Contextual Advertising and How It Works

Advertising expenditure on programmatic digital display ads is expected to hit over $141 billion by 2023, more than double the expenditure recorded for 2019. It’s within this context that contextual advertising is becoming more popular than ever, and with good reason. Contextual advertising checks all the right boxes for businesses who want laser-targeted digital advertising that gets real results without having to resort to the costly, time-consuming, and labor-intense pre-sales activities of finding and determining best-fit buyers. 

Here’s what you need to know about what contextual advertising is, how it works, and why it’s a win-win option for both businesses and end-consumers.

What Is Contextual Advertising? An Overview

In contextual advertising, ads are placed online on sites where the indigenous content is relevant to what’s being sold. So if a website is focused on content related to whipping up quick and easy weekday recipes, the end-user is more likely to respond to ads that feature time-saving cooking tools. Ads for irrelevant products such as a WordPress page builder, for example, simply won’t arouse the same kind of engaged interest.

This brings us to the concept of contextual targeting in advertising. For an ad to be relevant to a user such that they’re more likely to make a purchase, it needs to match up with content that the user is interested in. As an advertiser, you want to optimize your marketing by showing ads for products or services that the user has a genuine interest in. 

This strategy also factors in the need to deliver ads that are relevant to what the user is interested in right now. Programmatic advertising has advanced to a level where it’s now able to target users in a hyper-personalized manner, matching product creators and service providers with customers that are most likely to buy at the time the ad is being shown to them. 

A great example of this is one of the most well-known platforms for contextual advertising — Google Adsense, which is currently in use by over 2 million advertisers. Google presents relevant ads by taking into account the topic and keywords of the site. They also look at other elements like the categories, tags, language, page text, page structure, location, and even weather before determining the most optimal placement.

Diving Deep Into Contextual Advertising

Contextual advertising becomes increasingly relevant when you consider the very real problem of “advertising fatigue.” Consumers are bombarded with ads so often that they have a tendency to switch off, reducing the impact of digital advertising as a whole. Contextual advertising offers a solution in that it’s geared towards customers who are already interested in the related content. Instead of hampering user experience, they add value by informing site visitors of products and services that can supplement the content they find useful.  

As a long-term marketing strategy, this also makes sense when you consider the ongoing changes in the digital advertising landscape particularly as they relate to third-party cookies. With the onus increasingly on giving end-users more control over the privacy and protection of their data, cookies are on their way out. Mozilla and Firefox have already withdrawn support for cookie tracking on their respective browsers. Google, holding the largest share of the search engine market at 92.47% in 2021, hopes to migrate to a cookie-less interface by next year. 

Contextual advertising is uniquely poised to meet this challenge. The advertising model is dependent on the context and the environment of ad placement. As such, there is no real need to track the user’s behavioral patterns online to make it work. Real-time updates also enable brands to ply their wares at the time users are most receptive to their messaging. Contextual advertising offers a fantastic alternative for brands who want to ensure compliance with international data privacy regulations without having to collect user data.

How Contextual Advertising Campaigns Work to Reach Your Target Audience

Contextual advertising achieves focused targeting through a number of different approaches. 

Contextual Campaigns Are Placed in Front of Interested Users

The core focus of contextual campaigns is context. With contextual ad placements, you’re zoning in on content that relates meaningfully to your products and services. So aside from content relevancy, we’re also looking at contextual relevance. This makes for a powerfully engaging combination for site visitors, as the ads appear to show up just when consumers could potentially be looking for them.

Contextual campaigns are also timely in nature. Unlike behavioral targeting that can look at past behaviors, context and environment are more current. These provide “recency,” which influences the level of engagement users can have on your ads.

Keyword Targeting Ensures Your Ad Is Relevant to Site Content

Keyword targeting and topical relevance mean your ads are placed within content that the user is already engaging with. In other words, you’re not putting your ads out there and wishing on a falling star that they’ll take. Your ads are placed front and center for consumers who are looking for the products and services you provide that supplement their interests. The likelihood of users converting increases exponentially. 

The Ads Aren’t Disruptive to the User Experience

One of the biggest grouses consumers have traditionally had with ads is how disruptive they are to their experience of the site. Given how ads are literally everywhere in an online world, users have grown accustomed to the simple act of closing down pop-ups, effectively drowning out the noise. 

Contextual advertising helps businesses overcome this challenge only by placing ads that align with what users have essentially come to expect. The relevance of the advertisement to the content makes it more likely for users to engage with them and to convert.

How Contextual Advertising Compares to Native Advertising

It’s easy to confuse the two and even normal to assume that one could be a natural evolution of the other. But there are key differences. In native advertising, ad content is designed to look similar to the existing content on the site. It feels “native” to the site. The ad elements are placed unobtrusively on the site in the form of in-feed ads, search ads, or content recommendations for ads. But they don’t necessarily have to be relevant to the content on the site, unlike contextual ads.

Insider Tips to Creating a Fool-Proof Advertising Campaign

There are a few practical steps you want to implement to make sure you’re getting the best results from your contextual advertising campaign. 

Choose the Right Demand-Side Platform

Whether you’re new to programmatic advertising or have some first-hand experience with it, choosing the right demand-side platform poses a unique challenge. A Demand-Side Platform, or DSP for short, is technology or software that you use to automate and streamline the digital ad buying process for display, mobile, video, audio, and search ads.

