Contextual Advertising – Everything You Need to Know

Written by publift2019

9 Oct, 2020

What is Universal ID?

Contextual advertising is forecast to grow worldwide by US$279.2 billion or by a compound annual growth of 18.5%. In 2020, contextual advertising continues to grow in popularity as a result of rising concerns around data privacy, whether through post-GDPR compliance or the demise of cookie-based solutions.

A report published by GumGum has revealed that 61% of the United States ad publishers use contextual ads. Moreover, 24% of advertisers are now planning to increase their budget for contextual ads.

What is Contextual Targeting?

Contextual advertising is a type of targeted advertising that takes keywords and content of the webpage into consideration to display ads instead of the user behavior. The ads are placed on the web page depending on the content on it.

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. They are displayed on the basis of where the user currently is instead of focusing on where the user has been.

Contextual advertising enables publishers to create a robust marketing strategy through contextual targeting, based on the relevance of environment rather than collecting user data to curate targeted ads (ie. behavioral targeting).

Contextual advertising is an exceptional alternative for advertisers, ad publishers, and brands who can’t or choose not to deploy an advertising strategy based on behavioral targeting.

How Contextual Advertising Works

There are two fundamental ways to conduct effective contextual advertising. Both have their own sets of advantages and disadvantages. Ad publishers can choose either contextual targeting or behavioral targeting or both depending on their marketing strategy. But since the article is focused on contextual targeting-based advertising, let’s discuss the primary advantages that ad publishers and advertisers can make the most of.

Content or Topic Based

This is the form of advertising contextual where an ad publisher relies either on the primary keyword associated with the webpage or its topic (keyword targeting). Relevant 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 interest of the target audience.

Topics generally include a broader category that fits your ad campaign. For example, fashion, sports, vehicles, etc. You can run your ads on the basis of these categories using Google Display Network. They also give you the option to be more precise by selecting sub-topics or sub-categories. For example, an advertiser can select women’s fashion, then go on to pick from a number of sub-categories like bags, footwear, tops, and more.

Google AdSense

Being one of the first leading contextual targeting platforms, Google AdSense takes the same route. The only difference is that this time there’s an algorithm behind the decision-making process instead of a human. The bots evaluate the page for the keywords and assess its content to display contextual ads on the webpages. Apart from reading the text, Google AdSense can also contextualize ads based on the images and what’s written on them.

When you go with automated advertising, the ad 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 networks, exchanges, or SSPs that provide it to the demand-side network which finally returns contextual ads.

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

Contextual vs Behavioral Advertising

Many times behavioral targeting is mistaken or conflated with contextual targeting. Publishers need to remember they are not identical.

  • Context targeting is all about the environment in which the users or visitors explore, browse, and shop.
  • Contextual advertising involves 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 a subject of contextual targeting. It has very little to do with their behaviour and everything to do with the environment they are in.

On the other hand, behavioral targeting works differently.

  • They track the actions and preferences of the visitors.
  • It’s based on the past behavior of the user instead of their environment.

For example, 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 behavior and what they did earlier, they are seeing those ads.

Advantages of Contextual Advertising

Since contextual advertising 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 include the following.

Contextual Advertising isn’t Subject to Privacy Regulations

In order to run an effective behavioral advertising campaign, ad publishers need to collect user data through different channels including the following:

  • 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

They need to accumulate as much data as possible. That’s where regulations like the General Data Protection Act (GDPR) becomes a hurdle since the website or ad publisher needs to ask for the users’ permission.

Although it’s a consumer-friendly initiative, privacy-oriented legislation has made it a challenge for advertising businesses to gather data regarding user behavior. There is now one more step involved – that is to ask for permission from the user. If they don’t opt in, data collection becomes impossible. Having said that, 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.

Convenient & Economical Execution

A study suggests that contextual ads are much cheaper as compared to the alternatives. Since data collection is the bedrock of behavioral advertising, it requires quite a lot of human and financial resources for effective implementation. Apart from that, you also need strategies, tools, and software to ensure the whole process is adequately optimized. Brands that don’t have the resources to do so have a slim chance of implementing behavioral advertising campaigns in an effective manner.

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. It is much easier to implement and also more affordable, especially for startups and small businesses.

Easier to Manage Brand Reputation

One of the major risks of depending on user behavior to display ads is exposing the website to display a wide variety of ads from any industry. Ad publishers can exercise some control over this by excluding adult and violent categories but still a few ads can sneak in and show up on the website. It means that a brand has limited control over what types of ads show up on their website which could be damaging for their reputation.

Once again, 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. Displaying contextual advertisements enables websites to only display relevant ads without risking their reputation.

At Times 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.

Privacy-Oriented Advertising

There are brands where target audiences are quite aware of their privacy and don’t want websites or advertisers collecting their personal data. Moreover, there has always been a debate about the ethics of collecting user data, especially when it’s gathered without their permission. Technology-oriented brands such as consumer electronics blogs and cryptocurrency exchanges have target audiences that are privacy-aware and often don’t allow these services to install cookies on their devices which can be used to track their internet activity.

In terms of privacy concerns, contextual advertising can be used by a brand or ad publisher, so they can still earn revenue while complying with these issues.

Which Advertising Strategy is Better: Contextual Targeting vs Behavioral?

To pick one favorite over the other would be quite unfair since both contextual targeting as well as behavioral targeting have their own pros and cons. Although advertisers use behavioral targeting quite often, there are times when contextual targeting is a better choice. It helps brands to launch an advertising campaign that doesn’t require a lot of resources for perfect implementation. Contextual targeting also ensures 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 keywords 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 the advertiser or ad publisher 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.

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