics an advertiser has chosen match the central theme of a website, the ad is eligible to show up on that site.

Ads can be displayed in the form of banners, carousels, and more. Keep in mind that this requires manual judgment and execution on the part of the publisher. They need to ensure the ads they're displaying align with the interests of the target audience.

Topics generally include a broader category that fits an ad campaign such as fashion, sports, vehicles, etc. Most ad networks also give advertisers the option to be more precise by selecting sub-topics or sub-categories.

For example, advertisers can select women's fashion, then go on to pick from a number of sub-categories like bags, footwear, tops, and more.

2. Ad Network Analyzes the Pages in Its Network

Once you place your order, the ad network will try to match your ad with the most relevant content. It takes into account text, language, page structure, link structure, and your keywords—in addition to other targeting criteria.

Different ad networks provide different settings for this purpose. For instance, when using the Google Display Network (GDN), you can set your network settings to either broad or specific reach.

With broad reach, your ad will be based on topic targeting.

With specific reach, your ads will appear only on pages that match keywords and at least one of your targeted topics.

3. The Ad Is Displayed

After the above analysis is complete, the display network finds a placement that matches your ad contextually.

Google AdSense and Contextual Advertising

Google AdSense uses bots to evaluate a web page for relevant keywords and assess its content before displaying contextual ads.

Apart from reading the text, Google AdSense can also provide context for ad targeting based on the images and what's written on them.

With automated advertising, the publisher delivers the contextual data including categories, tags, content, keywords, URL, and more to the ad server.

This information is then transferred to the ad exchanges or supply side platforms (SSPs) that provide it to the demand side platforms (DSPs) which finally returns contextual ads.

On the other hand, when it comes to header bidding, publishers send the contextual data to the wrapper that transfers it to the exchanges or SSPs through ad requests. The information is then passed on in the form of bid requests to relevant DSPs.

What Is the Difference Between Contextual Targeting and Behavioral Targeting?

The main difference between contextual targeting and behavioral targeting is that while the former shows ads based on the web page's content, behavioral targeting serves up ads based on the user's past online behavior and browsing history.

In a nutshell:

Context targeting is all about the environment in which the users or visitors explore, browse, and shop.
Contextual advertising focuses on the relevance of content, keywords, topics, and images.

For example, if visitors are on a power tools website and they see an ad for repair parts for the same tools, they are the subject of contextual advertising. It has very little to do with their behavior and everything to do with the environment they are in.

On the other hand, behavioral advertising works differently.

It tracks the actions and preferences of the visitors.
It's based on the past behavior of the user instead of their environment.

For example, in behavioral ads, if a visitor has read an article about affordable hosting services and now they are on a website that sells shoes, they may see ads related to hosting services.

Such ads won't have anything to do with footwear but since the advertising is based on the user's behavior and what they did earlier, they are seeing those ads.

After comparing and contrasting contextual and behavioral advertising, it might seem like the behavioral approach is an upgraded version of contextual advertising.

After all, why would advertisers match their ad with the content of a web page if they can track user behavior for deeper personalization?

Nonetheless, there are some advantages of contextual advertising that behavioral and other advertising alternatives do not have. Let's take a look at a few of the greatest.

Advantages of Contextual Advertising

Contextual advertising work is rooted in the environment in which the user is exploring or shopping, it offers a diverse variety of benefits to both the ad publishers and the users.

Some of the major benefits of contextual advertising include the following.

1. Complies With Data Privacy Regulations

In order to run an effective behavioral advertising campaign, publishers need to collect user data through different channels including, but not limited to:

The operating system they're using
The websites they are visiting
What they like and what they dislike
Which buttons and CTAs they click on

With the demise of third-party cookies, and increasing user concerns about data privacy, collecting this data has become highly challenging.

Publishers now need to seek a user’s permission before collecting their data, and if they don't opt-in, data collection becomes impossible.

Contextual advertising does not require any personal information related to the visitors and still serves relevant ads to the users. This makes it a more convenient option for advertisers.

2. Economical and Easier to Implement

Since data collection is the bedrock of behavioral ads, it requires greater human and financial resources for effective implementation compared to contextual ads.

Additionally, advertisers also need strategies, tools, and software to ensure the whole process is adequately optimized. For instance, LiveRamp is a highly sophisticated software that publishers and advertisers use for storing and analyzing their user data to derive better insights into behavioral targeting.

Brands that don't have the resources to do so may not achieve the same degree of success when executing behavioral ad campaigns.

The most logical alternative is contextual advertising where brands can still serve relevant ads to their audience without having to spend an exceptional amount of resources and dealing with privacy regulations.

3. Easier to Manage Brand Reputation

A major risk of depending on user behavior to display ads is exposing the website to a wide variety of ads from any industry.

Ad publishers can exercise some control over this by excluding adult and violent categories but it is still possible that a few inappropriate ads may sneak in and show up on the website. This implies that a brand has limited control over what types of ads show up on their website. This, in turn, has the potential to cause damage to their reputation.

