Even if you didn’t know what it was called, there’s a good chance you’ve seen contextual advertising.

It happens when you’re reading an article about local highway construction and see an ad for a new car, or when you’re watching a video about new tax regulations and see an ad for a local bookkeeping firm. It’s not sponsored content, but it’s putting brands in front of an audience who is primed to be receptive to the advertiser’s message.

“Contextual targeting helps capture the attention of the right consumers when they are in the right mindset to be educated about what makes the brand different,” Streetfight Magazine explained.

For example, contextual advertising around articles about the recent U.N. Climate Change Conference (COP26) could have come from Tide laundry detergent’s current campaign encouraging people to wash clothes in cold water to save energy.

Going beyond topic and category verticals

But in recent years, contextual advertising has gone far beyond just topic verticals and has become much more nuanced.

“Broadly, it’s the ability to target ads and experiences against cookie-less data,” said Hersh Patel, CEO of Hindsight Technology Solutions, in a recent LMA Digital Club call. It can go beyond the content on the page to include information about the location of the user, weather, time of day or other factors that do not rely on cookies. It can include affiliate advertising based.

As Google hits the sunset button on the third-party cookies that feed the base of much programmatic advertising, advertisers are looking at all sorts of new ways to reach relevant audiences — and contextual advertising holds promise.

More than half of brand advertisers and agencies are increasing their spend on contextual advertising, according to data from Digiday Research earlier this year.

“While consumers are relishing better protection of their personal data, they have developed high expectations during the cookie-dominated years. They want to see ads that match their interests, personalized offers, and relevant content to enhance their online experiences,” wrote Mario Diez in an Exchange Wire article. Diez is CEO of Peer39, a contextual data marketplace that helps publishers target contextual ads effectively. “With the cookie heading down a path of no return, brands must find an alternative means to meet these expectations.”

To solve for this, an increasing number of brands are looking at first-party data in addition to semantics, intent and values to inform contextual advertising decisions going forward.

Contextual video advertising

For local broadcast companies and video, contextual advertising is still in its infancy. While the technology exists for contextual advertising to run against video — with technology that reads tags as well as content — inventory remains low, particularly compared with display advertising opportunities against text-based content.

“As inventory for contextual video creation becomes more automated, or more money is pumped into that and it becomes easier to create video ads … then it will definitely get there,” Patel said.

Placement for contextual ads, particularly video, matters a lot in terms of driving engagement with the ad’s content, Patel noted. Placing ads next to engaging page elements like comments, recommendations or other related content can increase activity related to the ad.

Risks and rewards

The pros of contextual advertising are obvious: consumers who are interested in a certain topic are essentially self-selected themselves into seeing ads from relevant businesses. It’s a safe bet that someone in Minnesota in January reading a travel article about a new resort in the Caribbean is likely to be interested in traveling to a warm locale during those dark days of winter. And businesses are willing to pay quite a bit to reach such a relevant audience.

The cons are more nuanced, however.

First, there’s a distinct risk that, if not set up correctly, contextual advertising could backfire on the brand. For example, the person who was interested in traveling to the Caribbean last week may not want to see an airline ad on a story about a horrific plane crash.

To combat this, particularly in hard news categories, Patel recommends ad placement based on values-based targeting. “Going beyond what’s on the page and focusing on the intent and how that content might connect to your readers will allow you to kind of create new, meaningful connections for different advertisers,” Patel recommended.

Without understanding the ability to use semantics and other signals for contextual advertising around hard news topics, some brands may feel the need to settle for a broader base of consumer, which may be perceived as less effective in terms of sales conversion, so it’s important for ad sales professionals to educate brands about the possibilities and alleviate those fears. That process may start with talking to advertisers about not just obvious topics (a bank may want to be placed against finance articles), but about who their ideal customer is, the values that customer possesses and what other interests those customers may have.

For local media, there’s hope in combining ZIP code targeting or other geographic targeting plus contextual advertising to bring local advertisers into the fold at higher rates than programmatic advertising provides.