What is Contextual Targeting?

by | Oct 11, 2019 | Guides

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When I set out to write this article I thought it’d be easy. After all, contextual targeting can be defined in one sentence, but that’s not the whole story.

To fully understand its uses, benefits and impact, we need to explore a lot of other subjects. 

This article will take you on a brief tour of the state of advertising: from targeting strategies, to brand safety, to cookies and even some recent international legislation.

Let’s begin.

 

How to define contextual targeting:

In digital advertising, there are several ways of picking where your ads go. Contextual targeting is the strategy of placing ads based on the content it will appear within (i.e., context).

If you’ve ever searched for something in Google and seen an ad at the top of the results, you’ve seen contextual targeting.

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In practice, these strategies are often used together for the most effective campaigns.

Curated white and blacklists can help protect an audience targeting campaign from some of these pitfalls and retargeting audiences are often used in conjunction with contextual targeting to improve performance.

These examples are meant to highlight their differences.

Why use contextual targeting?

It may seem like directly identifying potential customers is the most efficient way to drive conversions, but it’s not quite that simple.

Imagine you own a restaurant and you decide to run a digital ad campaign to try and attract new customers. Creating a targeting audience for this purpose may be trickier than it seems.

There are some obvious attributes you’d like to focus on, such as location. A restaurant owner in Denver, CO probably wouldn’t want to show ads in Washington D.C.

What about other attributes like gender, income or age? That may be nice to know, but none of that is what you’d really care about. 

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The most important attribute would be if a user was hungry.

How could you possibly tell if a user is hungry? One solution would be contextual targeting.  

Instead of trying to infer possible customers from search history you could instead focus on users searching for places to eat in your area.

Sometimes context is more important than even the most sophisticated tracking.

This is why Paid Search advertising is so powerful. It matches advertisers with users who are actively looking for their products (or something related).

Instead of trying to convince people to purchase a product, contextual targeting allows you to focus on those who already show some interest.

According to an article from Investopedia, Google makes most of its revenue off Paid Search and Google makes A LOT of money.

It’s fascinating to think that Google still makes most of its money the same way it has since the beginning.

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The primary source for that article is the Alphabet earnings report from 2017 which shows that the majority of Google’s revenue comes from advertising, but the report doesn’t break out the different platforms Google owns.

It’s possible this figure includes sources other than Google Ads (formerly AdWords) such as Display & Video 360 and/or Campaign Manager.

Anecdotally we’ve heard that >80% of Google’s revenue comes from Google Ads, so I’m inclined to believe the claim from investopedia, but I thought this was worth pointing out just in case.

We see this in our own data with Cost Per Acquisition (CPA). Generally, we regard CPA as one of the toughest performance metrics in a campaign. An acquisition can be nearly anything; a specific button click, a form-fill or even a product purchase. 

I reached out to Mike Hofmaier, our resident Google Ads expert, to ask him how CPAs in Google Ads compares to other platforms.

“Of course there are huge ranges, and in some cases Google Ads isn’t as good — for example, it can be terrible at creating demand. If you can layer on more contextual or better audiences (especially remarketing) to display, that will narrow things. But I’ve seen lots of cases where Paid Search gets 3-10x better CPA than Display & Video 360 thanks in large part to its contextual nature.” – Mike Hofmaier, Google Ads Expert

 

Why should you care about contextual targeting?

Contextual targeting’s focus on the surrounding content of an ad helps address a problem that’s received a lot of attention recently: 

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Brand Safety

For the uninitiated, brand safety is a blanket term for protecting a brand (name, logos, marketing material, etc…) from being associated with unwanted content.

Generally, brands don’t want to advertise on sites with strong political opinions, violence or graphic content.

This is easy to address and keep track of if you’re actively monitoring where your ads run. However, if you blindly trust audience or behavioral targeting who knows what content your ad will appear alongside.

This may sound hyperbolic, but brand safety is a big deal. For a good example, we can turn to everyone’s favorite cat-video-sharing platform: YouTube.

YouTube has had a lot of trouble with this in the last few years eventually leading to what they called an Ad-pocalypse.

