Contextual Advertising 101: How it Works, Benefits & Why It’s Necessary for Relevant Ads

Today, it’s hard to imagine any kind of digital advertising that isn’t based on browsing behavior: clicking a link, viewing a video, visiting a product landing page…

But behavioral advertising isn’t the only way to serve relevant ads to internet users. And according to some, it may not even be the most effective. In some cases, there’s a better way, and it’s called “contextual advertising.”

What is contextual advertising?

Contextual advertising refers to the practice of placing ads on web pages based on the content of those pages. For example, this could be ads for running shoes on a news article about running, or it could be ads for laptops on a tech ecommerce site. This is done through contextual targeting on an ad network, which involves segmenting ads based on parameters like keyword or website topic.

In the “Books” section of the New York Times website, for example, you’ll see what appears to be a contextual ad for reading glasses:

Here’s another example from Verizon, which runs its ad for the new Samsung phone on the technology publisher, TechCrunch:

And here’s another example of contextual: An ad for accounting software in the Wall Street Journal “Markets” section:

What is the difference between contextual advertising and behavioral advertising?

It’s easy to confuse contextual and behavioral targeting. But they’re not the same.

When advertisers target context, they do so based on the environment in which the audience is browsing. Both keyword targeting and topic targeting have to do with the content of the web page the visitor is on. If you see an advertisement about small business accounting software on a website dedicated to helping entrepreneurs manage their financials, you’re likely being targeted contextually. The product is related to the content:

When advertisers target behavior, they do so based on actions the user has taken before they reach the web page. This could include reading a certain article, clicking a particular link, visiting a product page, etc. For example, if you see an ad for a small business accounting tool on a political blog, or on Facebook, it’s because you’ve been targeted behaviorally:

This type of behavioral targeting software can detect that you’ve visited a landing page for a digital accounting product, and it can serve you an ad for that product across pages in the ad network regardless of content. Notice how this ad on AllRecipes.com, a cooking site, is about financial planning:

Clearly, since the ad is not remotely related to the content on the website, this is a behaviorally targeted ad. Behavioral ads are based on past browsing behavior, while contextual ads are based on the content of a web page:

How does contextual advertising work?

Contextual advertising involves the process of contextual targeting through a demand-side platform that will place your ad on web pages that meet your parameters. On the Google Display Network, for example, this is how the process works:

1. Choose parameters for contextual targeting

For contextual marketing to work, an advertising system needs to know what your campaign is about so it can place your ads on relevant web pages. On Google…

• Topics are broad categories in which your campaign would fit, like music, agriculture, fashion, etc. Selecting one of these makes your ad eligible to run on websites across the Google Display Network related to your topic. They can start broad, like “Autos & Vehicles,” and get more specific, like “Trucks & SUVs,” “Commercial Vehicles, or Motorcycles.”
• Keywords are for more precise targeting within your topics and subtopics. According to Google, each campaign should use 5-50 keywords, including negative keywords, which will help the network match your ad to website content. For a car campaign, these might include models and makes of cars or phrases about them, like fuel efficiency, luxury, etc.

Together, keywords and topics can give the network a good idea of what kind of content your display ads should be placed in when it analyzes a web page.

2. Google analyzes the pages in its network

When you place your order, Google will analyze the content in each display network web page to try to match your ad with the most relevant content. It takes into account text, language, page structure, link structure, while taking your keywords into account, on top of other targeting.

If you target keywords and topics in the same ad group, your keywords will be considered first when Google selects where to show your ads. Your ads won’t be eligible to appear on pages that don’t match your keywords — even if those pages are related to the topics that you’ve chosen.

You can set your display network settings to either broad or specific reach. If you’ve chosen broad reach, your ad will be placed based on your topic targeting. With specific reach, on the other hand, your ads will be eligible to appear only on pages that match your keywords and at least one of your targeted topics.

3. Your ad is placed

Through the aforementioned analysis, the display network will find a placement that matches your ad contextually. Here, Google offers an example of how it works with keyword and topic.

Keyword

When the keywords you’ve chosen match the central theme of a website, or select concepts on that site, your ad is eligible to show up on that website. According to Google, this is known as automatic placement. Other factors, like bid, location targeting, language, etc, determine whether the ad is actually placed on that website:

Topic

Similarly, when your topics match a website’s content or themes, it’s eligible to show up on that website. And whether or not it does depends on other targeting factors. What it does not depend on is your exact keywords:

This particular description is unique to Google, but it is similar to how other networks place ads contextually, too.

Which is better: Contextual advertising or behavioral advertising?

They’re two commonly used advertising techniques, and it’s easy to see why they’re so often compared to each other. Both methods show ads based on users’ interests despite key differences.

After comparing and contrasting, it’s easy to assume that behavioral advertising is better. It seems like an upgraded version of contextual advertising. Why match your ad with the content of a web page if you can track user behavior for deeper personalization?

After all, just because a user is reading a blog post about running doesn’t mean they’re in the market for running shoes. On the other hand, if their browsing history indicates they have been visiting product landing pages for running shoes recently, that’s a far stronger indicator of buying readiness.

