Apr'23·Andrés Auchterlonie·2 MIN
Improving advertising ROI with contextual advertising
The growing awareness among consumers about their data privacy and protection rights is leading many to opt out of data sharing. Frameworks such as GDPR and CCPA have made it mandatory for companies to obtain consumers' consent before collecting and using their data for advertising purposes. Marketers who for long have relied on ad tech platforms to collect data for digital campaigns are now looking to reduce their reliance on third-party cookies and other tracking technologies to help them continue to target consumers and be respectful of data privacy laws at the same time.
Contextual advertising has emerged as the front-runner for advertisers and brands. Contextual advertising targets consumers based on the content they are currently engaging with rather than their data. Besides being considered less intrusive and more pertinent to the user's interests, contextual advertising has shown higher engagement rates and enhanced campaign effectiveness. There are various ways in which contextual advertising enhances return on investment (ROI) when compared to alternate options available.
Enhanced targeting and engagement are the primary benefits of contextual advertising. Contextual advertising enhances targeting by serving ads to users based on the context of the content they are currently consuming. Algorithms analyze the content of a webpage to understand the meaning and context of the content. Based on this analysis, the algorithms can determine which ads are most relevant to the user and serve those ads in real time.
For example, a user reading a golf article would be keener on purchasing golfing equipment like golf clubs, golfing apparel like shoes, etc. This manner of targeting results in better engagement with the ads, leading to higher click-through rates, conversions, and, ultimately, a better ROI.
Contextual advertising can be more cost-effective than other forms of advertising, such as search or social media advertising. This is because contextual advertising typically has lower competition for ad inventory, leading to lower cost per click or cost per impression. Enhanced targeting capabilities allow brands to focus on groups with a higher purchase intent than on demographic data, which could be a hit or a miss. Contextual advertising has delivered higher click-through and conversion rates than other forms of digital advertising.
An indirect benefit of contextual advertising that could be measured is brand safety and brand suitability. Contextual advertising allows marketers to control where their ads appear, ensuring they are displayed in a safe and appropriate environment. This reduces the risk of ad fraud, brand safety issues, and other problems that can negatively impact ROI. For example, let's take a brand of eco-friendly cleaning products targeted toward environmentally-conscious consumers interested in sustainable living. If the brand's ads are advertised on websites that don't promote sustainable living, the target group would either need to be made aware that such products exist or, worse, feel that the product is not in line with their values and choose to buy from the competition.
Conclusion, contextual advertising provides a high ROI due to its ability to target potential customers with relevant advertisements and deliver messages more likely to interest the user, increasing the chances of a click or conversion. Contextual ads are integrated into the natural flow of the user's experience and are less likely to be perceived as intrusive or annoying. We at Seedtag have been helping clients like Diageo, LG, Colgate Plax, and others leverage contextual advertising to effectively reach the right people at the right time with the right message. Contact us to explore how we can maximize the returns on your advertising spending.