How Contextual Ad Targeting Works & its Benefits Explained [2022]
If you’ve browsed news sources or visited discussion forums surrounding digital advertising in the past few years, chances are that you’re already familiar with the term “contextual”.
The craze of contextual ad targeting is a catchy topic in marketing, with articles popping up all over the internet that herald the return of this privacy-friendly ad targeting technique.
But why exactly is contextual so popular?
The driving factor lies within contextual targeting’s future role within the ad tech ecosystem - based on an internet forecasted to operate without third-party cookies.
To really get an understanding of what all the hype is about, it’s helpful to take a look at the topic from the varied perspectives of all of the different parties influenced by contextual ads.
In this article, we’ll be dive into contextual targeting - explore how it works, review the benefits it offers vs other advertising methods, and showcase some examples of this popular targeting technique in action.
Table of Contents
- What is contextual targeting?
- How does contextual targeting work in advertising?
- Contextual Targeting Examples
- Why is the contextual targeting trend so popular?
- Benefits of Contextual Targeting
What is contextual targeting?
Contextual targeting is an advertising technique through which ads are targeted and matched with specific web content that aligns with the context of the ad being served.
For example, a website about pet care may serve ads about different brands of pet food and accessories, while a website about cooking might serve ads for grocery delivery services, cooking supplies, and guides.
Contextual targeting creates natural alignment between the content of a website and the subject matter of the ads being placed on the site - improving user sentiment towards the ads, among other advantages.
This approach is distinctly different from behavioral targeting, which relies entirely upon knowing a user’s past web browsing habits in order to serve ads based on their behavior.
Knowing a user’s past browsing history relies upon third-party cookies which are scheduled to stop working in the near future.
In contrast to behavioral targeting, contextual targeting requires no data about a user to be effective, instead relying on the idea that users who engage with a piece of content about a certain topic are more likely to be receptive towards ads about that same topic.
How does contextual targeting work in advertising?
Contextual advertising is a technique which involves a publisher and an advertiser working together to deliver an ad creative to a publisher’s contextually relevant web property.
As part of the process of serving a contextually relevant ad, contextual targeting works by identifying all of the elements surrounding an ad placement location. These contextual signals can then be targeted within platforms that support contextual advertising - such as Google Ads and DSPs (demand-side platforms).
Advertisers are able to configure their advertising campaigns to only place a bid on available ad inventory if it matches the specified contextual criteria.
Contextual Targeting on Google Ads
Contextual targeting on Google Ads generally works the same way as it does on most other platforms that support contextual advertising.
The process used to serve a contextual ad using Google Ads is as follows:
1. An advertiser configures their advertising campaign, defining the specific contextual categories and/or keywords they’d like to place bids on.
On Google Ads, categories are referred to as “Topics”.
Topics have varying degrees of granularity to support broad or narrow targeting.
For example, a brand advertising gym memberships and fitness plans might target the “Sports & Fitness” topic - while a brand marketing running shoes might target the more specific “Sports & Fitness -> Sports Fans -> Running Enthusiasts” topic.
A full list of topics on Google Ads is available here.
It should be noted that “Topics” on Google Ads are not the same as “Google Topics”, which is a proposal by Google for replacing third-party cookies - read more.
Keywords can also be specified by an advertiser for precision ad targeting. Google generally recommends including 5-50 targeted keywords, including negative keywords that the advertiser wishes to avoid targeting.
The advertiser finalizes the campaign by setting their reach preferences.
Advertisers are able to choose whether they’d like to run a campaign using the “broad reach” option, which makes use of their topic selections - or, they can use the “specific reach” option if they’d like to target by including their keyword specifications.
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Websites are prioritized based on whether the advertiser selected the “broad reach” or “specific reach” targeting option.
If the “broad reach” option was selected, any website which matches the topics selected by the advertiser will be eligible for ad placement.
If the “specific reach” option was selected, websites which include the specified keywords, as well as at least one matching topic will be eligible for ad placement.
