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Contextual targeting: 3 reasons why it’s more important than ever
July 18, 2022
The impending disappearance of third-party cookies has been a newsworthy issue in adtech over the last few years. Knowing that this shift in data strategies will be inevitable and compounded with increasing concerns about privacy and the rise of brand safety issues, industry players are in full swing re-envisioning their future strategies and how they will need to adapt.
It is no surprise that we are seeing these changes with a recent KPMG study showing that 86% of consumers feel growing concerns about data privacy and 78% have fears about the amount of personal data being collected. In response, some new regulations were introduced including limited browser ad tracking in Chrome and cookie deprecation in iOS 14.
To ensure campaign reach and effectiveness in the face of these changes, there has been a resurgence of interest in contextual targeting. In fact, the global investment in contextual is set to reach $376.2bn by 2027 and recent research found that 52% of UK and US marketers plan to up their investment in contextual targeting and, over the next two years, 86% of media owners expect the method to become more prevalent.
1.) Contextual targeting can replace the third-party cookie
With privacy regulations and cookie deprecation expected to rise in the near future, alternatives are needed - and fast. Contextual targeting offers a viable alternative for connecting with audiences and protecting revenue streams as it can outperform cookies in measurements such as clickthrough rate (CTR), cost-per-click (CPC), and viewability. Contextual targeting does not rely on any user information and therefore does not require large amounts of first-party data or consent to work. By identifying and analyzing page content rather than the user, it is inherently more respectful of user privacy while providing expected efficiency.
Contextual targeting solutions are compliant and cookie-free, allowing advertisers to target only brand-relevant content which leads to optimized brand recall and audience engagement, even in niche categories. Advertisers can fine-tune inventory selection and create custom segments, which means the risk is minimized for their ad to appear alongside unsavory or inappropriate content.
For publishers, contextual advertising presents an opportunity to provide users with improved ad experiences by serving relevant and accurate ads in the right place. This can be hugely beneficial for publishers, especially in the post-cookie world, with research showing that they can expect some 2.5x incremental revenue from appropriate ads that are not intrusive.
In parallel with the disappearance of third-party cookies, the share of non-consented traffic will also continue to grow. Monetizing this part of the inventory remains essential for publishers, who will be able to rely on contextual targeting solutions to enhance the quality of their content with a new source of demand while respecting user privacy.
2.) There are new advances in targeting
Pinpointing where the right audience is on the web is the basic need for advertisers, agencies, and brands. This is what third-party cookies have always provided and why so many are wary to give it up. Historically, third-party cookies have been chosen over contextual targeting, however, with the resurgence of contextual targeting many new advances have made it increasingly effective and precise.
Artificial intelligence (AI) and machine learning have taken center stage. They have been able to take traditional contextual targeting to new heights by mimicking human behavior to understand the context of any given environment to serve relevant ads, which is also known as semantic contextual targeting. Advances in AI with the use of Natural Language Processing (NLP) allow it to process natural language patterns and enable deeper, more nuanced page analysis that can understand things like tone and sentiment. This gives advertisers a more reliable and brand-safe solution for campaign placement in a privacy-safe way, as neither cookies nor any other type of identifiers are required.
Another step forward for contextual targeting can be seen in the recent product announcement by TikTok. They launched their new contextual tool, TikTok Pulse, which is said to enable brands to advertise alongside top-performing content in the “For You” feed. The emergence of a non-tracking-based and privacy-conscious approach on one of the biggest social media platforms is symbolic of the future of the digital advertising industry. With third-party cookies looking towards the door, news like this may be expected more frequently.
3.) CTV offers contextual advertising a new frontier
The fast-growing CTV space can also be considered a new frontier for contextual targeting. Targeting the right audience without cookies is no easy feat in the CTV space, but advancements in contextual targeting and the rise of more industry players focused on addressing this need offer valuable, scalable and customizable solutions to this challenge. Viewers can now be targeted in real-time, based on what they are about to watch, thanks to the use of AI and audio recognition. This individualized and non-disruptive ad exposure ensures performance while guaranteeing brand safety in a premium broadcast environment.
Peter Mason, co-founder and CEO of Illuma, stated, “Used carefully, page-level intelligence from a campaign’s best-performing contexts on the open web can be repurposed to make smarter live buying decisions in CTV. In turn, CTV insights can inform open web digital buys, giving a dynamic, near-real-time, actionable understanding of audience interests and the contexts that are delivering the best results.”
These advances are again thanks to the rich behavioral capabilities brought out by new AI-based targeting tools.
The changes in the advertising industry coupled with the advancements in contextual targeting make it more relevant than ever for all actors in the value chain. The industry must work together to achieve more privacy-compliant and brand-safe environments for the future to come.