What is 'Contextual Advertising'?

Contextual advertising is an automated process where a promotional message is matched to relevant digital content. The algorithms underpinning contextual advertising select the advertisements based on keywords and other metadata included in the content. The resulting advertisement is relevant and targeted, which encourages users to click through the ad. This click-through activity creates revenue for the publisher of the content and more traffic for the advertiser.

BREAKING DOWN 'Contextual Advertising'

Contextual advertising represents a large portion of internet advertising. The largest player in contextual advertising is, of course, Google (now Alphabet Inc) with its AdSense platform. AdSense allows a publisher to insert code throughout a site where ads are served by AdSense. The site is crawled for keywords and context and relevant ads are placed. The site owner can customize certain features, such as where and how ads are displayed, and the types of products or services advertised.

The Advantages of Contextual Advertising

The automation of the ad serving process has been a boon to many online publishers and companies that advertise online. Automation allows publishers, from large sites to small blogs, to serve ads without having to operate an ad sales department to find buyers or an IT department to display and track ads. For advertisers, it has provided more options and the ability to deliver messages to profitable audiences without having to search them out. The technology is also evolving whereby the ads themselves may be further customized according to the demographic information and geographic location of the user not just the content on the page.    

The Disadvantages of Contextual Advertising

The disadvantages of contextual advertising are that the ads can be distracting, the ads can annoy consumers if they disrupt content, their prevalence means that they are often ignored, and ads might be placed alongside those of their competitors. In addition, consumers who are searching for content may not click on what is obviously an ad.

The Future of Contextual Advertising

The field of contextual advertising is still relatively new. Beyond web pages, contextual advertising is integrating video and video game content. The concept of a dynamic billboard has been proposed, with a camera that can identify the gender and age of the audience and change the advertisement displayed based on collected data.

However, contextual ads are far from perfect. With the increasing integration of search history and user information, there are legitimate privacy concerns. On a practical level, the application of new streams of data to the contextual ad serving machine causes high-value searches to be followed from site to site. For example, most internet users are familiar with having a flight price that they searched for linger for weeks or even months. Similarly, a search for keywords around an engagement ring could follow a user for years. 

  1. Native Advertising

    Native advertising is promotional text designed to blend in with ...
  2. Cost Per Click - CPC

    Cost-per-click is an online advertising revenue model by which ...
  3. Flighting

    Flighting is an advertising scheduling strategy that alternates ...
  4. Banner Advertising

    Banner advertising refers to the use of a rectangular graphic ...
  5. American Advertising Federation ...

    The American Advertising Federation (AAF) is the oldest advertising ...
  6. Mobile Advertising

    Mobile advertising is type of advertising that appears on mobile ...
Related Articles
  1. Small Business

    Trends In The Digital Advertising Industry

    The rapidly expanding digital advertising industry is leading a shift towards content and demanding forced innovation.
  2. Small Business

    How is Programmatic Advertising Changing Media?

    Understand what programmatic advertising is as well as the technology that drives it. Learn about the top four ways programmatic advertising is changing media.
  3. Small Business

    Advertising From TV To Internet: An Industry History

    Changes in television consumption habits have forced advertising to target audiences through new means, namely Internet advertising.
  4. Small Business

    Digital Advertising Is The Future, But Why? (ZNGA, GOOG)

    Digital advertising has outgrown the internet.
  5. Tech

    Blockchain Unlocking Advertisers’ Profit Potential

    In online advertising’s current paradigm, there is an unavoidable conflict of interest. Enter blockchain.
  6. Small Business

    7 Companies With Big Advertising Budgets

    Here's what the corporations with some of the biggest advertising budgets in the U.S. spend their money on.
  7. Investing

    Amazon Earned $2.5B From Digital Ads: WPP Chief

    This is the latest estimate for what could become an increasingly important part of Amazon's business.
  8. Financial Advisor

    Ad Blockers Could Spell A Boom For Publishers  

    In a free content world, largely subsidized by advertising, ad blockers can eat into publishing revenues. But, publishers can still stand to gain.
  9. Investing

    Snap Looks To Avoid Youtube's Mistakes

    Snap is learning from the Youtube boycott and not taking any chances on their highly coveted advertisers.
  10. Investing

    Facebook's Milestone: 5M Monthly Advertisers

    Five million advertisers are running ads on the social network, up from 4 million in September.
  1. How important is advertising revenue in the Internet sector?

    Learn about the importance of advertising revenue in the Internet industry. Find out how much Internet firms rely on advertising ... Read Answer >>
  2. How do Internet companies profit if they give away their services for free?

    Learn how companies in the Internet sector make a profit when service, content and user applications are offered at no cost ... Read Answer >>
  3. Can I make money advertising on my car, or is it a scam?

    Are car wrap advertising companies legitimate? Some companies are scams, but some car wrap companies offer legitimate ways ... Read Answer >>
  4. How Do People Make Money on YouTube?

    Are you interested in making money on posting videos on YouTube? Learn how YouTubers monetarize their videos through ads ... Read Answer >>
  5. What are key operating activities in a company?

    Find out the things that make up a company's operating activities, including examples of some the key operating activities ... Read Answer >>
Trading Center