Why is testing contextual advertising essential now?

Over the past few years, signal loss (for example, due to Apple’s App Tracking Transparency) has made it essential for advertisers to seek methods other than behavioral targeting to ensure media campaigns deliver success.

With this in mind, Adrienne Rice, Performance Media Director, recently joined Kochava, DataSeat, and GumGum to discuss the power of contextual advertising in the context of how the advertising industry is moving towards privacy-safe growth.

The full webinar is available here, and this is a summary of the discussion. Please get in touch with us if you have questions or want to speak to Adrienne about your contextual advertising needs.

What is the difference between contextual and behavioral targeting?

Contextual advertising targets audiences based on the content of the site they are visiting. For example, advertisers promoting kitchen utensils or groceries may target people visiting a recipe website.

On the other hand, behavioral targeting relies on data signals from devices, such as app use, purchase intent, browsing data, time spent within apps, etc., to create personas of individuals or groups of people. For example, someone interested in dating may have dating apps on their phone and, therefore, be a target for other dating apps. 

Of course, this is not a new concept; contextual targeting is one of the older forms of advertising. After all, traditional print advertising relies on contextual targeting. For example, a car manufacturer would most likely be interested in buying media space within a car magazine to target potential buyers. 

How does contextual advertising work?

Contextual targeting looks for signals, such as publisher apps, country, geo, language, etc., that indicate what the customer is looking for and what the advertiser should bid on. Aside from obvious categories, advertisers can identify, e.g., car manufacturers advertising on car sites. It is worth teasing out less obvious opportunities for targeting. For example, beauty products that are suitable for pregnant women could run contextual advertising on sites where expecting mothers are spending time or visiting. Advertisers must understand the needs and motivations of their audiences and match creative with the audience’s needs.

Why is contextual advertising becoming more important than ever?

Since 2018, there has been an increasing focus on providing consumers with privacy-safe advertising, thanks to GDPR bringing about a change in direction for the advertising industry. This new legislation limited how users can be tracked and emphasized the importance of getting consent for tracking, for example, via cookies. The next major leap was brought about a few years later when Apple introduced ATT and SKAN.

These changes are good for consumers who can now opt out of being targeted by advertisers, but they have also meant a significant change to advertising, which is set to continue. As behavioral signals are removed, the pool of information advertisers can rely on to target their ideal customers is reduced. Contextual targeting is, therefore, becoming more important than ever.

The impact will be significant. Yes, cookie deprecation has been delayed until 2025, but it will eventually happen. Currently, approximately 33% of Identifiers are blocked on iOS, Safari, and Firefox (they already don’t have cookies). As of the start of 2024, 1% of cookies were removed on Chrome as Google rolled out testing. Up to 80% of users will become unidentifiable once cookies are removed, so advertisers need to ensure they have future-proofed measurement and are using this time to test while the signals are completely removed. 

Moving to ‘mindset-targeting’

It is important to consider a ‘mindset’ approach, which requires a deep understanding of the target customer’s wants and needs. People have different mindsets depending on what they are doing. For example, playing a game online vs. shopping vs. working requires a different approach to ensure advertising reaches them when they are receptive, and in the right mindset. Targeting someone with an ad for a game at 9 a.m. on a Monday may not be as sticky as targeting the same person on a weekend. 

It is important to understand the nuance of tonality and emotion, the publication’s tone, where the customer spends time, what creative is working for them based on the environment, etc. All of this requires time, and building enough time into testing is essential to ensure contextual targeting has time to succeed.

Leveraging AI and Language Models to understand semantics for keyword targeting is becoming increasingly important. Enabling scale could move advertisers beyond sector-specific contextual placements and find success in other contexts.

What are the biggest challenges for contextual advertising?

Targeting accuracy

There can be some wastage, so it is recommended to take a rigorous test-and-learn approach. A contextual approach takes time for campaigns to run and gather results and time to refine tactics, whereas behavioral can be optimized more quickly in some cases. 

Transparency 

With transparency comes improved brand safety. Thanks to SKAN and Privacy Sandbox, a more deterministic approach is on the way for contextual tactics.

Connected TV as a specific challenge and channel

A Private Market Place (PMP) approach to CTV provides scale and provides better signals for contextual targeting. This can lead to a limited inventory; however, as demand grows, the supply should also be able to offer contextual content at a larger scale in the future.

Contextual Targeting Tips

• If you are not doing so already, test SKAN!
• In fact, test, test, test. Each advertiser requires a different channel mix, and it takes time and patience to build up learnings. 
• Precision testing is time-consuming but will provide better results in the long run.
• Look for parallel contextual placements, such as natural beauty placements, that might appeal to pregnant women.
• Know your audience and do your research. Have a deep understanding of their needs and habits, e.g., where they shop, where they spend time on different days/times, etc. 
• Show creative content related to the context, e.g., playable ads in gaming contexts.
• Budgets can take longer to reach KPIs than behavioral ones. Be patient and align stakeholders to test and learn. Ensure there is enough test budget to build an audience pool for learning. Also, it is important to have enough budget to overcome SKAN thresholds.

If you have any questions about contextual advertising or any other performance media to grow your brand contact us.