The world of online advertising is constantly changing, and understanding what solutions might reshape the landscape will always be important. With that in mind, here’s what you need to know about contextual targeting.

Google’s send-off for third-party cookies may have been postponed to 2024, but brands, publishers, and advertisers are not wasting time finding a viable and effective alternative.

Although third-party data is still largely accessible, most organizations are already edging away from traditional behavioral targeting in preparation for the switch-off. And this is a logical move, not only to avoid being caught without a post-cookie solution, but also to build and maintain trust with their audiences.

With consumers largely in favor of this shift away from privacy-invasive methods, contextual advertising seems to be the natural next step, with its market worth predicted to reach $562.1bn by 2030.

As a strategy, contextual targeting isn’t new and has been discussed at length across the industry, especially in relation to the opportunities and challenges of a post-COVID-19 marketplace.

But do advertisers really know what it’s all about?

What is contextual targeting?

Contextual advertising is a method of serving advertisements to consumers that are relevant to the online environment in which these ads are viewed.

The popular resurgence of contextual targeting, dubbed ‘Contextual 2.0’, has its origins in print media. Before the birth of the internet, the advent of third-party cookies, and access to Browse histories, advertisers only had content to rely on when it came to reaching their target audiences.

Instead of targeting users with ads based on topics the consumer has engaged with previously, contextual ads are matched with what a consumer is interested in at that moment. This way, brands are able to reach relevant audiences, make sure their ads are compliant with key regulations, and ensure that the consumer’s rights to privacy remain protected.

The recent popularity of contextual targeting sits within a wider background of legislative change – including GDPR regulations in Europe, the DPA and the upcoming Data Protection and Digital Information Bill in the UK, and a range of active and evolving regulations across the US – which now sees 71% of countries across the world implementing data-protection laws.

With 74% of consumers prioritizing data privacy above other concerns – including sustainability, equality, and other ethical issues – the fact that contextual advertising doesn’t track consumers’ internet Browse habits stands out as one of its biggest strengths.

How does contextual advertising work?

Contextual targeting uses artificial intelligence (AI), machine learning, and deep-learning algorithms to analyze content in real time. In-page signals such as text, speech, and imagery determine the subject, general topic, and location of the content, and these insights inform the placement of the ad.

Matching keywords, topics, and subtopics are at the core of contextual advertising – but modern systems have refined abilities to secure more precise, suitable, and appropriate ad placement.

They also allow for greater nuance when it comes to scanning web pages to determine appropriate audiences, factoring in URLs, and semantic and natural language processing alongside traditional keywords.

These additional factors not only succeed in detecting phrases that are contextually relevant but also deduce tone of voice and general sentiment.

This provides an additional layer of brand safety, able to identify content that is relevant and appropriate, as well as content that should be avoided.

What are the benefits of contextual targeting?

Trust, attention, and engagement

From a consumer perspective, contextual targeting meets contemporary demands for more privacy-compliant marketing. 81% of UK consumers prefer ads that match the content they are viewing, according to the Interactive Advertising Bureau (IAB).

Without the same ads following consumers around online – which many describe as “creepy” – contextual advertising engenders a less intrusive and more positive brand experience.

According to one study, the chance of success is also high: 69% of consumers are more likely to engage with contextually relevant content, with 4 in 5 (81%) preferring ads matched to the displayed content. Contextually relevant targeting has also been found to increase attention by 107% and purchase intent by 14%.

Data, privacy, and relevance

With 65% of UK consumers favoring brands that use contextual targeting, brand reputation can also benefit. Beyond consumer preference, brands that explicitly rely on audience and user data risk falling short of continuously developing data regulations and incurring fines for violating consumer privacy, a danger that contextual marketing avoids.

Nearly half (43%) of respondents to Cisco’s 2022 Consumer Privacy Survey stated they do not trust companies with their data. According to most (79%), this is because there is a lack of transparency around data processing and management.

Businesses should always be clear on how they handle sensitive – or indeed, any – customer information, but contextual advertising bypasses many of these risks.

Beyond this, with 61% of users concerned about how their behaviors are tracked, marketing based on page content avoids potential harm to consumer trust, and further maintains a brand’s reputation and relationship with its audience.

Brand safety and suitability

Contemporary contextual tools are also vital when it comes to preserving brand safety. Accurate content identification reduces the likelihood of harmful or negative associations that can impact public and consumer perceptions. While many brands still rely on keyword blocking and exclusion lists as a way to advertise next to appropriate content, these methods should be used with caution.

As digital users are faced with seemingly unprecedented amounts of misinformation and disinformation, these broad-stroke approaches cannot guarantee both safety and scale.

Keywords can help to avoid placements alongside unsavory or untrustworthy articles but this often comes at the detriment of genuinely valuable content. News publishers, for example, while typically viewed as premium and trustworthy sources, often see upwards of 30% of their content misclassified and demonetized for being “unsafe” – a number that surges to 65% for progressive media content.

Financially viable and resource-light

Contextual advertising is also a cheaper alternative to implement. Traditional behavior-centric advertising involves the thorough collection of consumer data.

To access enough data for insights to be worthwhile and actionable, companies need to invest in reliable and up-to-date technology or, alternatively, employ a third party. And that’s only the first step of the process, as additional resources are necessary to store, manage, and analyze this data.

Developing a whole team dedicated to data collection and analysis can be costly – and relying on another party to do this can be risky from a data protection perspective.

Contextual advertising doesn’t require consumer data or the resources necessary to process it. This contributed to many publishers’ decisions to change their advertising tactics to contextual advertising ahead of the implementation of GDPR in 2018, seeing improved ROI as a result.

What are the disadvantages of contextual advertising?

While contextual advertising offers consumers and brands an extensive range of benefits, it’s not entirely free from challenges.

Ensuring suitable topics, keywords, sentiments, and subtopics are found and adhered to in order to rival the level of accuracy behavioral targeting can provide can be time consuming. And even then, there is always a chance that page sentiment may be misunderstood.

For example, a consumer may read about a celebrity’s latest expensive purchase, but it doesn’t guarantee they are planning to make the same purchase. Any ads based on that part of the content, therefore, may well be irrelevant.

The focus on relevant content can also make scaling advertising more difficult. If marketers want to expand their reach, they have to learn to be creative when it comes to identifying what counts as contextually relevant.

However, as a solution that is growing in popularity, there are new technologies constantly popping up to mitigate against limitations. SmartFrame’s solution, for example, uses highly detailed metadata embedded into its images, which provides a reliable source of data.

Automation is also speeding up progress in this area, although since AI cannot be expected to fully grasp the nuance of certain stories, human intervention can and should be added to the process to spot ambiguous content, refine targeting, and maximize outreach to target audiences.

The future of contextual advertising

The arrival of new privacy laws and the demise of third-party cookies – with 60% of web traffic predicted to be cookie-less by the end of 2023 – demands adaptation of the wider advertising industry. And brands that choose GDPR-compliant, non-invasive advertising are likely to come out on top.

The data suggests that the only direction for contextual advertising is up, predicting a CAGR of 13.3% across the period of 2020 to 2027, making it one of the most popular alternatives chosen across the industry.

Time and time again, contextual targeting proves superior as an advertising strategy that meets both consumer and business needs.

At SmartFrame, our mission is to help build a more transparent and effective digital advertising ecosystem. Our technology not only ensures prime ad placement within page images, but also increases efficiency and precision by providing additional data signals.

By combining SmartFrame’s technology with a contextual strategy, brands can be assured that their ads will hit home – and all without the pitfalls of behavioral targeting.