Behavioural vs. Contextual targeting: What you need to know

This is part two of our series on contextual advertising.

Previously we captured a fundamental understanding of contextual advertising, recognising it to be a strategy used to align branded ads to contextually relevant webpages. In summary, advertisers can deploy keyword or topic-based parameters to intricately align ads with webpages to exhibit contextual cohesion. We also covered advancements in contextual advertising, with some companies, like Smartology, going beyond the regular keyword capabilities, by employing natural language processing (NLP) and machine learning (ML) technologies. This allows our tech to understand the true meaning of advert and article content which enhances precision in the matching process and adds value to users’ experience.

We addressed some prevalent misconceptions of contextual advertising, namely that it is a blunt tool, it is not cost-effective and that contextual targeting is secondary to behavioural. The latter point is by far one of the biggest and most important areas to address which is why this blog will be dedicated to drawing a comparative analysis between contextual and behavioural advertising. This blog will demonstrate that there are two pervasive and influential strategies in the contemporary digital marketing landscape, and it will touch on why contextual advertising holds the edge in 2024.

Let's delve into what makes each of them tick and why they're pivotal in today's advertising landscape.

Behavioural Targeting:

At its core, behavioural targeting hinges on user data. With great attention to detail, it collects and analyses first, second and third-party data to curate personalised ads that resonate with users on a deeper level. Behavioural targeting begins with the storage and management of raw information which is then organised into Data Management Platforms (DMPs). Users’ historical data is the crux of behavioural targeting, search history data and what sites users spend the most time on is essentially what DMPs rely on. This is how brands and advertisers gain invaluable insights into their target audience, fine-tuning campaigns to ensure that their message reaches those who are most likely to engage.

Why use behavioural targeting?

Retargeting

Ever felt like an ad is following you across the web? That’s essentially retargeting, a cornerstone in behavioural targeting. By repeatedly showcasing the same ad across various sites, advertisers significantly enhance the likelihood of user engagement or conversion as it puts together the missing pieces of information about the users’ on-site journey. Say there is a product/service they have shown interest in, but have left without buying, you can retarget the user by showing content that reminds them to finish their purchase.

Personalised behavioural advertising

Personalised ads are something we have all come across in the digital space. Treating each user as a separate and unique entity and engaging with them in a more intimate way has become paramount, cutting through the one-size-fits-all strategy.

Ads are tailored to users' interests and preferences, crafted meticulously based on their online behaviour. This personal touch not only enhances user experience but also fosters a deeper connection with the brand.

High conversion rate

When ads speak directly to users' interests and browsing habits, engagement is likely to rise. Personalised ads are more likely to elicit further inquiry or even spur an immediate purchase, making them a potent tool for advertisers.

Behavioural advertising is an attractive strategy to use, given its ability to target advertisers' ideal audience and even retarget to solidify a conversion. However, as we will find out in the next section, its advantages are also one of its downfalls. While behavioural targeting is a technological achievement in itself, it seems that consumers are questioning its ethics in how it targets users, and advertisers are finding it to be less cost-effective and relevant in a changing advertising landscape.

Contextual Targeting:

In contrast to its behavioural counterpart, contextual advertising relies on webpage content (or as we call it, context) to make a relevant match. By leveraging the context of a user's search journey, advertisers can seamlessly integrate ads that are not only relevant, but also timely.

Why use contextual targeting?

Context is more relevant than behaviour

Behavioural targeting hinges on personalising ads based on what users are reading, watching and doing online, but that does not mean they have intentions of purchasing anything or even engaging with it, hence behaviour is not always an accurate predictor of a user's needs. The IAS and Neuro-Insight conducted a study and found that 73% of people considered contextually relevant ads more appealing. What's more compelling about the study is it revealed that matched ads generate higher memorability - specifically across the detail and global memory neuro metrics - compared to unmatched ads. This means that users are more likely to remember the call to action and the general theme of the ad.

Insights like these show that in most cases, users would rather see ads that add value to what they are viewing on the webpage. The study also shows that contextual ad placements have a larger impact on the user than unmatched ads as we subconsciously retain more information when ads are contextually relevant.

Non-invasive or “creepy”

While the ability to retarget adverts can be seen as beneficial, 54% of people still feel intimidated by the level of accuracy. This feeling of intimidation comes from the freedom brands and advertisers have in using personal data, while on the other end, users are in the dark about where and how their personal data is being used.

The Digital Consumer Trends Index 2021, from Cheetah Digital conducted a study on internet users who feel that it is creepy vs. cool for brands/retailers to interact with them; 66% of people found that advertisements that follow a user across multiple devices are “creepy”. Six out of the eight questions that were used in the survey saw a higher percentage of people choose “creepy’ over “cool”. This goes to show that more personalisation does not always translate well with the user and can deter people from interacting with the ads.

Contextual targeting removes the “creepiness” from its ads as it does not need user data to personalise and increase relevance, rather it only needs the webpage content to align the user with the ads they are seeing.

Ability to manage brand reputation

Contextual targeting allows advertisers to manage a brand's reputation. The webpages where the ads are placed are carefully selected to meet client requirements, ensuring that they exclude subjects deemed inappropriate or undesirable. In SmartMatch, this is achieved through two methods: using specific keywords or phrases, or selecting topics from a predefined list.

More cost-effective than behavioural advertising

The Drum identified that contextual advertising on iOS is 53% cheaper because advertisers don’t have as much competition when it comes to buying no-ID traffic.

Gum Gum and Dentsu Aegis Network conducted an extensive study over a six month period with four different brands participating to identify whether behavioural or contextual targeting is more efficient. They allocated 1 million impressions between behavioural and contextual ad lines and compared them against each other. Brands also provided descriptions of their intended audience and contextually relevant categories for the campaigns.

The results found contextual advertising more cost-effective than behavioural targeting in cost-per-click (CPC); cost-per-viewable impression (vCPM); and the cost associated with reaching the intended demographic of the brand (eCPM). The key takeaways were as follows:

• The CPC was 48% lower than behavioural targeting
• The cost-per-viewable impression was 41% lower than behaviorally targeted ads
• The contextual eCPMs were 36% lower than behavioural eCPMs

Privacy first approach

The key advantage of contextual advertising is that it does not rely on third-party data.

In July 2024, Google announced that instead of fully deprecating third-party cookies, it will introduce a one-time prompt allowing users to set preferences across Google’s browsing experiences. This empowers users to decide whether their personal data can be used online.

This shift will likely push the advertising landscape towards more privacy-focused, contextually relevant strategies. As users opt to limit third-party data usage, advertisers will increasingly turn to other methods such as contextual advertising, aligning with privacy-centric trends and fostering sustainable practices.

Consumers are beginning to reclaim their privacy from the tech and advertising industries. Third-party cookies have long been a major concern for data security, but with these new limitations, users will have greater control over their information as companies move away from third-party data strategies.

Such a transition presents a significant challenge for marketers, who will find it difficult to create scalable campaigns with limited data. Consequently, contextual advertising has become increasingly vital, with contextual AI emerging as a future-proof, transparent, and consumer-first solution, in turn pushing Smartology to the forefront of this transition.

Read more on Contextual Advertsing:

Contextual Advertising Unveiled: Understanding The Basics
How SmartMatch™ Utilises Contextual Advertising