Privacy-first contextual advertising is enjoying a rebirth as data protection regulations and the shift to a cookieless digital landscape require a new approach to capturing interest and engaging audiences. But the benefits of contextual advertising go well beyond protecting user privacy. Contextual ads drive higher engagement and conversion rates.

Experts estimate global spending on contextual advertising will reach US$335.1 billion a year by 2026 and US$562.1 billion in 2030. Why is contextual advertising on the rise? The growing demand from consumers for more transparency and control over their data has led to regulations — such as the European Union’s General Data Protection Regulation, California Consumer Privacy Act, and Canada’s updated Personal Information Protection and Electronic Documents Act — that are putting pressure on browsers to stop using third-party cookies to track people’s online behaviours.

As the race to get rid of third-party cookies accelerates, privacy-first contextual advertising is experiencing a rebirth and return to prominence as one of the most effective tools to reach and engage audiences with meaningful, relevant content without following people around online. The foundation of digital marketing before the emergence of third-party cookies, contextual advertising uses the data brands own. This helps ensure brands are complying with privacy regulations and not misusing customer information. As well, contextual advertising gives brands more control over where their ads show up.

Understanding contextual advertising and why it matters is critical for marketers to ensure their campaigns reach their desired audiences with relevant content in a way that puts their privacy first and drives results.

Fast fact: Contextual ads are 50 per cent more likely to be clicked on than non-contextual ads and have a 30 per cent higher conversion rate than non-contextual ads.

What is contextual advertising?

Contextual advertising is placing ads on a web page that are relevant to its content. If you are visiting the sports section of a news site, you are probably going to find ads for athleticwear and fitness equipment. If you are reading a blog about starting a small business, it’s highly probable you will see ads for accounting software and HR tools.

Contextual advertising is fueled by contextual targeting. Ad networks such as Google Ads allow you to target specific audience segments based on keywords and website topics while providing ad content that’s optimized to meet the needs and reflect the interests of each of those audience segments.

Contextual versus behavioural advertising

Contextual advertising is often confused with behavioural advertising, but they are different. Contextual advertising is less personal than behavioural advertising and is not bound by the same privacy regulations. It is based on the audience’s environment and the content on the page where the ad is displayed. It uses context to target web pages and keywords so ads are presented to consumers whose interests make them more likely to engage.

Behavioural advertising is based on a user’s actions before they visit a web page. This includes their interactions on social channels, the links they clicked on and articles they read. Behavioural advertising displays relevant ads to an individual based on their past behaviours.

Fast fact: 79 per cent of consumers are more comfortable seeing contextual than behavioural ads and about 80 per cent are more open to seeing ads that do not require their data.

Many brands find contextual targeting is easier and more cost effective than behavioural advertising, which requires a lot of data, expensive software and human time and effort to draw out useful insights. Contextual targeting also allows you to reach a more receptive and relevant audience. Since contextual advertising is based on the content of a page, users who are interested in that content will have at least some interest in your ad and what you’re selling. 

Contextual targeting best practices

  • Consider which of the following targeting criteria to include: the device; real-time and anticipated weather; time of day; intent and behaviour based on predictive models; active or passive engagement; keywords; and sentiment or positive targeting based on the tone of the content being consumed.
  • Create separate ad groups for each different audience segment. This will help you reach people with more precisely targeted content.
  • Analyze data you’ve already collected about your target audience and conduct surveys on existing and potential customers. The more you know about your audience, the more you can ensure you are running your ads on the right pages at the right time.
  • Conduct competitor research. Where are they running their ads and what kinds of formats are they using? Put this information to work to improve your ads.

Benefits of contextual advertising

Contextual advertising:

  • Protects user privacy because it relies on first-party data brands already own, eliminating the need for extensive user data collection and storage and safeguarding user information and privacy.
  • Precisely targets audiences based on the content they are interacting with on a web page, app or social channel. This allows marketers to craft ads that reflect the interests and needs of their target audience, reaching them with the right message at a time when they are already engaging with similar content.
  • Aligns ad content with user intent, leading to higher engagement and conversion rates.
  • Creates a seamless more positive brand experience because ads are tailored to their environment and provide added value to users.
  • Incorporates artificial intelligence (AI) and other advanced technology to offer dynamic, signal-based ad inventory at scale.
  • Provides flexibility and adaptability. Contextual ad formats include editorial sponsorships, audio advertising, connected TV ads, out-of-home and digital-out-of-home advertising, cohort advertising (targeting groups of people who share similar characteristics, interests and/or experiences) and event advertising.
  • Ensures consistent, unified messaging across channels.
  • Leverages AI and machine learning to analyze user interactions and adapt campaigns in real-time.
  • Optimizes return on investment by focusing on high-intent users and quality interactions to maximize ad spending and cost efficiency.

The benefits of contextual advertising go well beyond protecting user privacy. Contextual ads drive higher engagement and conversion rates. Simply put, contextual advertising presents the right content at the right time using a privacy-by-design approach.