Contextual advertising

What is a contextual targeting strategy

A contextual targeting strategy (or contextual advertising strategy) involves all the actions taken to show relevant ads on a web page or mobile app based on its content. Thanks to it, the digital advertising industry can rely less on third-party cookies. Additionally, this strategy helps show users relevant ads, thus increasing click-through and conversion rates. However, these are only a few examples of the benefits of contextual advertising, and we’ll cover more (along with some of its drawbacks)!

Contextual advertising in times of strict privacy regulations

In order to understand the increasing importance of contextual advertising in the advertising world, it’s vital to highlight how privacy initiatives are reshaping the advertising industry both in relation to mobile applications and websites. Here are two vital examples:

• When it comes to websites, the shifting plans around phasing out third-party cookies in Google Chrome show just how tricky privacy issues can be. Just to remind you, the Privacy Sandbox project initially aimed to remove third-party cookies to improve user data safety. However, following several postponements and pushback from groups like privacy advocates, advertisers, and regulators, Google paused the initial plan. Now, instead of completely removing third-party cookies from the most popular browser in the world, Google plans to introduce a new feature in Chrome. It’s said it’s supposed to help users make more intelligent choices about how their data is used, which they can adjust anytime;
• In the case of mobile apps, it is vital to understand that in 2021, Apple enforced Additional App Tracking Transparency (ATT) – a privacy system the company implemented to safeguard users’ information on iPhones and iPads. It works similarly to CMP, Consent Management Platforms, as it also appears to a user in the form of a pop-up window and contains a request for permission to process their data. Still, ATT is a specific Apple-enforced policy for tracking transparency on iOS devices. CMPs are more flexible and help businesses meet privacy rules on various platforms.

In summary, industry-driven initiatives and plans like the phase-out of third-party cookies are transforming the advertising world and making privacy-friendly options like contextual advertising more critical.

What is the difference between contextual advertising and behavioral advertising?

Although both contextual and behavioral advertising aim to target users effectively, their approaches differ significantly:

• Behavioral advertising relies on user behavior, as it tracks data like the time spent on websites, pages seen, search data, clicked links, and more. Importantly, it also gathers information on what the user doesn’t do. The mechanics of behavioral advertising vary between websites and mobile applications. When it comes to websites, to perform all tracking activities, behavioral advertising relies on cookies that carry details about a user’s visit to a website. These files are sent to a user browser by a website. Behavioral ads are displayed based on individual users’ preferences, and in order to work well, a sufficient amount of data must be available. Users are grouped into different segments according to their habits and actions; later, ads are shown to the groups that match the campaign goals. In the case of mobile apps, key roles are played by identifiers assigned to each mobile device – IDFA (Identifier for Advertisers, used on iOS) and AAID (Android Advertising ID, used on Android). These IDs help track how users behave across different apps, allowing advertisers to create detailed profiles of users in order to show them relevant ads;
• Contextual advertising, unlike behavioral ads, focuses on the content of a web page. The advertising system uses contextual data like keywords and topics on the page to display relevant ads without needing to track user behavior. The following paragraphs will delve deeper into this strategy.

In essence, contextual and behavioral targeting are two different ways to achieve the same goal – showing relevant ads. While the first approach is more content-centric, behavioral targeting is for sure more focused on using content to tell what the users want to see. This distinction makes contextual targeting a privacy-friendly option, as it doesn’t depend on user tracking. However, it’s behavioral advertising that allows for very precise targeting.

Pros and cons of behavioral targeting

Before getting more information on contextual advertising, let’s take a moment to take a look at some of the advantages and disadvantages of behavioral targeting:

• The main advantage of the behavioral targeting approach is that it allows for accurate targeting. Thanks to the information acquired, a very detailed user profile can be created, which, in turn, means more relevant ads, better user engagement, and improved conversion rates. Notably, on average, behavioral advertising offers better-targeting results than contextual advertising;
• An essential trait of behavioral advertising is the possibility of targeting a very specific user. The capability to pinpoint and reach particular audiences, tailoring the content to their unique behaviors and needs, makes this approach a powerful tool for maximizing advertising effectiveness;
• On the downside, behavioral advertising is not necessarily needed when an advertiser aims to reach broader audiences, like in the case of ads of supermarkets that sell goods that everyone needs;
• What’s more, these types of ads might seem a complicated option when it comes to growing concerns about privacy and the shift toward first-party cookies (which are cookies stored by the website and, among others, aid in remembering vital data like language preferences). In that regard, contextual advertising looks pretty appealing because it requires no cookies.

How does contextual advertising work

In the case of websites, contextual advertising operates by analyzing web pages and matching advertisements to the content. Here’s how contextual ads are placed on publishers websites when it comes to the Google Display Network:

1. The first step in the process is taken by the advertiser, who needs to add keywords or topics to their ad groups. Keywords are single terms, while topics represent the overall main ideas or central themes of web pages. What’s interesting is that advertisers can also provide negative keywords – meaning ones that can exclude irrelevant search terms from an ad campaign;

2. Next, to establish a web page’s central theme and provide targeting accuracy, the Google system reviews many of its elements, such as:

• Page structure, which aids in analyzing headings, subheadings, and menus, helping identify the essential parts of the content (this shows just how vital it is to properly structure your website, not just for SEO purposes but also for ad monetization),
• Language analysis aim is to get to know the appropriate language for advertisements,
• Text includes checking the content for phrases and keywords and looking for patterns and associations within the text. For instance, if words and phrases like “yoga” or “exercise tips” can be categorized into the “health and wellness” category,
• Link structure review provides information about internal and external links on the web page, where the first one provides data about how the page connects with other parts of the site, while external links give context on the web page’s affiliations or references, further clarifying its content focus.

