- Growth Potential. Contextual advertising is projected to reach a global market value of $562.1 billion by 2030.
- Privacy advantage. As a non-invasive, privacy-focused approach, contextual advertising aligns with current consumer preferences and regulatory trends.
- Strategic use. Contextual advertising isn’t a one-size-fits-all solution; its effectiveness depends on the brand, product, or service being advertised.
Contextual advertising targets users by displaying relevant ads based on the content the user is currently viewing. Using advanced artificial intelligence (AI) and machine learning (ML), this strategy analyzes web page content to present personalized ads that align with user interests. This enhances the customer experience, boosts engagement and improves conversion rates and ROI for advertisers. In this article, we will dive into contextual advertising, exploring its origins, contextual advertising platforms and real-world examples.
Understanding Contextual Advertising
Contextual advertising, a targeted advertising approach, strategically displays ads based on the content of a web page or app to more effectively engage users who are inclined to be interested in the advertised product or service. This advertising model uses AI and deep learning algorithms to analyze content and determine the best ads to serve.
As businesses move away from cookies, contextual advertising is becoming one of the most viable options for marketers and advertisers. It offers a privacy-focused approach to targeted advertising and is known to improve the relevancy and success of ad campaigns.
Mladen Maksic, founder and CEO at Play Media, a full-service digital marketing agency, told CMSWire that one of the primary benefits of contextual advertising is that it allows you to connect with consumers who are actively engaged with your content, leading to higher click-through rates and better overall performance. “Additionally, contextual advertising can help you achieve better brand safety by ensuring your ads don’t appear alongside controversial or inappropriate content,” said Maksic.
The use of contextual advertising is growing considerably. The 2023 Contextual Advertising: Global Strategic Business Report indicated that the global market for contextual advertising was estimated to be $199.8 billion in 2022, and is projected to reach $562.1 billion by 2030.
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The Origins of Contextual Advertising
The concept of contextual advertising can be traced back to the early days of print publishing, where print publishers used the environment and content to sell the promise of reaching relevant and engaged audiences (i.e., an article about golfing would feature ads about golf clubs, clothing for golfers, etc.). As digital advertising emerged, the idea of contextual targeting evolved, enabling advertisers to serve ads that were more relevant and engaging to users based on the content they were consuming.
Over the years, contextual advertising has grown and adapted to the continually evolving digital advertising market. With advancements in AI, ML and data analysis, today’s contextual advertising platforms are able to analyze vast amounts of content and context to serve highly targeted and relevant ads to users. As privacy concerns continue to shape the industry, the role of contextual advertising has become even more vital.
Along with regulatory compliance, contextual advertising is widely accepted by consumers because it doesn’t feel as invasive as other advertising strategies. Many consumers have had the unpleasant experience of leaving a camping website, for example, only to be followed around the web by ads for camping gear.
Liza Kirsh, CMO at Dymapak, a child-resistant packaging solutions provider, told CMSWire that contextual advertising is easier and more affordable to implement, it’s not as regulated by privacy legislation, it’s brand safe, and more importantly, it is often perceived as “less creepy” than other methods of gathering data. “Contextualized advertising can be very effective because it’s personalized,” said Kirsh. “No one wants to be fed ads that aren’t relevant to them.” Consumers tend to agree. A recent Harris Poll study that was commissioned by GumGum indicated that 79% of UK consumers are more comfortable seeing ads that are relevant to the content of the web page they appear on than ads that are based on their browsing history.
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Contextual Advertising Platforms
A contextual advertising platform leverages AI and deep-learning algorithms to analyze content, including text, speech, imagery and geolocation, with the goal of placing ads on web pages or other relevant content based on the context of that content. These platforms use technologies like computer vision and natural language processing (NLP) to scan the information on a web page and match ads to relevant sites using keywords, content category, page safety and sentiment, events, text and images. Here are some of the most popular contextual advertising platforms:
- Spotify Advertising is the advertising platform for the Spotify music streaming service. With this platform, advertisers can create audio, video and display ads targeting users based on their listening habits, demographics and interests.
- StackAdapt is a programmatic advertising platform that enables marketers to reach their target audience using contextual targeting techniques.
- Criteo Commerce Media Platform helps marketers and publishers build, scale and activate first-party audiences.
- Media.net is a contextual advertising platform that works with publishers and advertisers to deliver highly targeted ads to users.
- Google Ads, the popular advertising platform by Google, offers contextual targeting options for its display and video ads.
- Oracle Contextual Intelligence is a contextual intelligence platform that helps advertisers deliver relevant and engaging ads by understanding the context of the content in which the ads are served.
- GumGum is a contextual intelligence platform that enables brands to engage customers in their current moment through the delivery of the “right ad, in the right environment, when they want it most.”
Real-Life Examples and Success Stories
Notable examples of brands that have successfully implemented contextual advertising include Taco Bell & Waze, and Amazon. Taco Bell partnered with the GPS navigation service Waze for a contextual advertising campaign, enabling users to view Taco Bell ads within the Waze app when nearing a Taco Bell location. This targeted approach informed users about special discounts available at a nearby Taco Bell outlet.
Amazon’s well-known recommendation system is a form of contextual advertising which displays products (i.e. Explore more items) that are similar to or are associated with the items that customers are currently viewing in their shopping cart.
Maureen McDermut, a realtor at Sotheby’s International-Montecito, a luxury real estate brand, is a real-life example of a brand that is successfully using contextual advertising to engage customers. McDermut told CMSWire that one advantage of using contextual advertising in residential real estate is relevance. “If, for example, a potential home buyer is looking at 4 bedroom homes, then ads that showcase other 4 bedroom homes can be shown to them, as opposed to ads for other houses,” said McDermut. “This increases the likelihood that they will interact with the content of the advertising.” McDermut emphasized that in a world where home search websites are abundant, it is key for real estate professionals to be as direct and relevant as possible, so as not to waste the time of the consumer.
McDermut explained that when a business is segmenting its audience based on the customer’s interests, they do not spend money on wasted impressions or clicks, which is one of the biggest problems with the “spray and pray” approach to most real estate advertising.
Is Contextual Advertising the Best Option?
Although contextual advertising can be an extremely effective way to target individual customers, it’s not always the best advertising strategy a brand can implement. “It’s important to remember that contextual advertising is not a one-size-fits-all solution,” said Maksic. “While it can be highly effective in certain situations, there may be better options for some businesses or products.” Maksic suggested that if a brand’s products or services are highly specialized or niche, there may be better approaches than contextual advertising. “If you want to build brand awareness or target a broader audience, other forms of advertising, like social media or display ads, may be more effective.”
Other advertising strategies, such as behavioral advertising, which relies on user data to curate targeted ads, can be more effective in certain situations when trying to reach a specific demographic or audience based on their online behaviors. At times, depending on the nature of the product or service being advertised and the goals of the campaign, a combination of contextual and behavioral targeting may be more effective.
Final Thoughts on Contextual Advertising
Contextual advertising is a powerful and increasingly important advertising model that allows marketers and advertisers to serve highly targeted and relevant ads to users based on the content they are consuming. By using contextual advertising, marketers can create and implement effective campaigns that resonate with their target audience while being mindful of privacy concerns and regulatory compliance.