Advertising’s Contextual Future

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By Daniel Reina, CEO and Co-Founder of Tappx
Exclusive for Advertising Week

Contextual advertising has always made sense.

From manually buying newspaper ads based on a page’s content through to context-aware approaches to advertising have been ever-present arrows in the quiver of digital marketers. But with the advent of behavioural targeting, context was largely thrown aside by marketers in favour of using users’ granular data to follow them around the internet. With Apple’s abolition of its Identifier for Advertisers (IDFA) and Google’s looming split with third-party cookies, contextual advertising is once again in the spotlight, and with good reason.

What is Contextual Advertising?

In a 2018 survey, eMarketer reported that 51% of online users worldwide found targeted ads to be irrelevant. Another 47% found them invasive.

What if it didn’t have to be this way?

Imagine a world where you are only shown ads relevant to the webpage you’re currently browsing. One where ads for running shoes only pop up on the track blog where you’re researching how to train for a marathon. Or where deep dish doesn’t follow you into your email just because you googled ‘does pineapple belong on pizza’?

This is the promise of contextual advertising.

By reading the digital room, it uses the content displayed on content platforms to determine what ads to show—only on content platforms such as mobile apps, OTT, media and websites. . It aims to display in-the-moment ads based on the content being consumed by users at the time, all without prying private data from users.

While doing so for static banner ads is relatively straightforward, high-precision contextual ad platforms have more recently perfected the artificial intelligence technology needed to serve contextual audiovisual ads – meaning another use case of behavioural advertising falls by the wayside.

With behavioural advertising, snippets of code called ‘cookies’ track users across the web and show them ads based on their online activity, all the while collecting data that users are increasingly unwilling to share. In the past, these methods were seen as necessary to serve relevant ads and therefore, theoretically, boost ROI. Yet contextual advertising achieves this with non-intrusive ad serving that’s profitable for both advertisers and publishers.

How does Contextual Advertising work?

While there’s some industry jargon surrounding contextual advertising (isn’t there always?!), it boils down to a few pretty simple concepts.

Until very recently, contextual analysis technology was focused solely on written content. Relevant ads are displayed by the publisher on the basis of one of two criteria: keyword or topic. With keywords, ads are displayed around the content of a webpage based on a keyword chosen by the publisher to describe its content. Topic-based contextual ads are served based on the webpage’s topic, e.g. sports.

A contextual ad network uses these principles, with automated analysis of pages’ content that allows it to serve relevant contextual ads. Programmatic technology is integrated to further automate the process: The publisher shares contextual information such as content, URL, keywords, categories or tags to the ad server or wrapper. This information then passes to the relevant ad networks, exchanges and platforms to request contextual ads, which are then supplied.

Another recent development adds much greater sophistication to the contextual ad model. Iit is now possible to explicitly analyse audiovisual content – rather than just text – at scale. Contextual ad platforms such as Contextualize-it use artificial intelligence to identify objects, places and dialogue, which are used to generate metadata, to allow the segmentation of campaigns using keywords and/or IAB contextual categories. Algorithms can even identify different scenes in video content, enabling the technology to insert ads at the right moment.

So contextual advertising is, for the most part, enabled by familiar concepts and technology – with the secret ingredient of proprietary tech that analyses various elements of a webpage’s content.

How Big is the Contextual Advertising opportunity?

When it comes to economic viability, contextual advertising does not disappoint. At a CAGR of 13.3%, its global market is projected to reach $376.2 billion in 2027.

For marketers holding out hope that behavioural advertising will make a swift comeback, things aren’t looking promising.

Even before discourse around user-privacy permeated mainstream public consciousness in the US, 40% of US-based internet users consented only to mandatory cookies while another 10% refused cookies altogether. In Europe where GDPR has been in force since 2018, it’s reported that as few as 3% of users want to accept cookies. Google has announced it won’t build alternate identifiers to track individuals once third-party cookies are phased out. Since Apple’s IDFA was abolished, just a quarter of users have opted to share their data for tracking purposes.

The story is reversed for contextual advertising. By doubling down on relevance and eliminating the needs for cookies, context-aware ads have been found to command more click throughs and higher rates. In fact, IAS (Integral Ad Science) has discovered that (81%) of British consumers want to see ads that match the page content they are looking at. Almost two thirds (65%) of UK consumers will actually have a more favourable opinion of brands that serve them contextually relevant ads.

Advertisers’ Future is Contextual

While consumers have much to gain from privacy and contextual relevance, this doesn’t mean advertisers are dealt the short end of the stick. Far from it.

By replacing third-party data with first-party counterparts, advertisers are presented with tools that are more potent than ever. From CTRs to conversions and even difficult metrics like retention and attention, contextual ads have seen advertising KPIs soar across the board.

There’s also the strategic advantage these ads present. For the first time in years, advertisers can target an endless number of niches with laser accuracy – however obscure they might be.

And of course, there’s the cost factor. For decades, advertisers have channeled billions into behavioural targeting only to realise they have been shouting into the wind. Whether it’s through non-viewable ads, click farms or bot-generated traffic, a significant portion of ad spend has delivered artificial ROI (or in layman’s terms, been poured down the drain). Contextual advertising presents a more cost-effective solution where advertisers can be sure that they are reaching their target audience, for a fraction of the cost.

Just like with the advent of search engine marketing in the mid-90s, the advertising landscape is entering yet another paradigm shift. As more ecosystems and platforms prioritise user privacy or create walled gardens that ringfence their users, advertisers must jump the sinking ship that is behavioural advertising and tap into the potential of contextual ads.