Contextual Advertising 101

“Delivering the right message to the right person at the right time” is the age-old goal of advertisers around the world. For many years, behavioral advertising was the be-all, end-all solution for marketers. Leveraging cookies, marketers would track users from site to site collecting important data on the who’s, where’s and what’s of their target audience.

However, with new privacy regulations and the phasing out of 3rd-party data, behavioral advertising has and will continue to become increasingly more restrictive. Fortunately, behavioral targeting isn’t the be-all and end-all…There is another solution that has proven to be more impactful and more results-driven: contextual advertising. Let’s dive in!

What is Contextual Targeting?

how does contextual targeting work?

When setting up a contextual advertising campaign, advertisers will choose between content keywords and categories. From there, the platform will crawl and scan categorizing the content of different sites based on each web page’s keywords, phrases or website topic and their compatibility and overlap with the advertisers’ chosen keywords and categories. When a user visits the page, the ad server will match the page’s content with relevant, like-minded ads.

Not all contextual targeting is created equal. It is important that advertisers partner with a reputable ad platform to ensure quality inventory and access to advanced AI and ML tech. For example, Cohort Intelligence is Kargo’s proprietary AI-powered algorithm that identifies the most effective contextual environments to reach an audience using natural language processing and predictive performance analysis. Powered by IBM Watson and enabled by our exclusive 1:1 publisher integrations, Kargo’s proprietary language engine ingests and analyzes millions of articles to create contextual-based targeting segments that align with the specific interests of the consumer and ultimately, drive performance.

The terms contextual and behavioral targeting have mistakenly been used interchangeably, but they are, in fact, not the same. Ads that are served contextually are driven by the content of the website and match the specific keywords or topics specified by the brand. In contrast, when utilizing behavioral targeting, ads are placed based on previous actions taken by the user. For example, past behavior could include reading specific articles, visiting product pages or even clicking on various links, and these actions require cookies to track.

For example, if you’re on a cooking website and you’re served an ad for a local bank – you’ve most likely been targeted based on your previous online behavior. Behavioral targeting relies heavily on gathering data, such as cookies, which will soon become irrelevant with the  inevitable 'crumbling' in 2023.

You may be asking yourself: so which one of these solutions is better? The answer is easier said (or asked) than done. On the surface, behavioral targeting seems like the smarter strategy; after all, just because someone is reading a blog on pies does not mean that they are looking to purchase a pie at that exact moment. But with the digital advertising ecosystem continuously evolving and moving past the use of cookies – it's time to  become familiar with other solutions. At Kargo, we do continue to see cookie-based solutions put to use; however, many of our brands recognize the importance of testing and implementing new technologies in order to stay relevant and on the leading edge of the rapidly developing landscape of advertising.

The Benefits of Contextual Targeting

There are several major advantages to leveraging contextual advertising vs. other targeting strategies. Let’s take a look at some of these advantages:

• Easy to Manage: Leveraging first-party marketing strategies (such as behavioral advertising) requires A LOT of data to execute and scale effectively. An entire team or an outsourced vendor would need to monitor, store, manage and match consumers’ online behavior. Properly managing this data may not be possible for smaller brands or businesses with fewer resources and less access to customer data. Since it utilizes real-time data and activity, contextual advertising is a much smaller endeavor and therefore, much easier to implement.

• Brand Safe: Unlike contextual advertising, behavioral targeting chases the user — no matter where they are on the web. When based on previous online behavior, your ad is served without consideration for the context or messaging of the page where your ad lands. This could lead to your brand landing in some potentially unsafe, low-quality places and resulting in unwanted associations — such as sites promoting fake news or adult content. In contrast, contextual targeting places the content and articles at the forefront of the campaign strategy. By specifying keywords, topics and subcategories,  advertisers have more control and complete transparency over where their brand creative will live.

• Privacy Friendly: We talked earlier about the impending death of the cookie, and with it comes an advertiser's reliance on first-party data. The General Data Protection Regulation (GDPR) has classified cookies as personal information and created a legal framework that sets guidelines for the collection and processing of personal information from individuals who live outside of the European Union (EU). Companies are hit with massive fines if found guilty of violating these terms, and countries outside the EU are following this lead and enacting similar legislation. However, contextual targeting does not need access to your innermost desires — cookies — to get the job done. As a result, contextual targeting protects advertisers from showing up on pages that may not be compliant with local legislation.

• Reduced Ad Aversion: Since they are driven by relevance, contextual ads are considered less disruptive by the user when compared with other ads utilizing different targeting strategies. Oftentimes users find contextual ads helpful and informative because they correlate with the subject matter of interest. This correlation fosters engagement and in turn, promotes brand awareness and ROAS. In fact, a recent IAS study found that aligning ad content with context increased favorability by 107%, memorability by 76% and receptivity by 57%. Clearly, contextual advertising offers brands a results-driven method of advertising that delivers better outcomes for their business.

In a Cookieless World, Context is King

While the possibilities may seem endless, the choice — for advertisers — is clear. Contextual advertising offers brands the most efficient, the most relevant and safest approach to advertising. Ads driven by context foster meaningful and impactful connections with consumers in the moment without risking privacy infringements. By simply aligning with the subject matter that is clearly top of mind, these ads drive real results and leave the user feeling more favorable and more receptive to the brand overall. With multiple ways to granularly target your audience, advertisers can be confident that the right ad is being served to the right person at the right time — and real results will follow. 

Want to learn more about how your brand can take advantage of contextual targeting? Let's chat!