Contextual Intelligence: The Next Generation of Contextual Advertising
It’s an age old challenge — How do you serve the right ad, to the right person, in the right place, at the right time to drive conversions? For years, the ad tech industry has subscribed to the theory that behavioral targeting, often called audience targeting, was the Holy Grail which would solve this challenge. Third-party cookies enabled both advertisers and publishers to track digital behavior and cross-device usage to build rich, behavior-centric buyer profiles. Now facing growing privacy regulations, the demise of third-party cookies, and for all intents and purposes the ending of IDFA (Identifier for Advertisers), the ad tech industry is being forced to take another look at contextual targeting. While there is still skepticism when it comes to a full embrace, the next generation of contextual targeting, with a focus on contextual intelligence, is poised for success.
Empirical Evidence Supports Contextual Advertising Success
Brand awareness for contextually aligned ads increased by 93% compared to contextually misaligned ads, according to a study conducted in partnership between the Channel Factory and the University of Southern California’s Applied Consumer Psychology Department. The study examined variances in the effectiveness of contextually aligned ads vs misaligned ads by several industry categories. While the individual performance rates vary by industry, the bottom line showed a 2.5% improvement for ad attributes and brand lift across all industries when the ads were contextually aligned.
Another study which supports a move toward contextual advertising was released in late March by GumGum and NEURO Spark — Cognitextual: A Neuroanalytic Study of Contextual Ad Effectiveness. Among the key findings in this study, results showed that contextual ads generated 43% more neural engagement and proved to be 2.2X more memorable than contextually irrelevant ads.
“I absolutely want the ads to be in context. I’m reading it for a reason, that’s where my headspace is. If you’re trying to sell me something unrelated to my mindset, I don’t care about it.”
—Cognitextual Study Participant
The study not only supports that contextual advertising can indeed be more effective than behavioral advertising, but also explains why. Neural engagement is key to direct response performance. When ads are contextually aligned, there is a greater degree of neural engagement which makes the ad more memorable and more likely to drive purchase intent. High-context ads were remembered an average of 10 times more than low or medium-context ads.
Why is Contextual Advertising Increasingly Effective?
“In the attention-transfer process, other things being equal, an advertisement seen or heard in a context that a consumer pays more attention to more likely will be seen or heard. High correlations between attention to content and advertisement recall have been shown repeatedly.”
—Horst Stipp 
There are no recent official figures, but it is now estimated that the average person will encounter between 6,000 to 10,000 ads every single day. When you consider that users are bombarded with advertisements and branding campaigns everywhere they look, it’s not surprising that the brain filters out mass amounts of imagery and information which is not relevant to a user’s current mindset. The average person is shown more than 1,700 banner ads per month but only ‘sees’ half of them. (ComScore). And 70%-80% of users completely ignore sponsored search results. (Search Engine Land).
Typical user behavior is to ignore most of the display ads and sponsored content shown because the ads frequently have absolutely nothing to do with whatever the user is searching for, or reading about, at that particular moment. As the studies mentioned previously in this article indicate, contextual targeting is proving advantageous as it ensures alignment between the ads and relevancy of the content. Sustainable success in the next generation of contextual advertising will require that advertisers go beyond frequency and reach, and work contextual intelligence into the equation. Contextual intelligence allows advertisers to combine the relevancy of contextual targeting with key first-party data to serve the right digital ad, to the right person, at a time/place which is relevant to the other information being consumed — maximizing the opportunity for engagement and memorability.
Aside from the relevancy, engagement and memorability aspect, contextual intelligence is uniquely positioned to enable advertisers to capitalize on real-time opportunities using advanced Artificial Intelligence and Machine Learning (AI/ML) technologies. The advanced AI/ML can be used to update predictive contextual segments by populating keywords pulled from the top trending content or topics. These predictive contextual segments allow for brand suitable campaigns which are both optimized for the moment and relevant to the targeted audience.
Change is Difficult. And Imminent.
There is no doubt that the ad tech world will face continued challenges as it shifts from behavioral targeting to contextual targeting. And, while some will continue to fight to hold onto third-party cookies as long as possible, the early adopters of contextual targeting may be gaining a competitive edge. By adopting a new paradigm using contextual intelligence, advertisers have the advantage of building for the future of advertising before they begin to suffer from the collapse of behavioral targeting with third-party cookies. Those who continue to cling to behavioral targeting and hold out until the end may struggle to catch up.
 Stipp, Horst. How Context Can Make Advertising More Effective. Journal of Advertising Research, 2019.