Why We Use Contextual Targeting
As you know, we are actively working towards a better, more efficient and more ethical advertising ecosystem. One way we do this is through contextual advertising; here’s why.
When it comes to targeting end users, we have always been on the privacy side. This means that even if we had a chance to do it, we would never cross the boundary of abusing personal data collection for the sake of making a sale. We value privacy and we’re convinced that control over user data should be put back into the users’ hands. As simple (and ethical) as that. All this doesn’t mean that we sacrifice good targeting; it simply means that we employ contextual advertising instead.
What is contextual advertising?
As the name suggests, context plays a major role here: we just look at what page the end user is visiting and display ads that are relevant to the contents of that page. Say someone is reading an article on training their dog on a pet resources website — and you happen to sell dog treats. We would serve an ad for your dog treats on this page. Since the end user is already reading the article, chances are they have a dog that they want to train (unless they are a naturally curious weirdo who just wants to know how dogs are trained).
The contextual targeting here significantly increases the chance of the reader clicking on your ad and then making a purchase. As someone who has a dog, I promise you they’ll need the treats for training their good boy, and the article probably recommends it anyway.
And that’s contextual advertising in a nutshell.
Unless they live off the grid, your potential customers are bombarded by ads anywhere they go online. This could be very overwhelming, and causes a phenomenon called “ad blindness”. Ad or banner blindness means that your ads can (and most likely will) be subconsciously ignored by the users — their brains simply “skip” ads because they’re seeing so many of them that the brains renders them irrelevant. This ad “skipping” may also happen consciously. Sometimes users just find them boring, irrelevant and intrusive and pretend the ads don’t even exist; other times they actively block them.
The use of ad blockers rose by as much as 34% in 2018 alone, showing that 25% of all internet users now use ad blockers. Some studies show that nearly 80% of people suffer from ad blindness, confirmed by statistics that over 85% of the clicks are actually generated by a mere 8% of all Internet users.
That’s a whole lot of wasted ad impressions.
However, this changes when your target clients see an ad closely related to the topic in which they are invested in that particular moment. This is the reason behavioural targeting is gaining momentum and is being adopted by more and more companies. One of the most recent examples is The New York Times: at the 2019 NewFronts forum they spoke about using contextual factors for advertising targeting in 2019 and focusing on the motivation of the end-users to be reading a particular article, a.k.a using the right place and the right time to their advantage.
While the decision of the New York Times is very much driven by their growing concern about user’s privacy, it is also driven by numbers. Since February 2018 when they first experimented with responding to people’s emotions while reading a story with a relevant ad, they have seen a 40% improvement on click-through rates (CTRs) over control (a trend now adopted by other large publishers such as ESPN and USA Today).
Increased CTRs is not the only benefit associated with contextual targeting. One we already briefly touched upon is maintaining the integrity of end user privacy. We’ve all come to dread the abbreviation GDPR and its implications. But here’s the beauty of contextual targeting: since no data is being collected or stored, it is already automatically GDPR compliant and therefore much more ethical than other targeting methods.
The lack of data gathering/storing also makes contextual targeting a lot less creepy and completely non-invasive for end users. By searching for something in particular, they’re essentially telling the whole of the Internet what they want or need — no harm done if we offer them more of what they’re after.
The better CTRs offered by contextual targeting also translates into higher conversion rates (CVRs). A customer is more likely to click on a relevant ad, then make a purchase — in this scenario potential customers are in the right headspace and closing the deal is much easier. This is a lot less disruptive to the end user’s browsing and creates a much better experience in general.
Another major advantage is the fact that contextual targeting is aiming to achieve similar results to search advertising without the associated astronomical price tag. Not everyone’s advertising budget would allow them to splurge on ads which can cost up to $50 per click, right? Admittedly, user profiles help in search advertising but contextual targeting is a great alternative already proving to deliver actual results.
Disadvantages of contextual targeting
Of course, it’s not all champagne and roses, and as any type of advertising, contextual comes with its own disadvantages.
Since no data is collected about the user, contextual advertising doesn’t allow us to create buyer profiles and predict the future behavior and purchasing habits of our customers. It doesn’t give us the details about their past purchases so that we can offer them similar products either. As intrusive as these practices are, they do help drive sales up and for the time being are still a thing in advertising.
A direct consequence of this is the fact that no historical data about a user’s orders is obtained and saved. This means that an ad for a product or service for example can be shown to a user even after they have purchased that particular product/service.
Remarketing is also a challenging approach when it comes to contextual ads. However, it is technically possible and we’re looking into the best ways to introduce retargeting to AdEx.
Why we chose contextual targeting for AdEx
AdEx is a platform which aims for efficient and ethical advertising — and naturally, the pros of contextual targeting massively outweigh the cons. We decided to go this way as for us, this approach of reaching potential customers carries the best ratio between high CTRs/CVRs, cost efficiency, and privacy.