But there are some advantages to contextual advertising that alternatives do not have. Here are some of the biggest.

The benefits of contextual advertising

1. Easier and more affordable to implement

The success of behavioral advertising relies on data. Lots of data (the most valuable being first party data). Which means you need tools to collect and analyze it, strategies for using it, and people to optimize that process. For businesses with fewer resources, and less customer data at their disposal, behavioral advertising may not be worth implementing right away.

Contextual advertising can offer an alternative that is easy and affordable to start with, while providing a level of relevance in its own way. And though it may not be as personalized as behavioral advertising, its reach will be broader in most cases, providing a valuable way to get visitors off other websites and onto your own.

2. Not constrained by privacy legislation

The General Data Protection act was the first legislation to classify cookies as personal information, laying out strict rules for how it can be collected. Since then, its governing body has handed out big fines for violating user privacy:

Now other countries are following suit with their own version of the regulation. And it means the no-holds-barred method of behavioral advertising is coming to an end.

While overall that’s a good thing, it does mean that browsing behavior is harder to collect than it used to be. Consent to use cookies for advertising is no longer implied when visitors land on your website. You have to get visitors to opt in. And, while getting opt ins may improve the quality of your retargeting (and hopefully public perception of behavioral advertising in general), it does make the process more difficult.

Contextual advertising, on the other hand, does not rely on intimate personal details to serve advertising. This makes it safer for advertisers who want to ensure they’re showing ads on compliant pages. According to Digiday, when GDPR was set to take effect, many publishers shifted their advertising dollars from behavioral to contextual advertising, and actually saw improved ROI.

3. More brand safe

It’s not just legal safety brands need to worry about, but the safety of their reputation, too. And for behavioral advertisers, it’s been difficult to maintain in some cases. More and more, brands are discovering their advertisements in non-brand safe environments, like adult or extremist content. But this is the risk of placing advertisements based on your user’s behavior alone.

With contextual targeting, however, the web page your ad will display on is the heart of the campaign. You specify the topics, subtopics, keywords. And this makes it less likely your ads are going to follow a user to an environment where they don’t expect (or want) to see advertisements, and where you don’t want them showing up.

4. Sometimes context matters more than behavior

Advertisers know that personalization is a powerful marketing tactic. But that’s only because it makes an ad more relevant. And sometimes, an ad personalized based on past behavior isn’t totally relevant to present wants or needs. This is what Ana Gotter suggests in a blog post for Disruptive Advertising:

I love to cook, so I’m constantly browsing new recipes online. Even though I have a lot of other interests, I’m most likely to click on an ad when it’s relevant to the content I’m looking at.

So, even though I run a small business, I might ignore the ad below when I’m in chef mode. If I’m checking out recipes, I’m not thinking about running my business, I’m thinking about cooking to detox from running said business.

This next ad below, on the other hand, is perfect.

On a site page for an easy-one-pot-dinner, there’s an ad for easy-done-in-ten-minutes quinoa. That’s relevant and it makes me more likely to click.

Of course, this one example doesn’t prove that contextual beats behavioral in terms of relevance. However, it does present an interesting point. If your audience is on a cooking website, perhaps they are interested in seeing cooking content. If they’re on a marketing website, perhaps they’re more receptive to martech ads at that moment.

Retargeting based on past behavior is effective, but is it always as relevant as an ad related to what a visitor is viewing in the present? You might test by retargeting on web pages that are relevant to your product, instead of all web pages in the display network.

5. Relevant without being creepy

“No one likes being stalked around the Internet by adverts.” writes Natasha Lomes in an article for TechCrunch. “It’s the uneasy joke you can’t enjoy laughing at. Yet vast people-profiling ad businesses have made pots of money off of an unregulated Internet by putting surveillance at their core.”

The feeling of being “surveilled” and “stalked” around the internet is not one unique to Lomes. In fact, you probably feel it regularly yourself. Whether or not this makes you uneasy has been shown to vary based on age, background, and other factors.

Some say they see too many ads from the same companies, and that these ads continue to stalk them even after purchase. They’re “intrusive” and “obnoxious.”

Others say creepy retargeting is just a result of bad advertising, and that tactics like frequency capping can control for it.

While it’s hard to argue with results, it’s safe to say that, if you can provide a relevance without creeping your audience out, it’s certainly worth implementing. Contextual advertising can accomplish this. A user is less likely to feel they’re being followed around by an advertisement if it is related to the content they’re consuming at the moment. Even if the ad is following the user around, it’s much less evident when it fits contextually.

Create effective post-click landing pages for your contextual advertisements

With advantages to both methods, the choice between contextual advertising and behavioral advertising isn’t easy to make. Luckily, you don’t have to make it. Both have a place in the modern digital marketing strategy. Behavioral advertising is especially valuable to use on people who have visited your website.

When it comes to contextual advertising, its value is in relevance combined with reach, safety, affordability, and ease of implementation. However, none of these benefits matter if your ad doesn’t eventually result in a conversion. And you can’t generate that conversion without an effective post-click landing page.

Every contextual ad needs its own unique post-click landing page to maintain a level of relevance throughout the campaign. Discover how to scale your post-click landing pages with a demo from Instapage.