For years, there has been a debate around whether contextual targeting or behavioral targeting is more effective for digital marketing campaigns. Each is a method that marketers use to define which audiences view their ads. Behavioral targeting emerged after contextual, and, at the time, some predicted that it was going to replace the old way of advertising.
However, others believed that to reach your target audience you need a combination of both approaches. For a while, behavioral targeting was the preferred way to set up digital ads, but contextual targeting is seeing a resurgence.
A recent report forecasted that the global contextual advertising market will be $335.1 billion in 2026. What is driving this renewed popularity? Primarily, third-party tracking and privacy regulations are making behavioral targeting hard to do. In fact, Google will phase out third-party cookies in Chrome by late 2023.
Many businesses that relied on third-party cookies for marketing have been trying to adapt to a future without them. As a result, contextual targeting is getting more attention, but what is it exactly? What method is better for your marketing—contextual or behavioral targeting? This guide will cover all that and more.
Table of contents
- What is contextual targeting?
- Contextual vs. behavioral targeting
- Contextual advertising examples
- How does contextual targeting work?
- Why is contextual targeting popular again?
What is contextual targeting?
Contextual targeting is a method used to place advertisements on a website based on that site’s content. When done well, contextual advertisements will appear alongside content that is relevant to your product or service. In addition, the people that view the site’s content will also be your target audience. For example, a tech site could display contextual ads for laptops, mobile phones, or headsets.
Contextual vs. behavioral targeting
In order to choose whether to use contextual vs. behavioral targeting, you first need to know the key differences between them.
With contextual targeting, advertisers target audiences based on shared interests. If you view an ad for accounting software on a website that helps business owners manage their money, it’s likely contextual.
What is behavioral targeting?
In behavioral targeting, advertisers target audiences based on what they did before they came to the website. In other words, you are targeting ads based on a person’s behavior.
A prime example is when you have visited a website or clicked on a company’s ad before. These are also known as retargeting ads. Based on your past behaviors, you’ll likely be hit with display ads from that same company.
However, it is not possible for advertisers to track this without third-party cookies. In 2023, Google will phase out third-party cookies. So, you won’t be able to track a person’s behavior across other sites, a key component of retargeting ads and behavioral targeting.
For now, sites often show digital ads that have a mix of contextual and behavioral targeting. Sometimes, you see an ad because you’ve viewed the product or service before, which is behavioral targeting. Other times, an ad appears simply because it is relevant to the site, which is contextual. One web page can have many ads that fall into either category.
Contextual advertising examples
Sometimes to really understand the differences between these two advertising methods, you need to visualize them. Below we’ve included a few examples of contextual advertising and how they appear on websites.
1. Shape and running shoes
A popular site, Shape, writes blogs about wellness and fitness. If you click on a few articles, you’ll start to notice the display ads often relate to the content on the page.
For example, the publication has several articles about running. It’s no coincidence that ads for running shoes and apparel appear on those pages. Right beside this article about running playlists is an ad for Hoka, a company that sells many types of running shoes.
In another article on the benefits of running, notice this Nike ad in the corner.
Both are placed on these pages because of contextual targeting. The content is about running, and both companies sell running shoes and apparel.
2. Stack Overflow and Developer Job Postings
Stack Overflow, for example, is a programming-related Q&A site. This makes it a perfect location for firms to post job adverts for developers. Before visitors click into a single discussion, the site displays a combination of local employment listings and corporate promotions.
However, once they enter a specific forum discussion, they will get highly tailored employment adverts depending on what they are reading.
3. Drinks52 and Maker’s Mark
Food52, for example, is a website that provides recipes and culinary tips. They also produce Drinks52, a subcategory of the site that focuses exclusively on drink recipes. Notice the banner ad on the top of the site? Again, it’s no surprise that the bourbon whiskey brand Maker’s Mark appears on a site with drink recipes—it’s intentional and contextual targeting.
Because Maker’s Mark has such a prime spot on Drinks52, it is likely that the two brands also had an ad agreement or placed the ad using a private marketplace (PMP). A PMP is an invitation-only private marketplace where publishers offer prime inventory to a small number of advertisers that pay top dollar for placement.
Not only does the ad appear at the top, but as you scroll down, another ad for Maker’s Mark appears. Clicking around the site, you see other instances of the ad.
These examples primarily include display ads, but contextual targeting can be used on a number of channels—connected TV, mobile apps, YouTube, and more. The key is that contextual targeting doesn’t rely on third-party cookies but on similar audiences, interests, and content.
How does contextual targeting work?
Businesses and marketers typically use a demand-side platform (DSP) or an ad network to set up and place contextual ads. The exact process may differ depending on the platform you are using, but here’s how it works on the Google Display Network.
1. Choose your topics and keywords
For contextual marketing to work, you need to place your ads on relevant websites. To do this, you’ll choose from topics and keywords, and the platform will position your ad on websites that satisfy your criteria.
