On the eve of ATS London 2022, Andy Ashley, global marketing director at SmartFrame, introduces key findings from a recent whitepaper detailing the importance of contextual advertising following the upcoming deprecation of third-party cookies.

Third-party cookies are soon to be a thing of the past, and behavioural-based targeting will become less straightforward as a result of this. This in turn underlines the need to explore new ways of delivering advertising to the right audiences in a regulatory-compliant manner. Third-party-cookie advertising underpins many ad models, so workable solutions are timely and potentially set for widespread adoption. But the need to respect online users’ privacy and adhere to the necessary regulations, while ensuring that advertisers gain real benefits from such models, is far from straightforward. Sub-optimal solutions may, at best, be a waste of advertisers’ time and money. But, at worst, they can impact the way a brand is perceived, and have serious financial consequences as a result.

Contextual targeting, which works by assessing an online environment in which an ad can be displayed to determine which specific ad is served, is now attracting increasing attention as third-party cookies are phased out. While the concept of contextual targeting is not new, the need to move away from behavioural targeting should ensure that we see plenty of innovation in this space over the coming years.

And with the contextual market projected to be worth USD$376bn (£305bn) by 2027, the incentives are certainly in place.

How is contextual targeting different from behavioural targeting?

Andy Ashley, SmartFrame

The most obvious difference between contextual targeting and behavioural targeting is that contextual targeting serves advertising that is relevant to the environment in which it’s viewed, whereas behavioural targeting serves advertising based on a user’s previous online activity. This difference is important for three key reasons. First, it’s reasonable to assume that a user browsing a particular website may be more receptive to advertising related to its content. Those same adverts for holiday package deals, for example, would be a natural fit on a tourism website or a travel blog. And consumers themselves appear to prefer this; a survey conducted by the Interactive Advertising Bureau (IAB) showed that 81% of UK consumers prefer online ads to match the content they are viewing. From an advertiser’s perspective, this increases the chance of it resonating with that particular audience, and with it, higher click through rates and a better ROI.

The second reason is related to all of this. Contextual targeting serves ads that are relevant to the there and then. In contrast, behavioural targeting’s approach of using information from previously browsed websites can be both a strength and a weakness. Its strength lies in the fact that it may remind a user of something no longer at the forefront of their mind, which may well facilitate a conversion at a time when it otherwise wouldn’t happen. But its weakness is the risk of serving ads that are no longer relevant to the user. Would a user have any interest in seeing package holiday deals once they had returned from holiday? It’s unlikely – but the behavioural targeting system wouldn’t necessarily appreciate this.

Third, by placing contextually relevant advertising alongside this kind of content, the user stands to have a more positive experience with that brand. The same survey showed that 65% of UK consumers have a more favourable opinion of brands that serve contextually relevant ads.

The attention economy

As we’ve started to move into the next evolution of digital advertising, the importance of metrics that are typically used to measure performance – cost per mile (CPM), click-through ratio (CTR), impressions, and so on – has started to be questioned. While these clearly have utility and are unlikely to be abandoned, marketers and advertisers are increasingly looking beyond this to the idea of measuring attention.

The attention economy is built on the premise that attention is a scarce resource. As advertising can only be effective if it is noticed to some degree by its audience, it follows that understanding the ways in which different ad formats, placements, and other variables affect attention can help to determine which kinds of campaigns are likely to be most effective.

When you consider the ever-increasing number of channels and range of devices in which ads are served, and the array of visual, aural, and audio-visual formats that advertisers now have to choose from, it’s easy to understand why this information is more valuable than ever before. But part of the appeal of understanding attention can also be attributed to the shortcomings of existing metrics. For example, we may be able to determine that an ad is more viewable, or be gaining more impressions, than another, but this doesn’t necessarily mean that it is getting more attention because of it.

One key difference between conventional performance metrics and the measurement of attention is that the latter is measured qualitatively, rather than quantitatively. This means that data on attention cannot be gathered on demand in the same way as it can with clicks and impressions. Most of the studies done on measuring attention with respect to advertising have concerned eye tracking in controlled conditions. Some studies have used front-facing cameras in mobile devices, although quite how easily this could be expanded to work on genuine ads in real-world environments while respecting user privacy is unclear.

Nevertheless, it seems very likely that this will be an area that continues to attract interest. As we gain a greater understanding of the variables that make the greatest difference to ad performance, we should expect new ad formats to be adopted and older ones to be abandoned, particularly on mobile devices, which today account for more internet traffic than desktop devices.

The future

The next few years stand to have a significant effect on the future of online advertising. The introduction of various privacy-focused regulations around the world means that it’s highly unlikely that the shift from cookie-based targeting is anything but permanent, and as new regulations continue to be passed in various territories, the global advertising industry will need to remain agile if it’s to continue to serve relevant advertising in permissible ways.

What specific mix of ad tech systems will form the backbone of online advertising in the future? Perhaps it’s too early to say. Exactly how Google will develop its Topics system; whether this will be adopted more widely by others; and whether one or more Universal IDs will become standard are just three of many unknowns. Also important is the fact that cookie-based targeting may be disappearing, but much of what is being proposed to take its place is still based on behavioural targeting, albeit in a less intrusive form. So the question of how this will be received by online users remains.

Advertising of some sort is essential to the continued operation of many online properties, and many people no doubt appreciate this. So efforts to raise awareness of a value exchange can hopefully lead to a solution that everyone can agree with. This is important, as it’s only by taking the needs of all stakeholders into consideration can we build systems that are likely to succeed.

But if we assume that the findings from research into contextual targeting reflect the views of broader audiences, it’s reasonable to predict that enough weight will be thrown behind it for it to grow into a dominant targeting format in the years to come.

ATS London 2022 will take place on 14th and 15th June at Central Hall Westminster. Tickets and further information are available via the ATS London 2022 event hub.