5 min read

What is Contextual Targeting? The Definitive 2023 Guide

Sarah Wheeler
Sarah Wheeler
Updated on
June 15, 2022
Intro to Ad Serving

Privacy laws are increasingly limiting publishers’ use of user data. So, to play it safe, more ad businesses are relying on contextual targeting. Without personal information, contextual targeting is a key way to respect user privacy while also monetizing your site and app.

This article explains what contextual targeting is, how it works, and use cases to try.

What is contextual targeting?

Contextual targeting involves displaying ads based on the ad slot’s surrounding content. Within this, there are different levels of granularity:

  1. Publisher’s industry: Say you’re an advertiser working with CNN.com. You know that your ad will be appearing alongside news articles. If your target buyer is one that reads the news, CNN may be a better spot to reach them than, say, broad online communities like Quora or Snapchat.
  2. Subcategory / page topic: Even within a single publisher like CNN, you could employ contextual targeting by buying ads just on certain subpages like “cnn.com/politics” or “cnn.com/health.” If you’re advertising a new yoga mat, for instance, you may be willing to pay more to buy ad slots on the health page versus the politics one.
  3. Keywords in surrounding content: Getting even more complex, you may work with CNN to advertise only in articles that mention the word “yoga,” regardless of whether this article is classified as “health” or “business” or “politics.”

Contextual targeting is a great way for publishers to obtain or retain advertisers, who are constantly looking for ways to reach their target audience at the right times. For a yoga mat advertiser, a user reading a yoga-related article likely is more valuable than someone reading about overseas politics. And if the ad slot has more value, they will pay more to buy it, allowing you to charge higher rates for such targeting options.

One word of caution: contextual targeting can go wrong. Publishers have gone under fire for unfortunate content and ad pairings. This news publisher, for example, faced backlash when a story about bullies pouring bleach on a child simultaneously displayed an ad for bleach. This can be mitigated by implementing strict standards around what type of content can be targeted.

example of improper contextual targeting

What are examples of contextual targeting?

Many companies employ contextual targeting, including:

  1. Walmart: As users browse by categories, Walmart shows context-based banners.

Walmart example

  1. Amazon: Amazon targets standard banners and sponsored listings based on surrounding content.

Amazon example

  1. Healthily: These text ads appear as users browse Healthily and employ contextual targeting so advertisers can buy ads based on what content the user is searching for.
  1. YouTube: YouTube specializes in showing relevant ads based on video content. In this example, when looking for writing tips, YouTube shows Grammarly, a writing service, ads.

Youtube example

  1. Pinterest: Within user feeds, Pinterest shows ads similar to native content.

Pinterest example

  1. Atom Tickets: Movie studios work with Atom Tickets to show ads in the homepage carousel because they know they are reaching potential movie purchasers.

Isn’t that like behavioral targeting?

Though these seem similar, contextual and behavioral targeting do work differently. While contextual targeting looks at the surrounding content at that moment, behavioral targeting incorporates users’ past actions.

Let’s say I go to Amazon and browse outdoor cooking equipment, but decide not to make a purchase. Amazon nonetheless stores this data, and when I return to the site, they may show me ads for grills. Behavioral targeting, therefore, requires the use of personally identified information (PII), as the publisher needs to store one’s browsing history in order to then use it in the future.

Amazon grills behavioral targeting

Contextual targeting, however, isn’t based on previous behavior, but on the content that currently surrounds the ad. If I visit Amazon as a first-time user, for instance, and go to their “Charcoal Grills” department page, I will likely see ads for grills. Such targeting is anonymous and doesn’t involve PII, yet still reaches users in-market for a grill.

Amazon grills contextual targeting

Though the difference is subtle, it’s important as you debate the tradeoffs between valuable targeting options and user privacy.

Why are companies using contextual targeting?

Contextual targeting has been around since the beginning of advertising. When an advertiser works directly with a publisher, they have a good sense of the audience they are reaching based on the publisher’s industry. And Google has a ton of targeting options for reaching specific YouTube channels, websites, and more, based on contextual keywords.

But contextual targeting is having a resurgence for a couple of reasons:

  1. Chrome’s deprecation of third-party cookies - Programmatic publishers and advertisers alike know that user targeting will be hindered when Chrome ends third-party cookies in 2023. There will be less user-level data for targeting, which will prompt publishers and advertisers to find other targeting means (see: contextual targeting).
  2. Privacy - Instead of tracking user behavior, which can be difficult due to privacy laws, companies can target based on their own content, independent of user information. With many privacy laws on the books - GDPR, CCPA, LGPD, etc. (and more on the way) - ad publishers are understandably becoming hesitant to use even first-party data for ad targeting.
  3. Ease - Publishers building their own walled ad gardens quickly discover that it’s difficult to offer a full suite of targeting options, including first-party, intent, contextual, geo, and more. Many companies launching ad products choose to avoid the complicated process of collecting, storing, and activating user data, and instead opt for something simpler (but still valuable), like contextual targeting.

How do I get started?

Looking for a way to easily incorporate contextual targeting into your ad platform? Kevel’s ad APIs provide the tools you need to monetize with contextual targeting, without having to spend months building the feature yourself. To learn more, contact us today.

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