Contextual advertising: how to effectively use the power of context for your business

Contextual advertising is the future of online advertising. When a business owner needs to rank high in search results, they can use one of two methods to promote their company. You may use contextual advertising or precisely and effectively optimize the site for consumer requests (SEO).

Contextual advertising: the future of online advertising

Targeting is the foundation of the contextual advertising system

With its assistance, you can narrow down the network's general audience to just the target audience based on the predetermined criteria, including geolocation, demographic indicators, and many other factors. You can use them separately or in combination. The more precisely you place constraints, the more economically you will use the budget.

There are two types of contextual advertising: search advertising and media advertising. The first appears in search results, while the second does so on numerous websites.

Google uses Google Ads to display advertisements.

Search advertising

Search advertising appears in the first few lines of the section titled "Advertising." The system aims to return the most pertinent links once the user types in a search term.

The system takes into consideration numerous factors, including bids, click-through rates, keyphrases, and ratings. The auction's mechanism, in which the overall ad rating "competes," determines the winner. The highest offer doesn't always appear in the opening line of the advertisement; this depends on all indicators taken together.

Media advertising

Media advertising appears on partner sites in banner format. Users' past searches and websites visited affect the advertisements they view.

Programmatic advertising

You may purchase ads automatically using programmatic advertising, as it also operates on an auction approach. Programmatic advertising is quite similar to contextual advertising. It covers a wider range of websites and has a larger audience, which is better for the target format.
Programmatic advertising will choose specific ads for a visitor in real time. In other words, as soon as a person accesses the website, the platform receives information about them for the purpose of creating ads. As a consequence, the visitor will see the most relevant ad with the highest bid.

Difference between programmatic and contextual search

The main difference between programmatic and contextual search is that the latter works with the help of keywords. The user enters a phrase, for example, "buy cryptocurrency," and in the search engine, he sees the ads most suitable for this phrase. In the future, they will see display ads with offers to acquire cryptocurrencies thanks to retargeting on third-party websites and platforms.

Programmatic does not work like this: it does not care about the request itself. It determines in advance that a person is interested in cryptocurrency and shows them an appropriate ad. As a result, programmatic generates demand. If the user takes action on the ad, then the same retargeting or media advertising comes into play.

Cost of contextual advertising

The cost of contextual advertising primarily depends on the chosen payment model.

The most common payment model is pay-per-click (PPC) or cost-per-click (CPC). The business owner will only pay for advertising when a user clicks on it and goes to the website.

Two more models are less commonly used:

• Payment per impression: the number of ad impressions results in a financial debit, and it does not matter whether a person clicked on it.
• Payment per conversion: the system only receives payment after a user complets the intended action (registration on the site, subscription, adding goods to the cart, etc.). Further, the cost of the ad will depend on the set cost per click, impression, or action; these, in turn, depend on the niche and level of competition.

The system will show ads based on the principle of an auction: the higher your score, the more likely it is to appear on the first page or receive site impressions.

The pricing system of contextual advertising

You can set the maximum bid yourself and change it at any time. The system will spend only this amount. You can determine the right price using self-service analytics, or you can use a bid simulator or a keyword planner. The system can also set an automatic maximum bid.

Bid adjustments are usually needed on a case-by-case basis. For example, if you want to increase the share of ad impressions on smartphones.

Set adjustments for users in specific cities or regions, for display at specific times, and for many other indicators. By changing the bid correctly, you make the ad as targeted as possible.

Setting up an advertising strategy and negotiating rates involve experts with experience and a strong portfolio (cases) to save money. But even experienced professionals resort to the help of contextual advertising management platforms that automate many complex mechanisms: Origami, Alytics, and eLama.

Post a task on Insolvo to get professional help with an advertising campaign. Also, see our article on content management systems.