Contextual Advertising: How Context-Based Advertising Works

In this article, we take a closer look at Contextual Advertising. We will discuss the advantages of this advertising form and highlight some providers and opportunities that are particularly suitable for it.

If you missed the previous parts of the series, feel free to check them out. There, we talk about why it is important to define the right corporate goals and the benefits of broadening your online marketing channels.

Contextual Advertising

With stricter data protection laws and the resultant increasing targeting restrictions, as well as the trend of many marketing platforms to automate and broaden campaign distribution, it becomes even more crucial to reach the right target audience at the right time and to minimize scatter losses as effectively as possible. But what are the options for targeting one's audience more effectively?

This is where Contextual Advertising comes into play. In this form of advertising, ads are not displayed based on users' demographic data, preferences, and interests, but the algorithm primarily focuses on the current context of the page - which gives it the name “Contextual” Advertising.

This means that websites are categorized based on various factors. These could be, for example:

• Product categories

• Images

• Text passages

• Specific keywords in the running text.

After a successful categorization, ads that match the page content are played. In the example above, we see a NIKE advertisement placed in an article about the major running shoe test of 2024. It can be assumed that people interested in this article are also more likely to be interested in purchasing new running shoes in the near future. Thus, there is a match between the advertised ad and the purchase intention. The fact that the ad often blends seamlessly into the actual content of the website additionally reduces friction and enhances the coherence between advertising and content. Numerous studies have already shown that this positively impacts user perception and can increase purchase readiness.

As mentioned earlier, Contextual Advertising helps to create as much relevance as possible for the target group while impacting the user experience minimally, and ideally even improving it. Additionally, it offers a good opportunity to position your brand in a targeted and brand-safe manner, thus avoiding unnecessary scatter losses. Since it completely dispenses with the use of cookies, this form of advertising is significantly more future-proof and robust against the increasing restrictions on third-party cookies.

The question of the right channel for Contextual Advertising often cannot be answered universally but depends on many factors. On the one hand, there are the classic providers such as Google Ads or Microsoft Advertising, which enable contextual advertising. Here, targeting by keywords or specific placements is available. From experience, Google's keywords are often interpreted very “broadly,” which can make this type of targeting quite inaccurate. Advertising via placements works better. For example, offering moving services could achieve above-average campaign results on sites dealing with apartment searches, house buying, and similar topics.

Other providers have almost exclusively specialized in Contextual Advertising. The most well-known among them are probably Criteo and GumGum, which have developed more advanced algorithms for website categorization, thus ensuring a significantly better match between content and ads. This is particularly worthwhile if the product range is quite broad.

But what options are there if we offer a very “niche” service? Reddit offers the possibility, for example, of reaching people who have viewed or interacted with specific subreddits. Since Reddit is generally a platform with relatively higher engagement rates, this can positively affect ad perception and interaction. Although it's not possible to exclusively target specific subreddits here, higher relevance for the target group is still given by the fact that interaction with a subreddit already assumes a higher interest.

Companies that sell tech products or gaming accessories could also find a promising channel in Twitch. Originally started as a purely gaming platform, Twitch has significantly expanded its offerings, but for many tech-savvy individuals, it remains a very relevant channel in the entertainment routine. And who hasn’t wanted a setup like their favorite streamer?

Often unjustly underestimated, (Digital) Out of Home Advertising, also known as (D)OOH, is still often treated very negligently. What used to be indispensable in the form of billboard advertising in any marketing mix has lost significant popularity since the introduction of digital marketing, but has been on the rise again in recent years.

More and more companies are recognizing the advantages of well-placed outdoor advertising, especially since the introduction of digital screens, which opens up a whole new range of possibilities. Suddenly, it is possible to advertise very dynamically at specific locations or at relevant times, reaching exactly the right target group at that moment. McDonald's demonstrated impressively a few years ago that this approach can work.

Thank you very much for your attention! Hopefully, it was informative, and you could take something away from it! In the fourth part of our miniseries, we will take a closer look at competitive analysis.

Have we forgotten something important, or do you still have questions on the topic? Feel free to write it in the comments!

If you want to get in touch with us directly, feel free to visit our contact form. We help you to position your brand even more effectively with Contextual Advertising so that you can get the most out of your online marketing strategy - simply and without obligation!