This is not a risk factor with contextual advertising since ads are shown strictly on the basis of the keywords or topic targeting regardless of what users have been watching, reading, or interacting with.

4. Sometimes Context Is More Relevant Than Behavior

The entire point of behavioral advertising is to serve personalized ads to the users depending on what they've been doing, reading, or watching. However, that's not always the case. Some users only engage in certain behavior because they have particular interests but no intention to purchase anything.

Similarly, past behavior isn't necessarily an accurate predictor of current needs and requirements. This is not to disparage behavioral advertising as it has its place, but to point out that it's not always the best advertising strategy.

There are times when what's more important to the visitor of a website is what they are seeing right now instead of what they have seen a few days ago. Contextual advertising is a better alternative strategy for targeting such visitors.

Disadvantages of Contextual Advertising

While contextual ads have a few key advantages over other strategies like behavioral targeting, they are far from perfect. Listed below are some of the main disadvantages of contextual advertising:

1. Less Accurate Targeting

Audience-based targeting methods like behavioral targeting allow publishers to zero in on users who may be ideal customers for a particular ad. Since contextual ads do not look at personal data, they can end up being less effective at reaching your ideal customers.

2. Can Be Disruptive

Like most forms of digital advertising, contextual ads also have the potential to annoy and irritate visitors to a website. This is often exacerbated by improper or inefficient ad placement, which obstructs the flow of content. Cramming too many ads into a page can have a similar effect on user experience and engagement.

The Future of Contextual Advertising

Since it does not rely on third-party data and is also privacy compliant, contextual advertising is certain to occupy a more central role in the coming years. We can expect the following changes in the coming months and years:

1. Increasing Role of AI

For contextual targeting to work as intended, systems need the ability to accurately scan the content of pages and match them with relevant ad topics or keywords. Natural language processing (NLP) algorithms will play a greater role in contextual targeting systems of the future, improving the relevance and accuracy of contextual ads for viewers.

2. Greater Integration With First-Party Data

More brands are pivoting towards the collection of first-party data from customers to adapt to a cookie-less world. Contextual targeting platforms will start offering clients the option to onboard first-party data securely to further improve the targeting accuracy of these ads. This will allow systems to improve targeting accuracy based on user-provided data like age, gender etc. This will go a long way in closing the precision gap between contextual advertising and behavioral targeting.

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3. User Intent Targeting

Current contextual systems focus solely on the content of web pages. Machine learning software capable of analyzing vast data sets for insights already exists. When deployed to analyze user actions and behavior on pages, they can predict with greater accuracy the user intent at various sections. These insights can help further improve targeting accuracy.

Three Contextual Advertising Examples

1. Outside Magazine

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Outside is an American magazine that covers all things outdoors including travel, fitness, sports, gear, and environment. In this article about why humans love running, the magazine has displayed an ad about running shoes. The ad features a pair of running shoes with the tagline “Run more, effort less”. This is a highly contextual ad as anyone reading this article is very likely to be interested in running and running shoes, and by extension, is very likely to click on an ad for shoes that promises to improve their running performance.

2. Wired

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Wired is a popular technology magazine that features content related to all aspects of technology. Most articles on the magazine feature a large banner ad at the top that advertises a product or service related to technology. For instance, the example above shows a banner ad for Zoho Creator, a low code application development platform that is likely to be of interest to many readers of Wired.

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This same ad is displayed across several different articles, irrespective of what the content is. In this case, then, we see a limitation of contextual advertising. Since technology is a vast field, not everyone reading a Wired article is likely to be an application developer.

3. Adweek

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Adweek is an American magazine that covers topics related to advertising and marketing. In this article about the Cannes Lion, the world’s premier festival for creative advertising professionals, the magazine displays ads for Quad, an end-to-end marketing creative solutions provider. It is interesting to note that the ad appears both at the top and on the right side of the screen, thus showcasing the flexibility of contextual ads when it comes to placement.

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Which Advertising Strategy Is Better: Contextual vs. Behavioral?

To flat out pick one over the other wouldn't be fair, given that both contextual and behavioral targeting strategies have their pros and cons.

Although advertisers use behavioral targeting quite often, there are times when contextual is a better choice. It helps brands launch an advertising campaign that doesn't require a lot of resources for perfect implementation.

Contextual advertising solutions also ensure websites or advertisers don't have to scrape personal user data and worry about ensuring compliance with GDPR regulations as they can simply go for keyword targeting.

Final Words

When we talk about contextual advertising, we talk about a marketing strategy that is solely based on the environment that a user is in. From content and keywords to images and web copy, everything is taken into account for advertising contextual marketing content effectively.

Contextual advertising puts the control in the hands of advertisers or ad publishers instead of the user, allowing them to focus on the present behavior of the visitor instead of what they have done in the past. Plus, contextual advertising is far more economical and easily implemented. It can be a great alternative for new and small businesses.

If you're making more than $2,000 in monthly ad revenue, contact us today to learn more about how Publift can help increase your ad revenue and best optimize the ad space available on your website or app.