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Contextual Advertising Is Not Replacing Behavioral Ads. It’s Enhancing Them

Dozens of ‘privacy-first’ advertising solutions and strategies — cookie workarounds, hashed email identifiers, first-party data, doubling down on walled gardens — are hitting the market claiming to secure the future of advertising amid privacy changes. Given the maelstrom of new solutions vying for viability, it is tempting to talk about approaches to advertising as if they were in a race, one destined to claim the gold and all others condemned to the trash bin of business history.

But that is the wrong way to view advertising innovation around privacy. Most of the emerging solutions will fill some gaps and not others, and brands and publishers will deploy a mix of tactics and data sources to reach consumers going forward.

This perspective — putting tactics together instead of elevating one to the detriment of another — is particularly relevant to the conversation about behavioral and contextual advertising. As one way of thinking would have it, contextual advertising, which matches ads with brand-suitable content, is the privacy-safe alternative to behavioral advertising, which hinges on granular data about consumers that could lead brands and publishers astray of privacy rules and regulations.

But that zero-sum framework is not how Dave Hills, CEO of contextual advertising firm Advanced Contextual, sees the future of digital advertising. Rather than replacing behavioral, Hills said, contextual will become a deeper layer of intelligence that guides most advertising going forward. In other words, advertisers and publishers will pair contextual and behavioral signals to target ads more effectively — based on some audience traits and the type of content with which audiences are engaging when they see an ad.

“When you think about the first generation of ad exchanges, 99% of the signal in the bid request from ad exchanges was behavioral,” said Derrick Horner, CEO of H1 Ventures and advisor to Advanced Contextual. “The contextual signal was really just a page category — if you had that. Eventually, the contextual elements in the programmatic bid request will be much more advanced. We want to make contextual signals universal in the bid request coming from ad exchanges. That may include keywords but also sentiment scoring, semantic entities, and topics.”

In other words, the future of digital advertising is not contextual ads versus behavioral ads. It is ad targeting based on a combination of contextual intelligence and (consensual) behavioral targeting. Though, for the industry to get there, contextual targeting will need to become available in the open exchange — and that is precisely what Advanced Contextual endeavors to enable.

Keywords plus context

Contextual advertising has a branding problem. The digital ad industry exploded in the past 10 or so years with the advancement of behavioral ads, which target messaging based on the traits and behavior of audiences. By contrast, contextual ads came to look outdated, as many equate them with simple keyword targeting — a consumer reads an article about running and gets a Nike ad.

But a next, emerging generation of contextual advertising solutions are leveraging natural language processing to push keyword-based approaches to a more sophisticated level. Advanced Contextual is betting on what it calls topics, an approach that helps advertisers understand how consumers are engaging with a given topic and whether and how the advertiser wants to launch campaigns around that topic at a given time. Advanced Contextual ingests 1.5 million new pages and 86 billion impressions daily to power its contextual targeting solution.

“The reason topics are good is they help you draw a circle around the content you like,” Hills said.

Consider the recent situation travel advertisers faced given the humanitarian catastrophe surrounding the US withdrawal from Afghanistan. Advanced Contextual’s technology identified an explosion in travel impressions and was able to identify the brand risk in targeting travel stories broadly. In effect, the company had used the intelligence powered by its technology to move beyond keywords, helping advertisers not only target people reading about travel but also determine whether a given travel story was appropriate at a specific moment in time.

“It’s keywords plus context that provides a brand-suitable environment,” Hills said. “Those [travel-related] keywords are great, but in the Afghan context, they’re in an unsuitable environment.”

This is another novel way of thinking about contextual ads that will drive the next generation of the technology. Contextual is no longer about matching brand messaging to keywords; it is about using a search engine like Advanced Contextual’s to survey a vast array of content, identify pages of interest based on keywords, and then use a richer, NLP- and human-enabled understanding of context to execute an effective and brand-suitable campaign.

“The open Web against the walled gardens”

Google and Apple are cracking down on tracking, US states and foreign countries are releasing increasingly strict privacy regulations, and consumers are calling into question the data collection that powers personalized targeting. As a result, the popular call to arms in digital marketing has become to collect as much relevant first-party data as possible. In effect, most advocates making that argument are calling for the extension of the era of behavioral targeting — just with data collected directly by a brand, not by third-party data aggregators sharing an individual’s information across the global corporate landscape.

Unfortunately, most businesses will not be able to amass enough first-party data on their customers to power effective behavioral advertising strategies. Even if they could get the data, they may not have the resources to know how to effectively leverage it. Thus, the reality of digital advertising’s future is likely increased reliance on the walled gardens. Open web targeting will become much harder, but Google, Facebook, and Amazon, with their massive user bases and unparalleled technical know-how, will beckon, becoming all but the only game in town.

While shying away from the “philosophical,” as he put it, Hills views this as Advanced Contextual’s opportunity to make a lasting difference in the online marketplace. The company, if successful at launching contextual advertising at scale on the open exchange, could empower publishers and brands to survive the privacy-driven data drought that will otherwise force advertisers and publishers alike to submit to the whims of the walled gardens.

“This is not me against Oracle. This is the open web against the walled gardens,” Hills said. “If we go to the demand side and say, ‘We’ll give you everything the walled gardens do plus transparency,’ it’s going to attract money away from the walled gardens and into the open web.”

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Joe Zappa is the Managing Editor of Street Fight. He has spearheaded the newsroom's editorial operations since 2018 and compiled the daily newsletter since 2016. Joe is a journalist who has written widely about technology, business, and politics. You can contact him at jzappa@streetfightmag.com.