There were a lot of factors that lead up to this (and most are outside the scope of this article), but some of the earliest issues came when high profile creators posted offensive videos or opinions.

For some brands, advertising there became a liability and they responded quickly.

Many brands pulled their ad dollars not just from the offending channels, but from YouTube entirely. The platform itself suffered from being unable to keep brands safe.

This is an extreme example, but it serves as a cautionary tale: never disregard Brand Safety. Even if you’re using a white-list/black-list with audience targeting, it doesn’t guarantee your ads won’t show up alongside damaging content.  

You need to be proactive in evaluating the placements themselves.  

If you’re still not convinced there is one more BIG reason you should be aware of contextual targeting:

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Cookies

You’ve probably at least heard of cookies before, but nailing down a precise definition can be tricky.  Put simply, cookies are data files stored on your browser created by sites you visit (we touch a bit on it here).

What do these data files contain? Just about any information the site wants to keep track of: login information, user preferences, settings, etc.

This is how you’re able to visit a website without logging in each time. The site has a cookie that remembers you’re logged in. However, much like the effects of their edible counterparts on my waistline, digital cookies carry significant consequences.

Cookies can be used to track a user across the web. Even if you’re okay with being tracked for marketing purposes, and not everyone is, there are legitimate privacy concerns regarding who can read the information in cookies from websites you visit.

The details of which require discussing first vs. third party cookies which, despite the name, aren’t as fun as a cookie party.

But we’ll save that for a future article. Suffice to say there are real concerns and actions are already being taken.

Over the last few years you may have noticed websites displaying banner notifications informing you of their cookie use asking for your consent.

This is in response to the European Union’s 2016 privacy legislation General Data Protection Regulation. It covers A LOT, but the relevant aspect to this article is how it handles cookies.

GDPR only allows websites to track users if they consent to cookie usage. So many sites simply ask everyone to consent instead of trying to figure out who’s from the EU and who’s not.

Europe isn’t alone. California is rolling out its own privacy legislation called the California Consumer Privacy Act (CCPA).

Even big tech companies are taking a stand. Apple added ITP (Intelligent Tracking Prevention) to its Safari browser in 2017 with serious limitations on cookies, and each iteration has only gotten more strict. Firefox has implemented similar measures with its browser.

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You may be thinking “Who even uses Safari? Isn’t everyone using Chrome?” 

That may be true for worldwide or desktop traffic, but there are more Safari users than you may realize.

Safari accounts for the MAJORITY (>50%) of mobile traffic in the US according to this article.

How do cookies relate to contextual targeting?

Audience targeting is built off cookies and, as you can imagine, these cookie limitations are bad news for anyone who relies on it.

While some of today’s contextual targeting also uses cookies, it doesn’t have to.

The content of a website can be determined without any information on the person visiting it.

However, you simply can’t collect browsing data on a user without being able to track them across multiple sites.

We won’t see the full effect of these changes overnight, but if you’re in the digital advertising industry you should already be thinking about a very different future for cookies.

Is contextual targeting the complete solution? Probably not, but I think it will gain more attention in the coming months.

Contextual targeting has some serious benefits: 

  • low CPAs
  • more attention to brand safety 
  • the ability to operate without cookies.

I hope you enjoyed learning about Contextual Targeting, I suspect you’ll be hearing a lot more about it and soon.

Further reading:

Great article about Brand Safety with scary numbers: Brand Safety Matters: A New Survey Shows the Cost of Fails


More information GDPR and how it affects marketing: How GDPR Affected Marketers in Its First Year

Must read if you’re running mobile campaigns and wondering how ITP will affect your performance: ITP 2.2 – How Apple’s Intelligent Tracking Prevention Version 2.2 Impacts Marketers

Note: If you want to use the calculations from this article to estimate the effect of ITP on your own campaigns I would recommend using a much higher number for % of users with ITP.

Apple is famous for its adoption rate of new software versions. Since iOS 13 (released a few weeks ago) has ITP built in you can safely assume >80% of iOS users will have ITP by this time next year.

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