The Complete Guide to Understanding Contextual Advertising
Today, behavioral targeting is one of the most common methods to determine which ads to show to users. Cookies and tracking data allow advertisers to target users with relevant ads based on actions they’ve taken: a link clicked, a page visited, a video viewed. However, common though it might be, it may not be the most effective and widely- used method much longer. Now, advertisers and publishers alike are turning their attention to contextual advertising.
Why is this approach causing such a stir in the advertising community? After all, contextual advertising is hardly new. However, recent events and evolving technologies may just be the new go-to method of delivering relevant ads to users.
In this article, we’ll cover topics like:
- What contextual advertising is and how it works.
- The differences between behavioral and contextual advertising.
- The benefits of using contextual ads.
Let’s start by defining contextual advertising in a nutshell.
What Is Contextual Advertising?
In a nutshell, contextual advertising is the practice of showing users ads that are relevant to the content on a web page rather than their previous browsing behavior. For example, if a user was browsing a food-related website, they might be shown ads related to cookware or local restaurants.
How Does It Work?
The process starts with advertisers selecting a set of parameters on their demand-side platform (DSP). Their ads will only be displayed if those parameters are met, and they may include:
- Topics. These are broadly selected categories that advertisers can select to find relevant publishers and web pages on which to show their ads. (Fashion, Automotive, Music, etc.).
- Keywords. Using keywords is a more precise way to target users. Rather than selecting a category, such as fashion, keywords can drill down into specific niches such as dresses, evening gowns, DIY tie-dye, and more.
Once an advertiser has chosen their parameters, the rest of the process becomes automated between the DSPs and SSPs. The system will look for and find pages with content relevant to the brand’s selected topics and keywords. From there, it goes into the auction, and the winning ad is finally placed on your website.
Behavioral Vs. Contextual Advertising: Which Targeting Method is Better?
Behavioral and contextual advertising are often compared with one another. Both involve showing ads to users based on their interests, but the key difference is how they do that.
Behavioral targeting tracks a user’s behavior and gathers data about their online activities. For example, a user would visit Amazon to view a specific range of products. Later, while browsing your website, they’re shown ads for those products. Rather than being relevant to the content on the current page being viewed, the ads are shown depending on their relevance to a user’s past actions.
As we mentioned earlier, contextual advertising targets users based on the content of the page currently being viewed. In other words, if a user is reading a blog about building their own shelves, they might see ads for power tools.
After comparing the two approaches, you may think that behavioral targeting is the way to go. It uses more data points to evaluate a visitor’s potential interests and may appear to have a lot more potential than a contextual approach.
A common argument against contextual targeting is that a user may be looking at an article about making a shirt, but that doesn’t mean they’re interested in buying an expensive machine to take up sowing. However, if they’ve been visiting product pages for sewing machines, it’s a clear indicator of interest.
It’s a compelling argument – on the surface. To be fair, both approaches have pros and cons. That said, considering developments regarding digital privacy and evolving technologies in advertising, a contextual approach may have unique benefits that give it an edge.
While we explore some of those benefits below, it doesn’t mean that you need to entirely do away with behavioral ads. In the end, publishers need to decide which approach would serve them the best. You can even use a combination of the two tactics to see which offers your niche the best results.
The Benefits of Contextual Advertising
While the advantages for advertisers are clear, you may be wondering how you’ll benefit as a publisher. Below we’ve outlined a few key advantages of partnering with platforms and partners that provide contextual ads.
Compliant With Privacy Laws
One of the most significant benefits of contextual ads is that it’s completely compliant with various international privacy laws, including GDPR. Privacy concerns are having a significant impact on how brands approach advertising, and it also influences how publishers need to approach monetization.
For example, publishers who have behaviorally targeted ads on their websites need a consent management platform. Unfortunately, many publishers either don’t have a CMP or don’t realize that they need one. While it’s always good to have a consent platform, regardless of your monetization solution, it’s critical to work with an ad network or exchange that includes a CMP with their solution.
These platforms allow users to deny advertisers and publishers access to their personal information. That can have a significant impact on your ad inventory and revenue.
Contextual ads don’t need to gather personal and private information about your visitors to display relevant ads. There’s also no need for cookies to track their online activity. Instead, users will see ads that are relevant to the content they’re viewing. Essentially, the approach doesn’t require any personal information about the user at all.
It’s a great way to keep showing ads relevant to a visitor’s interests without violating any privacy laws.
No Dependency on Third-Party Cookies
Behavioral targeting is currently dependent on third-party cookies. These data packets indicate where a visitor has been and with which products or services they’ve interacted. The platform will then decide which ads to show the user based on the accumulated data. However, third-party cookies will soon be phased out entirely, and while there are some alternatives in the works, contextual targeting is the natural next step for advertisers and publishers.
By adopting contextual ads for your website, you can protect your revenue and keep displaying relevant ads without the need for third-party cookies. Better yet, you’ll know that the ads displayed on your site are relevant to the interests of your visitors, which may even result in increased conversions and revenue.
Protects Publisher Reputation
Typically, publishers have very little say regarding the types of ads displayed on their websites. Instead, the supply-side platform (SSP) will determine which ads to deliver based on the visitor’s earlier behavior, as we explained earlier. Unfortunately, this can have some unexpected and very negative consequences. One needs to look no further than the 2017 YouTube brand safety scandal for a prime example – and the problem is still unresolved.
While publishers can prevent adult or violent ads from being displayed on their sites, some may still sneak through. Consequently, their reputation (and revenue) can suffer quite a blow. With contextual ads, that risk is all but eliminated.
Since ads are strictly selected based on keywords and topic targeting, the risk of harmful, irrelevant, or explicit ads being shown is almost nil. It’s a great way to monetize your content without gambling your reputation.
Alternative Approach to Personalization
No one likes to have their privacy invaded, and that’s one of the reasons why so many people are turning against third-party cookies and behavioral advertising. While consumers enjoy seeing relevant ads, many don’t enjoy feeling like advertisers are essentially stalking them online.
That doesn’t mean we can’t use personalized ads at all – and that’s where contextual ads’ true potential shines through. Since contextual ads focus on the topic and keywords of a particular web page, users are still shown ads relevant to the information they were looking for. In some ways, contextual ads are even more effective when it comes to personalization.
For example, let’s say that you run a video gaming blog. One of your regular visitors is both an avid gamer and a small business owner. When users are browsing your website, they’re focused on something they enjoy and may completely disregard any ads about tools or services that benefit their business. However, if you were to show a contextual ad featuring new high-tech gaming peripherals, they may be more tempted to click on the advertisement.
Contextual ads show that it’s not just about a user’s past behavior but also their current interests. The method allows you to take advantage of a visitor’s interest at an opportune moment without making them feel like advertisers are digitally stalking them. It’s better for your reputation as a publisher and your bottom line.
Behavioral ads have served the programmatic advertising industry well for many years. However, as new technologies and methodologies are developed, advertisers and publishers must adapt accordingly.
The stage is set for contextual ads to become incredibly popular and lucrative, and being an early adopter may see publishers enjoy several benefits. With the right approach and monetization partner, you can protect your revenue, brand reputation, and visitors while still generating a lucrative income.