May 7, 2024 ↘︎

Why contextual targeting is the future of digital advertising

The web is a very different place now than it was 30 years ago when I first went online.

Google hadn’t been founded, Mark Zuckerberg was only 10, and Digital Display Ads (or “banner ads” as we called them back then) had only just been invented.

To place an ad, you’d contact the website directly, negotiate a deal, and send them the ad file.

The first known banner ad was placed on by AT&T in October 1994. They paid US$30,000 for a three-month placement and achieved a staggering 44 per cent click-through rate!

As demand for online advertising increased, algorithms were developed to match ads with relevant website content. Unfortunately, the technology was limited, often leading to unfortunate placements.

Fast forward to today, and our every online move is tracked, sometimes resulting in irrelevant ads following us around. Simultaneously, the web has become more concentrated. Walled gardens dominate, and users often confine their interaction with the internet to a handful of apps on their phones.

This concentration of control has eroded what the internet was designed for. As author Cory Doctorow observes, platforms often shift over time, prioritising their interests over users and advertisers. He coined the term ‘enshittification’ to describe this shift.

The prioritisation of engagement over accuracy on social media, algorithms amplifying divisive content, and data monetisation at the cost of privacy are all examples of this trend.

As marketers, we are caught in this dynamic, relying on platforms while increasingly losing control over our audience access and data.

The ‘enshittification’ of platforms leads to less control, increases costs, and limits the ability to reach the right audiences.

As marketers, we need to find customers, but platforms increasingly control that access. If Meta shut down Facebook tomorrow, many of us would lose years of work and our primary means of reaching customers.

On top of this, the impending death of third-party cookies takes away our ability to retarget with ads.

With that in mind, how do we reach those with potential interest in our products?

Google Topics: A flawed solution

With the phasing out of third-party cookies, Google is proposing a solution called Topics. This system analyses browsing history to categorise user interests. However, it has several problems:

  • Limited interests: Most people have a vast range of interests however Topics only allows for a handful of them per user which restricts targeting accuracy.
  • Broad categories: Websites get to choose an overall category, making targeted product placement difficult.
  • Chrome-specific: Other browsers aren’t adopting it, limiting its reach.

Back to the basics: The power of contextual targeting

While it seems like a step backward, contextual targeting holds several advantages in the evolving advertising landscape:

Relevance: Ads displayed in a relevant context are more likely to resonate with users. Imagine a user reading an article about the latest fitness trackers. By placing your ad for a new fitness tracker model in this context, you’re reaching someone who is already actively engaged in their health and well-being. This increases the chances of them being receptive to your message compared to a generic ad displayed on a random website.

Cost-efficiency: Targeted placements potentially reduce the number of impressions needed to achieve a conversion. This means you’re not paying to show your ad to users who have no interest in what you’re offering. Imagine trying to sell high-end running shoes to someone who looks at cat memes all day. With contextual targeting, you can focus your budget on placements that reach users who are actively researching running shoes, browsing reviews of different brands, or reading training tips. This allows you to maximise your return on ad spend (ROAS) and stretch your marketing budget further.

Privacy compliance: Contextual targeting avoids privacy concerns associated with user-specific tracking. Unlike methods that rely on cookies or device IDs, contextual targeting focuses on the content of the webpage where your ad is displayed. This means you’re not building a profile of individual users and their browsing habits. This is becoming increasingly important as privacy regulations around the world become more stringent. By adhering to these regulations, you can avoid hefty fines and ensure your brand is seen as trustworthy and privacy-conscious.

So how can you put this into action?

Start by asking your media agency to find websites with relevant content and place your ads there.

Contextual targeting offers a powerful and privacy-conscious way to navigate the changing landscape of online advertising.

Develop a deep understanding of your target audience and the websites they frequent. Research industry publications, blogs, and forums relevant to your niche.

Look for websites with high-quality content that aligns with your brand message. Partner with these websites to explore advertising opportunities that go beyond banner ads. Consider native advertising formats that seamlessly blend with the website’s content, sponsored content placements like product reviews or testimonials, or even webinars and podcasts co-hosted with the website owner.

By taking a proactive approach to contextual targeting, you can develop long-term relationships with valuable publishers and reach your target audience in a way that is both relevant and respectful of their privacy.

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