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As mentioned above, an advertiser’s reach preferences determine where ads are placed within the GDN.
When both keywords and topics are included in the same ad group, keywords will always be weighted more heavily when determining where to place an ad (again, in these cases, at least one topic will also always match the chosen ad placement).
Proprietary Contextual Targeting Systems
A contextual targeting system, also referred to as a contextual management platform, is a tool that can be used by publishers to offer contextual ad placement options to advertising partners directly through an owned web property.
While Google Ads and other programmatic platforms that offer support for contextual ad targeting have traditionally been the go-to solution for many marketers, the use of proprietary solutions has become more common as contextual targeting’s popularity has grown.
Proprietary contextual targeting systems work similarly to Google Ads, but allow publishers to segment and showcase their inventory as addressable audiences for advertisers to purchase directly.
Publishers can also earn more by setting their own CPMs, generating substantially more value from their inventory than the rates offered by Google.
In addition, publishers can capture and tap into first-party contextual data that they own directly, allowing them to forecast revenue and increase content production for their most valuable content categories.
Publishers can also share reports generated from their contextual data with their advertisers - a distinct advantage considering Google has restricted access to its contextual data (and has never been great at reporting on contextual data in the first place).
Here's a look at how contextual targeting works when using a proprietary management platform:
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As we previously covered, Google has its own list of contextual “topics” that it uses to categorize publisher web properties and determine which ads to place on each website.
Google's list of topics allows contextual ads to be programmatically placed online, alleviating the need for advertisers to manually search for publisher web properties which align with their ad campaigns.
For proprietary contextual targeting systems, the process is not so different - but the list of categories is provided by the IAB (Interactive Advertising Bureau), an organization which provides standardized metrics and frameworks for much of the ad tech ecosystem.
The list of categories is referred to as IAB’s Content Taxonomy, a “common language” which publishers can use to describe, distinguish, and organize their website content.
The main role of the Content Taxonomy is to facilitate both contextual targeting, as well as brand safety in the form of allowing advertisers to avoid certain sensitive categories of content they’d prefer to avoid serving ads to.
Because the IAB is an accepted standard in ad tech, the Content Taxonomy allows publishers and advertisers to “speak the same contextual language” across all of the different platforms in the programmatic ecosystem - including SSPs and DSPs.
In essence, the process of categorical contextual ad placement is very similar to the one followed by Google Ads - except instead of scanning GDN for websites, all websites which are connected to various programmatic ad networks and ad exchanges are scanned instead.
A full list of contextual categories outlined by the IAB’s Content Taxonomy is available here.
Keyword Contextual Targeting
Unlike Google Ads, the IAB’s Content Taxonomy doesn’t offer a set of standardized keywords to use for tagging content - which means it falls upon publishers to tag their own content.
For smaller web publications, while manually tagging content can sometimes be possible, it’s often a cumbersome process, easily forgotten, and even inaccurate in some cases.
For larger publishers, the process of adding keywords is typically forgone entirely, as it’s simply not feasible to keep up with the volume of content being published - especially in instances where a website features user-generated content.
To overcome these obstacles, proprietary contextual management platforms automatically manage the keyword tagging process by employing AI to crawl through and continuously update each web page’s set of keywords.
This opens up additional targeting options for publishers to offer to their advertising partners, as granular audience segments are compiled from a website’s list of keywords.
If you’re interested, more information is available surrounding how publishers can lift revenue through contextual management platforms.
How publishers configure contextual advertising
In order for contextual advertising to work, a publisher must first ensure that the content on their website is tagged with topical categories and keywords that identify what the contextual focus of each page is.
For example, an automotive publisher might have broad categories assigned to topics like “car insurance”, “car repairs”, and “car reviews”.
The same publisher might also include keywords for each article or blog post to help further define the subtopics of each page.
These might include specific makes and models of cars like “Honda”, “2021 Civic”, features such as “Manual Transmission” or “Automatic Transmission”, or engine types like “Combustion”, “Hybrid”, or “Electric”.
