Is Contextual Advertising the Answer to the Death of the Cookie?

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The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.

One of the major challenges to overcome in advertising is targeting — reaching the intended audience with the right ads and at the right time. When online ads stepped into the scene with a goal to replace traditional methods of advertising such as newspapers and magazine ads, they attracted an overwhelming attention from businesses, possibly since they promised to leverage the growing internet user base to reach a wider audience.

But before ads started appearing on web pages or search engines, it all began as “spam email advertisement,” created by Gary Thuerk, a marketing manager working for Digital Equipment Corporation (DEC). Gary might have annoyed people with his lengthy email invitation to a DEC product presentation, but his idea evolved into what is now called email marketing.

Email marketing — though the name sounds better than Thuerk’s idea — hasn't fully dropped its prefix, spam. Commercial emails can be irritating to consumers and if the messages aren’t sent to the right people, they might just end up being deleted or unsubscribed. The sender also has to make sure they comply with privacy and security rules and that they are only sent to the people who have given them permission. To solve this problem and the one above, a modern way of online advertising was developed, contextual advertising.

What Is Contextual Advertising?

Contextual advertising is a form of targeted advertising where ads displayed on a webpage are related to the content that is being viewed. Advertisers accomplish this goal through the use of an automated system. The system scans the texts inside a webpage and displays ads based on specific keywords. For instance, if a user is on a knitting blog, they will get ads on knitting needles and anything to do with knitting, and when they are on a dog website, the ads displayed will be dog-related such as dog food and dog toys.

If the user doesn’t click on the ad within a specific time, the ad is replaced by another related to the content being viewed. Search engines such as Google also use contextual advertising to show adverts based on what the user searches. For example, if a user’s query is about shoes, the ads display may include websites that sell shoes.

Some of the big names using contextual advertising are Google, a subsidiary of Alphabet Inc. GOOGL, Bing, owned by Microsoft Corp. MSFT, Twitter Inc. TWTR, Mobiquity Technologies Inc. MOBQ, Infolinks and Yahoo! Native.

Contextual advertising has an edge over other methods of advertising:

• Since ads are paid only when clicked and not for being displayed, they are cost effective.
• Ads reach a wider, targeted audience, which may boost sales.
• The method provides a way to know which ads are bringing in revenue.

The Race Between Cookie Ads vs. Contextual Advertising

Cookie advertising is another form of target advertising that is designed to gather information from a user's device and use it to display advertisements. The information is gathered by third-party cookies that monitor what the user is browsing and store the information on their device by a web browser.

Cookie advertising has come under heavy scrutiny over the years from the public, which has become uncomfortable with the way data companies obtain data from web browsers. The life of cookie advertising could be hanging in the balance especially after Apple Inc. AAPL announced that its Safari browser will fully block third-party cookies. Called Safari`s Intelligence Tracking Prevention, the feature allows users to fully block cookies and prevent advertisers from eavesdropping on their data.

According to Ana Milicevic, co-founder and principal consultant at Sparrow Advisers, the solution to Apple`s move is contextual advertising. “I hope that publishers are shifting to contextual advertising to lessen the ability to target users behaviorally in the browser,” she said.

Dean Julia, co-founder and CEO at Mobiquity Technologies, agrees with Ana that contextual advertising is the answer for publishers. “Contextual advertising targeting is done on the open web, so it levels the playing field and puts more power in the publisher's hands," he said.

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.