3. After an analysis, it’s time to place an ad. It can be done either with the use of:

• Matched keywords – which means keywords that advertisers provide correspond to the web page’s ones. For instance, an advertiser selling running shoes might target web pages containing keywords like “top marathons in Europe in 2025” or “marathon training tips”,
• Matched topic – meaning that a selected topic matches a web page’s primary theme without the need to match the exact same keywords. For example, an advertiser promoting outdoor gear might select the broader topic of “outdoor activities”. Their ad could then appear on web pages about hiking, camping, or adventure travel, even if specific keywords like “tent” or “hiking boots” are not explicitly mentioned.

However, it’s crucial to remember that additional factors beyond those discussed here may influence ad placement. These factors can include details such as the target audience’s geographical location or the users’ language preferences. Although simple at its core, contextual targeting involves not only matching ads with the content of a website but also ensuring that other criteria are met. It’s also worth knowing that contextual ads that are more based on the user’s geographical location are called location-focused contextual ads. At the same time, those that instead rely more on the person’s current behavior – activity-driven contextual ads.

4 benefits of contextual advertising

• Contextual ads are a part of the market that is constantly growing and projects to grow even more:
  • according to Statista, contextual advertising spending is projected to increase at an annual growth rate of 13.8% between 2022 and 2030. Regarding location-focused contextual ads, they are forecasted to see an annual increase of 13.3%, while activity-driven contextual ads are expected to grow even faster – by 14.7% yearly,
  • as per Global Market Insights, the value of the contextual advertising market in 2023 was 13.5$ billion,
  • with the rising awareness of third-party cookies and their downsides, publishers are starting to understand the importance of contextual advertising better. Their bright future is also predicted by many platforms specializing in data gathering;
• This method safeguards user privacy and aligns with the broader industry’s generally negative attitude toward third-party cookies because it requires none. In the case of mobile apps, obtaining contextual data doesn’t mean utilizing identifiers like IDFA (iOS) and AAID (Android), making it a privacy-friendly alternative to behavioral advertising;
• Contextual advertising, although to a lesser degree than behavioral advertising, helps prevent banner blindness, which is a situation when users stop noticing ads and instinctively overlook anything resembling them. Significantly, this impacts both advertisers and publishers, but contextual advertising solutions can prevent that by helping to show ads that might truly matter to a user. Additionally, as we all live in times surrounded by too much information, displaying relevant content matters even more;
• Contextual advertising benefits everyone: users, publishers, and brands advertising their products or services. It’s cost-effective, as it demands less spending than behavioral targeting. One of its key strengths lies in its effectiveness with niche audiences. Niche webpages provide content focused on specialized topics, making them an ideal platform for targeted advertising. Plus, implementing contextual advertising often doesn’t require any special effort from publishers – however, it’s best to contact your ad monetization partner if you want to know more.

Drawbacks of contextual advertising

• Much like any other monetization approach, contextual advertising is not without flaws and may pose threats when not applied correctly. A key concern is the possibility of mismatched advertisements. For example, when a user reads an article covering the serious topic of plane crashes, finding an ad offering cheap airfare may be disconcerting. Such unfortunate ad placement may lead to a damaging perception of the brand and create discomfort for readers;
• What’s more, contextual advertising is inevitably less accurate than behavioral advertising. It concentrates only on a small segment of the “bigger picture”. For instance, even though a particular user might be a car enthusiast and often visits automotive magazines, car search portals, etc., once in a while, he visits other websites, like the ones covering health-related topics. Ads on that page might focus on diet plans or vitamins, ignoring the user’s frequent engagement with car-related content.

Future of contextual advertising

The digital advertising industry faces rapid transitions, with shifting requirements impacting advertisers and publishers. One of the main challenges of the modern digital ad industry is adhering to privacy laws and standards. Unlike cookie-dependent approaches, contextual advertising matches ads to the web page’s content, enhancing relevance without infringing on user privacy. Importantly, according to the latest news, third-party cookies will stay with us for much longer than Google initially intended. By deciding not to phase out third-party cookies, Google has changed how the industry moves forward. Cookies will remain essential for behavioral ads, keeping data-focused strategies in the spotlight. This may slow the shift to privacy-first approaches, but it also provides more time for the ad industry, allowing it to implement more contextual advertising in monetization solutions. Right now, each of the three most essential platforms for publishers – Google Ad Manager, AdSense, and AdMob offer both contextual and behavioral advertising strategies. However, if you wish to get off your shoulders the tech hassle and start generating more satisfactory incomes, read our requirements, complete the registration form, and let’s get the ball rolling together!