The term “Contextual advertising” – though sounds new to the ears – is one of the fastest growing forms of online advertising being leveraged by many companies of all sizes these days. In fact, the latest report from Research and Markets shows that the contextual advertising market is expected to be worth US$ 125.79 billion in 2018 and is likely to reach US$ 297.68 billion by 2023.
As a strategy with a major role in driving the whole digital advertising landscape, business owners should start thinking about how contextual advertising can impact the competition in the industry they are in. And more importantly, how they can take advantage of this rising opportunity to up their digital advertising game for the years to come.
Just like adopting any new business strategy, it’s best to know fully what contextual advertising is, how it functions, and the latest trends being used by the forward-thinking companies today. Read on as we discuss in this infographic all the things you should know about contextual advertising:
1. Contextual Advertising: Delivering the Right Ads at the Right Time
In order to understand what contextual advertising is, it is first important to understand the meaning of the term “context.”
Cambridge Dictionary defines context as “the situation within which something exists or happens, and that can help explain it.” Each content on the web has a different context, meaning they convey different messages which could have a direct impact on customer’s desire to buy a certain product or service.
Other external factors, such as the weather, can also influence the behavior of the customer, and therefore is also part of what context is all about when it comes to advertising.
Contextual advertising is a strategy founded on this idea and therefore has a primary goal of enticing customers to purchase by providing compelling ads – usually on relevant websites and mobile apps – that fit the context of the content that the customer is consuming at that very moment in time.
2. Elements of Contextual Advertising
As stated earlier, contextual advertising takes in a variety of elements in order to provide highly-personalized ads to the audience. This allows advertisers to be creative when creating contextual advertising campaigns.
For instance, a local fashion boutique who would want to sell winter jackets would need weather and location information, while consultant who would want to increase his blog readership would need to know the preferred channel of his/her target audience.
Here is the key element of contextual advertising:
- Time of the Day
- Preferred Channel
- Past Behavior
- Purchase history
3. Contextual Advertising: How It Works
The contextual advertising as we know it today is very different from how it used to be during the era of newspaper and magazine ads. In order to collect the aforementioned elements, advertisers these days use automated platforms called contextual targeting systems.
Clearcode.cc explains how contextual targeting systems work into two steps:
- A web crawler scans every URL of the website and categorizes content and placements.
- When a user visits a given page, the information about the URL is passed in the request to the ad server. The ad server can match with data collected by the crawler for the specific URL and can match relevant campaigns to topic categories, keywords, etc.
Publishers and advertisers bid for the use of keywords through an auction which is run a by a contextual advertising company.
Other examples of contextual advertising companies are Amazon Associates and Media.net which also function similarly to AdSense. Facebook Audience Network is also a type of contextual advertising system, though it only works if you have Facebook traffic from mobile users.
4. Cost of Contextual Advertising
The cost of doing contextual advertising can vary depending on different factors. One of such factors is the contextual advertising network you are using. For instance, you can expect to pay more in AdSense than in Yahoo! advertising network because the former have higher search volumes and higher competition.
Another factor that could influence your contextual advertising budget is the ad format you’ll use. Generally, you will need to pay more for in-text video ad than banner ads.
Last but not the least is the keywords you are targeting. Generally, you will need to pay more for in-text video ad than banner ads. Some market can have different levels of competition which causes the bidding price of ads to vary. For example, there is aggressive competition for insurance, legal, and consulting industries and they must pay top-dollar to be placed on the searches.
5. Benefits of Contextual Advertising
The first and most significant benefit of using this strategy is that enables business owners to promote their product and services to the right person and at the right time. According to Databilities, contextual advertising can have “almost twice the click-through rate of the cookie-based targeting used in behavioral campaigns.”
This type of online targeting is also cheaper to execute since it does not solely rely on the user’s location, GPS data, or the campaign’s size. Rather, it utilizes contents that are relevant to the ads, so publishers have a higher chance of attracting higher-quality leads with less cost.
Lastly, contextual advertising can help advertisers to promote without the risk of non-compliance with GDPR. Since this strategy only uses information about the website and specific page (content, keywords, URL), it is considered as the most effective digital advertising solution that companies can use in the age of increased data protection and privacy regulations.
Overall, like any other digital advertising strategies, contextual advertising isn’t a magic pill that can quickly provide you with the results you want. But with the right planning and execution, you will surely be able to integrate your ad campaigns to relevant channels and platforms and enjoy better ROI for your digital ad spend in the long run.
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