Why is contextual advertising on the rise?

What’s old is new again. Cargo pants, low-rise jeans, bucket hats…and, uh, contextual advertising?

If the internet does indeed become a data desert—whether because of the loss of third-party cookies and other identifiers, privacy regulation, or the rise of retail media networks and other channels reliant on first-party data collection—contextual advertising could become one of few tools left in a marketer’s tool box.

“Contextual budgets are growing as advertisers are re-examining their data strategies,” according to Emily Kennedy, SVP of digital and programmatic partnerships at Dentsu, who said that clients are increasing their contextual investments anywhere from 25% to 50%.

So, what is contextual advertising?

It’s exactly what it sounds like: Buying an ad based on the context of the placement, rather than targeting an individual based on their past viewing or purchasing behaviors. This kind of ad-buying is usually done with little to no user data.

Think a mayonnaise brand buying streaming ads during a Food Network cooking show, or how magazine ad buying works, e.g. a sporting goods brand buying ad space in Sports Illustrated.

That’s how Sterling Cooper and Partners would have bought ads. In other words, it’s an old form of advertising that’s finding a second wind thanks to increasing privacy concerns. “We’re coming back full circle,” Kennedy said.

Advertisers can still reach an intended target “without any of their personal data, without creepily tracking any of their browser history and following them around the internet,” Hailey Denenberg, VP of strategic initiatives at ad-tech company GumGum, said. She’s also interim head of Verity, the company’s contextual advertising platform.

Today, companies that specialize in contextual advertising tend to use web crawlers and AI to scan websites, looking for things like keywords, sentiment, and ad load to get a more nuanced look at the context of a page. It’s the “technical aboutness” of a website, explained Mario Diez, CEO of the contextual data company Peer39. Those extra insights are becoming meaningful to media buyers.

Using the above example, it’s rather obvious that a sporting goods company might advertise in Sports Illustrated, but an online SI article about vegan athletes could open up less obvious opportunities for supplements, nutrition, or vegan brands in search of ad inventory and the right context.

“You’re able to take a scalpel across the internet, to content that you might not necessarily think falls in a certain category,” explained Phelan Pullen, SVP and group director of programmatic at Mediahub, who said his clients were “testing more dollars” with contextual advertising.

It’s not without controversy or drawbacks

Publishers, at least in theory, stand to benefit from contextual advertising since they have firsthand knowledge of their content, meaning they’re in the best position to help advertisers understand the context of a story. But trade groups representing publishers in the UK and US have raised concerns that ad verification and brand safety vendors could be gleaning data from their sites and selling it as contextual advertising data to clients, potentially infringing on their “intellectual property.”

Last year, the IAB Tech Lab started testing a labeling system for publishers called “seller-defined audiences” that lets them label their own content for advertising purposes. For example, Vogue could label an article as “skincare” for advertisers.

“Instead of DoubleVerify saying, ‘Here’s what the content’s about,’ it’s the publisher saying what the content is about. That feels pretty good to me,” Paul Bannister, chief strategy officer at Raptive, told us last year.

Overall, contextual advertising is just one solution for advertisers looking to move toward more privacy-oriented ways of reaching their core audiences. Others—like cookie alternatives or an increased reliance on first-party data—still rely on behavioral targeting, something advertisers have grown accustomed to over the years.

Contextual advertising is a lot like vinyl, explained Paul Verna, head of Insider Intelligence’s advertising and media practice at Insider Intelligence. It was popular, then it went away. Now it’s back, but it isn’t the only way to listen to music.

“It may be one of the best solutions for privacy compliance, but it’s not a very robust solution,” he said. “There’s a place for contextual for sure, but I don’t think a lot of publishers or marketers would be comfortable with that as their biggest weapon in the arsenal.”