These categories and keywords allow advertisers to match their ads to the tagged content in the next step of the contextual advertising process.
How advertisers configure contextual advertising
Advertisers use a system called a DSP (demand-side platform) to define their list of requirements for serving a contextual ad.
While every DSP is slightly different, the option to select from a list of broad categories as well as niche topics is generally available on all systems.
To stick with the automotive example, a repair service might run a seasonal ad that targets the niche keyword “tires” to advertise a promotion for winter tire swaps near the end of fall.
A repair and restoration shop for vintage car models might run an ad that specifically targets a car’s model, “Porsche 911 Carrera”, together with the model’s year, “1987”.
In yet another example, a car dealership interested in selling a wide range of cars might target a variety of car makers, including “Honda”, “Dodge”, “Ford”, “BMW”, and “Mazda”.
Contextual ad placement in action
Once both the publisher and the advertiser have defined the keywords they’d like to match, the process of serving a contextual ad can begin.
An advertiser will upload their ad creative and select the keywords they’d like to target through their DSP.
When the ad campaign is launched, any publishers that own content tagged with the matching keywords will be a viable supply source that the advertiser’s ad can display on.
Modern contextual advertising can also make use of a publisher’s first-party data to evaluate an ad’s product affinity score, which creates better alignment between specific types of ads and a webpage’s content.
The process of serving an ad is then followed - a technical process which is covered in the linked guide if you’re interested in learning more about it.
The end result of this process is a contextual ad being served to a piece of content that matches what the ad is about - for example, an ad for a 2022 Ford Mustang appearing on a review article for another car model manufactured by Ford.
Contextual Targeting Examples
A lot has been covered surrounding how contextual ads are placed - but what does a contextually relevant ad actually look like?
Before continuing on, here’s a look at some examples of what contextual targeting looks like in action:
1) An ad for SEM Rush, an SEO tool, being served to the front page of SearchEngineLand.
2) An ad for Sour Patch Kids (gummies of all kinds are a popular mid-run fuel option for longer distances) and a triathlon event being served to a running shoe review blog.
3) MSI targets an ad for a gaming laptop towards one of their own product listing pages on NewEgg to attain an effect similar to a native ad placement.
In each of the examples above, the content of the ad creative aligns with the content of the webpage - improving user experience and purchasing intent through added relevancy.
Why is the contextual targeting trend so popular?
As mentioned at the beginning of the article, contextual targeting and its role in the future of advertising has been a popular topic of discussion lately.
It’s no surprise that the discontinuation of third-party identifiers, which will render popular targeting techniques like behavioral, retargeting, frequency capping, and audience extensions unusable has left the ad tech space eager to find alternatives.
However, with the “rediscovery” of contextual advertising (it never really “went away”, but an explanation of why it became less popular for a time is available here) businesses have been realizing some inherent benefits associated with serving contextually relevant ads.
When coupled with the necessity of pivoting to privacy-first web practices, the perks offered by contextual alignment have caused publishers and advertisers alike to take note of the technique as being one of the most effective in modern digital advertising.
Benefits of Contextual Targeting
We’ve already covered some of the benefits associated with contextual targeting systems and platforms that manage a publisher’s contextual data, but what about the benefits of contextual ads themselves?
Here’s a breakdown of the advantages contextual ads have to offer:
Improved User Experience
Great user experiences keep visitors coming back for more.
In a study conducted by SearchEngineLand, contextually relevant ads stimulated 43% more neural engagement, and were even 10% more engaging than the content itself - while also being over twice as easy to recall.
In a similar study conducted by BusinessWire 73% of consumers reported that contextually relevant ads complemented their content experience.
Contextually relevant ads are also notably effective for reducing ad fatigue in visitors.
Higher Purchasing Intent
Users are significantly more receptive to ads which are contextually relevant.
