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Apr'23·Andrés Auchterlonie·3 MIN

How AI-powered contextual advertising will replace the third-party cookies

Home How AI-powered contextual advertising will replace the third-party cookies

For many years, brands were able to leverage the benefits of third-party cookies to help them identify consumer behavior and target them online with ads. Consumers were not particularly pleased with this approach and considered it an intrusion of privacy. This focus on data privacy became especially relevant in 2020 as online activity sky-rocketed, with most people staying home. 

Companies like Apple have already moved to phase out third-party cookies, with Google looking to complete the same by 2024. With acts like GDPR and CCPA put in place by governments, the death of third-party cookies and other means to identify online behavior was welcomed by consumers; advertisers did not share the same enthusiasm.

The marketing and advertising industry has again looked to technology to solve the same challenges technology has created. 

Contextual advertising emerged as one of the relatively easy options for companies to adopt and ensure they could still target consumers with some degree of certainty. It showed more significant benefits in targeting, increased sales, improved adherence to brand safety and suitability, and much more.

Reports estimate that the global market for contextual advertising will reach a size of US$335.1 Billion by 2026, growing at a CAGR of 13.3% over the analysis period.

Contextual advertising is all about analyzing the web page's content and context to determine whether an advertisement is relevant and suitable to that page. The tools in the market  today allow brands to study a variety of parameters including keywords, page type,media channel, positive or negative connotations and more, without the use of third-party cookies. 

Brands are able to optimize ad positions and deliver relevant and engaging communications with the target audience. The goal of contextual advertising is to make the ads as relevant as possible to the user to increase their chances of clicking on the ad. For example, someone reading a webpage on golf is more likely to buy golfing equipment and related apparel than possibly place an order for fast food. 

Contextual advertising is continuously being refined by technologies like AI, machine learning, natural language processing and more. For the longest time, AI was confined to the realms of science fiction, books and movies. However, the science fiction of yesterday has become the reality of today. The advertising world got its first taste of the power of AI when Lexus released an advertisement entirely scripted by AI. By studying over a decade of award-winning car advertisements, Watson from IBM identified the winning elements and put them together in a single ad. 

With AI, brands are able to gain actionable insights with regard to context behind digital content beyond just keywords and user behavior. AI is helping brands determine suitability of an ad in correlation to a webpage with greater accuracy, determine optimal spots for ad placement to yield higher returns on ad spend, enhance targeting through real-time analytics, deliver more relevant and personalized experiences to readers and much more.

Marketers and advertisers prefer to leverage AI to palace contextual ads than third-party cookies for various reasons. Some of the top reasons include the following –

  • Adherence to data privacy - Third-party cookies have been under scrutiny for their potential impact on consumer privacy. Cookieless advertising methods, such as AI-powered contextual advertising, do not rely on personal data from users to target ads. AI can analyze data from first-party sources to create a complete picture of the user. This includes demographics, first-party customer data, interests, and behavior, which can be used to target ads more accurately.
  • Improved targeting – AI algorithms can analyze and understand the context of a webpage or app beyond just text and keywords. These algorithms can optimize ad campaigns by adjusting targeting by studying performance metrics such as click-through and conversion rates to know what ads work in the page's context. AI-based NLP is even able to understand the intent behind a search query, allowing for more accurate ad targeting. AI is also helping brands locate the optimal spots for ad placements so as to ensure maximum return on advertising investments
  • Enhanced personalization - Consumers today find most digital ads to be disruptive to their online experience. AI is helping address this challenge by not only finding the best spot to place the ad, but deliver the ability to blend ads into images or video more seamlessly into the larger webpage content, that is more attractive and interesting to readers and enabling a higher quality experience and subsequently returns
  • Increased brand safety and suitability – AI algorithms can also identify negative articles, fake news, fraudulent articles, etc., and avoid placing content there to enhance favorability with audiences and avoid financial losses. When going beyond browsing data, AI allows brands to ensure that users see ads in the proper context. AI can also detect and prevent fraud, such as bots clicking on ads, making the advertising ecosystem more secure.

The market spending for AI in marketing is expected to grow significantly in the coming years. According to a report by Markets and Markets, the global market size of AI in marketing is expected to reach USD 40.09 billion by 2025. AI constantly improves, learns, and adapts as needed to make better decisions. This will allow brands to future-proof their targeting efforts and advertising spending as the market evolves. Cookie-less advertising is the future of digital advertising, and AI is set to usher in a new era of contextual advertising. If you are yet to adopt contextual advertising and technologies like AI to improve the return on your marketing investments, contact us at Seedtag today.

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