Topics are broad categories under which your campaign may fit, such as fashion, travel, and leisure. By choosing a category, your ad will be qualified to appear on relevant websites throughout the Google Display Network. Categories might start broad, like “Auto,” and then narrow down to subcategories like “SUVs and Trucks,” or “Motorcycles”.
Keywords are precise subtopics and search terms that relate to your specific product or service like “trail running shoes” or “travel yoga mats”. If you sell travel accessories, you might include keywords like, “travel bags for women” or “travel toiletry bag”.
Google recommends that you use 5-50 keywords, including negative keywords, for each campaign. Negative keywords are terms that you want to exclude, so you don’t appear on sites that are unrelated, but may sound similar. For example, Google uses eyeglasses as an example. The term “glasses” is similar, but you don’t want ads around “wine glasses”, because it is a different product.
2. Google analyzes the sites in its network.
When you select your targeting parameters, Google will search its display network for sites that have the most relevant content. It evaluates content, page, link structure, language, and keywords in addition to targeting.
3. Your ad is placed on multiple sites.
Finally, the display network chooses sites that fit your ad using the information above. Once you run contextual ads, you may notice them on various sites. Measuring the performance is similar to other types of digital ads. For example, you’ll want to keep an eye on your cost-per-click, conversion rates, and overall return on investment.
Why contextual targeting works
A recent study from Dentsu Aegis Network and GumGum suggests that contextual targeting is more effective than behavioral targeting. Ads that used contextual targeting had a 48% lower cost-per-click (CPC), and a 36% lower cost-per-thousand impression (CPM).
In a separate study, GumGum and SPARK Neuro investigated how contextual relevance influences consumers. They discovered that contextually relevant ads resulted in 2.2 times better ad recall, and 10% more engagement than the overall article content. Additionally, there was a statistically significant increase in purchase intent.
At Goodway, we have firsthand experience with contextual targeting. We were awarded the Oracle Markie Award for a campaign that increased revenue for an automotive client by 194%. With contextual advertising, our client could reach in-market audiences and those who had opted out of cookies.
Why is contextual targeting popular again?
Matching the content of a webpage to an ad is helpful because you can reach the right consumers at the right time without compromising their privacy. Here are five reasons why contextual targeting is trendy again.
1. It follows rules and regulations.
Contextual targeting uses site or app content to target an ad. It does not track or target users directly. Because of this, it operates outside the General Data Protection Regulation (GDPR) and other privacy legislation and browser-specific constraints, making it a viable targeting method.
Unlike many currently proposed cookie-less alternatives, contextual is a tactic you can use in nearly every programmatic ad channel. It maintains user privacy and is often is more cost-effective compared to the price of third-party audience data.
2. It makes sense to your audience.
Aligning brand messaging with content can drive more action. If users see relevant ads next to the content they’re reading, listening to, or watching, the advertising feels natural; it fits in. Your ads may be more interesting and impactful simply because users come across them while they’re already in the right mindset and in the right place at the right time.
3. You can reach broad and niche audiences.
Larger audience pools attract new customers. You can cast a larger net right away and engage qualified consumers as they progress through the sales funnel.
Contextual Targeting can also help you find hard-to-reach audiences. For example, let’s say you are running connected TV ads, and your target demographic includes Spanish speakers.
You can use automatic content recognition (ACR), which is a way to identify what content people are viewing on their screens. With ACR, you can identify audiences that watch Spanish-language content, and set up contextual targeting in that way. It is one way to reach niche audiences without having to rely on third-party cookies.
4. It reduces ad fatigue.
When people see ads so often, they get bored and eventually may tune them out. It is known as ad fatigue, and contextual targeting can help reduce it. With it, you can affordably get in front of a ton of people at one time. When done well, you reach buyers that are most likely to purchase, which overall reduces how often your ads need to be viewed for a conversion to happen.
Contextual targeting on the web works the same way in real life. A sunscreen manufacturer can pay for a retailer’s brick-and-mortar store to display its sunscreen in an aisle end cap next to the store’s summer section.
For example, the sunscreen display may show up next to life jackets, kayaks, pool floats, and swimwear. It is a natural fit because the products go together. Interested, qualified shoppers are already looking to buy related items for the beach or pool and may be ready to take that assumed next possible step, buying sunscreen. Contextual targeting is one smart way to boost sales online and offline.
5. You have more control.
When you use contextual targeting, you have more control over where ads appear. For example, you can make a list of sites you’d like your ads to appear.
You can utilize a keyword scraping tool to extract the keywords from each page. Choose the keywords that make the most sense for your product or service from the list, then use them as a base for your campaign.
You have complete control over your keywords and can quickly revise them as needed. Utilize pre-built contextual segments or create your own. You can even use a combination of contextual and behavioral targeting tactics.
Either way, make sure you’re ready to go cookie-free. Contact us for a no-obligation consultation and a roadmap to a more privacy-conscious future. Explore our free cookie-less advertising resources, including white papers, films, blogs, and infographics, all available in our Identity Resource Hub.