Ad Tech & Ad Ops

What is Contextual Advertising? How Does it Work?

According to a study conducted by GumGum, contextually relevant ads generated 43% more neural engagement. In fact, users recalled contextual ads 2.2x better than other ads.

This year, with its impending third-party cookie apocalypse and its impact on programmatic revenue, has made publishers shift their focus to contextual targeting. 

Contextual advertising is important because it does not depend on any kind of cookies. Instead, this targeting makes use of keywords and keyphrases on a web page, thus completely eliminating reliance on user data.

In this post, we help publishers understand what contextual advertising is, its benefits, and how it works.

What is Contextual Advertising? 

Contextual advertising uses keywords on a web page to display ads. Unlike behavioural targeting where tracking pixels and cookies are used, contextual targeting displays relevant ads based on content on the page. 

This has a positive impact on users browsing the web page. The ads remain contextually relevant, thus getting better viewability. In a 2020 study conducted by Seedtag and Metrix Quality, contextually targeted ads with rich media yielded stronger view quality. 

Here’s an example to understand this better. The screenshot below is of a Wall Street Journal web page with the primary story of rising fuel demand. 

The ad displayed on the sidebar is of Winergy Gearboxes, a renewable energy product. Thus, this contextually relevant ad makes a lot of sense next to content related to depleting natural resources. 

Wall Street Journal article

Contextual Targeting vs. Behavioural Targeting

Publishers often find themselves asking which targeting is better, behavioural or contextual? The answer is neither as both types offer different kinds of advantages. 

However, there is a sudden surge in interest for contextual advertising, and for good reasons. It is a great alternative to behavioural targeting for surviving third-party cookie deprecation. But without this context, neither type can be deemed superior. 

Here are some significant differences between the two: 

CategoryContextual TargetingBehavioural Targeting
TrackingMakes use of keywords on a web page to display relevant adsUses cookies which track online behaviour for displaying ads 
Data privacyEffortless privacy compliance as ads use keywordsRequires additional step of obtaining user content
AccuracyLess accurate as users may not be interested in the product at allMore accurate as ads are based on the user’s interests
DependencyDoesn’t depend on user data. Advertisers can easily target users based on webpage infoEntirely depends on user data. If users decline the use of data, advertisers can’t use this option
CPMWorks on the ‘best-fit’ principle, hence, advertisers are known to put less money – around 10- to 30- cents range.Since users are targeted with more accuracy, advertisers are known to put a range between 50 cents to $3.
Best caseWorks best with audience segmentation and niche webpagesWorks for all kinds of webpages and niche

Benefits of Contextual Advertising

Contextual advertising has many benefits, some of which are listed below:

Fights Banner Blindness

Banner blindness is a common phenomenon in which users have learned to subconsciously ignore ads. However, contextually targeted ads can help fight that simply by their relevance. 

For example, a movie review website serving ads for a movie ticket booking website makes more sense than it serving ads related to cars. 

In a study by Infolinks conducted on fighting banner blindness, contextually relevant ads of lesser-known brands were recalled 82% more by people as opposed to ads of popular brands but irrelevant to page content. 

Ad placement matters. An ad placed next to/between relevant content immediately increases its value and therefore, offers a higher CTR potential.

Protects Users’ Privacy

The best part about contextual advertising is that it does not partake in exploiting user data for tracking online behaviour. All the ads generated through contextual targeting make use of keywords, thus helping publishers in building trust among their users.

Contextual targeting helps publishers to comply with privacy laws such as the GDPR, CCPA, and others. 

Increased Click-through Rate

Contextual advertising benefits all: users, publishers, and brands. 

It benefits users by introducing them to relevant products through targeted ads. When users view relevant ads, ad viewability piques and there is an increased likelihood of a high click-through rate. 

GumGum study on contextual ads

How to Run Contextual Targeting in Google Ad Manager?

Publishers who use Google AdSense already utilize the in-built feature of contextual targeting. AdSense uses keywords/keyphrases on a webpage to find relevant ads for website users. 

For publishers using Google Ad Manager, things are slightly different. Contextual targeting in GAM is performed via key-value targeting. 

Key values are used in Google Ad Manager to identify or define custom preferences such as specific ad inventory, pages, etc. They are used for all kinds of targeting, including contextual. 

Also Read: How to Use Key-value Targeting in Google Ad Manager

Here’s how publishers can create key-values to serve contextual ads: 

Adding Key-Values

  • On GAM’s homepage, click on Inventory >> Key-values >> New Key-value
  • Assign a Name and a Display Name
  • Select a Value Type. This has two options: Dynamic and Pre-defined. 
  • Go to Report on Values and select Yes if you wish to make the keys reportable. Otherwise, set your preferences accordingly. 
  • Now go to New Values under Targeting Values and add values according to your preferences. One can add as many values as they want. 
  • Click on Save

The remaining process requires a thorough understanding of Google Publisher Tags which are used for adding the key-values to an ad request. Through key-values, publishers can perform two kinds of targeting: ad slot-level and page-level. 

Ad-slot Level Targeting: Publishers can use the setTargeting() function to assign key-values to individual ad slots. This is recommended for granular targeting for a particular audience. 

Page-level Targeting: This is beneficial for a broad-level targeting such as targeting an entire page. This reduces the amount of header code to be added. Publishers should use googletag.pubads().setTargeting to use page-level targeting. 

Conclusion

The ad tech industry is highly volatile and both the demand and sell-side constantly need to revise their technical requirements. For surviving the third-party cookie apocalypse, publishers must rethink their targeting strategies. Contextual targeting appears to be an effective solution that publishers can embrace. Since a majority of publishers already work with Google-based ad tech, getting started with contextual targeting should be easy. 

In the end, publishers need to remember that users are the biggest strength that the digital advertising ecosystem possesses. Keeping users satisfied and in control of their data should be the industry’s top priority.

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