In the same BusinessWire study referenced above, purchasing intent was 63% higher for audiences that were served contextually relevant ads over those which were targeted through behavioral methods - benefiting publishers and advertisers alike.
In another [study conducted by DoubleVerify(https://doubleverify.com/the-resurgence-of-contextual-targeting/), 69% of consumers were more likely to engage with contextually relevant ads than those that were targeted using other methods
90% of a consumer’s 30,000 decisions are driven by emotions, which are best catered to by the tactful nature of contextual advertising.
Growing Revenue Opportunities
In advertising, it pays to go with the flow - especially the flow of ad dollars.
A report by GumGum indicates that contextual targeting is the most popular strategy in both the US and the UK, with 49% and 36% of advertisers implementing contextual advertising methods, respectively.
Of the surveyed companies, about 60% plan to maintain their current contextual ad budget, while 25-30% plan to increase their contextual ad spending over the coming years.
Greater Brand Safety for Advertisers
Contextual advertising provides a much higher degree of brand safety than most other forms of online advertising.
Part of maintaining a brand’s public image comes from serving ads to high-quality websites, an objective which isn’t always feasible when website selection is managed solely through a visitor’s data and browsing habits.
Because contextual targeting manages website selection based on the contents of a web page itself, the chances of a contextually relevant website complimenting the message of an ad and retaining a brand’s reputation are both greatly improved.
In fact, the BusinessWire study reference earlier suggests that brand favorability is 40% higher for contextually aligned ad placements.
AI Is Constantly Improving
When it comes to keyword-based contextual targeting, the technology in use has evolved significantly since the early days of keyword tagging.
Rather than literally interpreting individual keywords, page scanning AI technologies are able to piece together fluent semantic understandings of what a web page is about - including whether a positive or negative sentiment exists surrounding the featured topics.
The same concept applies to image recognition, as well as audio ad serving and video ad serving - all of which are becoming progressively more sophisticated and context-savvy over time.
Privacy Friendly
It comes as no surprise that most of the internet values their digital privacy.
In fact, a study by eMarketer indicates that 83% of internet users worldwide value the integrity of their digital privacy.
While pop-up notifications and web banners about legislations like the GDPR have become commonplace online, one of the great things about contextual advertising is its ability to bypass the need to rely on a user’s compliance with all such privacy regulations.
Because contextual targeting only relies on categorical matching between a publisher’s content and an advertiser’s targeting preferences, the technique allows end-users to maintain their privacy throughout the ad serving process.
Future-Proofed for the Cookieless Web
It’s been mentioned time and again, but contextual targeting doesn’t rely on third-party identifiers like many other advertising methods.
This makes contextual advertising a sustainable channel that won’t be disrupted by ad tech’s shifting privacy landscape moving forward.
According to a report by eMarketer, 49% of digital media professionals believe pivoting away from third-party identifiers is one of their greatest challenges - a challenge which can be addressed directly through contextual ad placement.
Ease of Implementation
While many advertising methods rely on detailed user profiles to accurately create valuable audience segments to target, contextual management platforms create segments from keyword data alone, which is automatically gathered and managed by the platform itself.
As a solution, contextual management platforms allow publishers to keep operating expenses low by forgoing the need to hire specialized teams to manage their audience data.
This creates a simple, affordable, and effective way for publishers to showcase relevant audiences to their advertising partners, without having to stitch multiple solutions together.
Bringing contextual targeting into your digital marketing strategy
Contextual targeting is making waves in digital advertising once again.
Both publishers and advertisers are positioning themselves to take advantage of the shift back to this user-favored, privacy-friendly ad serving technique.
Rather than relying solely on Google Ads, many publishers are adopting the use of contextual management platforms to gain proprietorship over their lucrative first-party data.
Finding the right partner to bring a contextual ad serving strategy to life doesn’t have to be a hassle either - there’s a solution sitting right in front of you!
The AdButler team has over two decades of experience in providing and configuring ad serving solutions for both publishers and advertisers.
Check out AdButler's contextual management platform for yourself.
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