As the use of programmatic advertising continues to grow, new and more effective approaches for automated buying and selling of online advertising are being adopted. Most advertisers are currently leaning on cookie-based methods to reach as many people as possible. But in light of recent changes to the third-party cookie, and the benefits of contextual advertising, is the use of audience data really as effective?
Audience targeting is one of the most popular targeting strategies in the digital marketing space. However, the death of the third-party cookie will make it harder to collect and apply data for targeting. Experts also believe that it falls behind when compared to contextual targeting for programmatic advertising. Contextual targeting has recently experienced a resurgence in popularity due to its simplicity and effectiveness. According to a report by eMarketer, close to half of U.S. marketers and a third of marketers in the UK already prefer contextual advertising as their favorite targeting format.
What is the Difference Between Audience Targeting and Contextual Targeting?
Audience targeting is the use of data to segment consumers or prospects based on demographics, geographical locations, interests, or individual preferences. Data management is key to audience targeting, which is why it relies heavily on the use of third-party cookies to track consumer behavior online. This has yielded great results to marketers in the past, but as consumers and industry leaders make needed privacy updates, advertisers need to look to alternative targeting methods.
Contextual targeting provides a fantastic and effective alternative to audience targeting. It allows advertisers to deploy a more privacy complaint form of targeting for ad campaigns. Contextual advertising uses various factors to determine which content is most relevant to users when placing an ad. It targets prospects based on context, such as the content of a webpage a user is looking at, location, or the weather in a specific location. For instance, if a user is reading an article about search engine optimization, contextual targeting might show an ad for an SEO tool to the user, right on that same page.
What are the Benefits of Contextual Targeting Over Audience Targeting?
For some time now, the advertising industry has been slowly moving away from third-party cookies (used for audience targeting) to focus on context. And context is important because advertisers can gather useful information about the type of content a user is interested in. They can then target prospects with useful ads that are related in content and messaging.
Here are five reasons more advertisers now prefer contextual targeting to audience targeting.
No Need for Third-party Cookies and Behavioral Information
Provides Personalized Customer Experience With More Relevant Content
No doubt, consumers appreciate seeing more personalized ads than random ads just popping up in their faces. Forrester found that even an immature personalization strategy yielded about a 6% increase in sales and a 33% increase in customer loyalty and engagement. By using contextual targeting to show more relevant ad content to consumers, companies can improve their advertising ROI.
Contextual Targeting is Easier and Cheaper to Implement
Audience or behavioral targeting typically requires serious investment in data management, as consumers' online behavior must be monitored, stored, and matched using third-party cookies. But contextual advertising focuses on more real-time page level data that makes it less costly and easier to implement.
Boosts Sales With Better Weather Targeting
An important component of contextual advertising is the weather. The location or weather of a consumer will likely affect their purchasing behavior. Advertisers can leverage this information and other valuable insight to deliver more relatable ad content to consumers. For instance, this ad by Burt’s Bees shows that weather-related contextual ads can perform well by engaging audiences for average exposure times of over 20 seconds!
Allows for More Creativity
Since contextual targeting shifts the marketers focus away from data associated with the audience or behavioral targeting, it opens the door for more creativity in creating and placing programmatic ads. For instance, by focusing on context and personalization, the creative opportunities are endless to match messaging to the environment, or use DCO to relate to the individual consumer on a deeper level. The idea of presenting complementary products or services to a user based on the web pages they visit is a strong indication of how dynamic contextual advertising can be. When we worry less about the data segments (left brain) we can dive deeper into creativity (right brain) - the original intent of advertising.
To learn more about how your business can take advantage of contextual targeting to improve your programmatic advertising efforts, feel free to contact us.
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