DSPs are feature-packed and highly beneficial for contextual advertising. Aside from helping you manage your costs more effectively by maximizing the results on a predetermined budget, they also help you:

  • Capture real-time bids as and when they appear
  • Gain complete transparency on all the metrics that matter, including click-through rate, and page view lift
  • Creatively manage the aesthetics and content of your ads themselves through value-add design features
  • Laser-target the right audience profiles at the correct times to boost conversion rates

But to get the best results, you want to spend time carefully choosing the right DSP for your needs. It’s particularly important to look at:

  • The quality of the inventory and reach. As tempting as it is to shoot for the DSP with the biggest reach, desist. You want to weigh reach against traffic sources so that you’re getting the best returns on your investment.
  • Value features. Look for capabilities in targeting and data analytics that match your needs. Sophistication sounds great on paper, but at the end of the day, you want tools that you will use and can optimize for the results you’re looking for. Ask yourself what kinds of targeting options are available and how flexible they are, the level of segmentation available, what kind of reporting capabilities are available, and how in-depth, customizable, and transparent the reports are. 
  • Costs. Look into what you’re paying for before you sign up for a DSP. Costs can vary from one DSP to another. You’ll most likely be paying a fee off your advertising bids. Sometimes you may have to commit to a minimum monthly or annual expense. Additional service charges may also apply.
  • The level of support that’s available. Talk to the DSP provider to get a sense of how they relate to customers. Check to see if there’s dedicated account management support, onboarding support, or development support for more advanced users. Do you only get setup support, or does your provider guide you every step of the way?
  • Partnerships. As a business owner or agency, you may choose to dispense with using tools altogether. But there can be a learning curve, and you may have other competing areas of focus as a brand manager, which makes your time even more precious. You might want to consider pairing up with programmatic advertising partners that will do much of the leg work for you. 

Utilize Keyword Targets and Topic Targeting Strategically

It’s a necessity to have the right keywords on the one hand. On the other hand, you want to make sure you’re using them strategically. Market research and a fundamental understanding of your customers’ pain points are crucial to narrowing down on the right keywords for your ads. 

Ensure Your Post Click Landing Page Has Relevant Content

Your post-click landing page is the proverbial cream on top of the pie. Not only does the content have to match up to the promise of the ad, but it also has to be enticing enough for the user to follow through with the desired activity. Every stage of your campaign funnel has to be optimized for conversion, but don’t let relevance fall to the wayside. 

Segment Your Audience Into Smaller Defined Groups

Segmentation is essential for targeting the right audience groups and getting the maximum conversions. Develop ad groups on the basis of themes that directly relate to the products and services you’re offering. For instance, if you’re in home goods, create separate groups for kitchen accessories, bathroom fittings, and hall furnishings.

Set up an ad group for each ad that’s placed as well. Each of these groups should have their own set of relevant keywords. The initial segmentation will give you the ability to personalize your ads for specific audience types. Based on data and analytics on the performance against these campaigns, further segment your groups to smaller, more defined groups for even better results. 

List Out Your Negative Keywords

Negative keywords keep your ads relevant to user intent by ruling out words or phrases you don’t want your ads to be seen for. A producer for hard rock music, for example, may optimize their website by using negative keywords like “igneous” or “geology degree.” This helps you to make the most of your costs and refine your audience targeting.

  • You can use negative keyword lists for general topics as well as the specific niche that you can easily find on search engines as a starting point. But tweak, adapt, and change keywords based on your understanding of your market and your business.
  • Select negative keywords that don’t compete with — or cancel out — your positive keywords.
  • Continuously refine your negative keyword list based on the results you’re seeing. If you’re not getting the right type of traffic, it’s time to go back to the drawing board. 
  • Consider keyword levels — you may have to vary negative keyword usage depending on the level of the ad sets. The same negative keywords you use for a group-level ad set may not be required or work at campaign-level. 

Always Adjust Advertising Strategies as Needed

The success of your advertising campaign can depend on how quickly you’re able to adapt to optimize results. Time is of the essence in marketing, as is speed to market. Continuously evaluating your performance can help you understand what you’re doing right and where you’re going wrong. 

  • Use a consistent measuring system throughout your campaign to help you more accurately understand where your traffic is coming from and how they’re converting — or why they’re not. 
  • Measure for traffic (impressions, clicks, etc.), conversion (leads, sign-ups, purchases, etc.), and bottom-line sales vs. marketing efforts. These can help you identify stumbling blocks through your entire paid contextual marketing campaign in more depth. 
  • Optimize the usage of your budget based on results instead of arbitrarily allocating a fixed amount for marketing campaigns.

Should You Spend Your Advertising Dollars on This Approach?

Contextual advertising can offer you excellent results when compared with other forms of traditional online marketing. You gain the ability to reach targeted traffic at lower costs without impacting their user experience. You can dispense with the complexities of having to comply with various data privacy regulations because you aren’t collecting data — you’re simply advertising within the context of content that users have already expressed a preference in.

Contextual advertising is a no-brainer approach worth looking into for businesses who want to optimize their spending, get the best possible returns on their investments, adapt to the user experience, and comply with data protection standards. 

AUDIENCEX leverages an established partnership with Peer39, an advanced contextual data company, to help power these capabilities across our fully integrated omnichannel platform. This partnership is one of many futureproof solutions that we have developed to provide our client brands and agencies with multifaceted capabilities that can scale rapidly throughout the digital ecosystem, ensuring they retain a competitive edge. If you’d like to learn more about how AUDIENCEX and our platform can help you empower your marketing, please feel free to contact us for a free consultation.