Contextual Advertising

While writing our blog about Google’s announcement of their 3rd party cookie phase out the term contextual advertising came up as a possible solution. We found this topic worth digging into a little. Contextual ads are placed on web pages based on the content of those pages. For example, if you’re reading an article on Yosemite an ad for hiking boots may pop up. This keeps the user’s data privacy in tact while still getting the right information in front of the right audience. Contextual advertising relies on the relevance of its keywords, topics, and images so it’s important that the agency be very clear on these things.  It also doesn’t need 3rd party cookies that are required to collect data for behavioral advertising. Some numbers even suggest that “45% of publishing executives saw no significant benefit of behavioral ads versus contextual and 23% said that behavioral ads actually caused a 23% decline in revenue” (Forbes). It seems that this type of adverting may even be more cost efficient according to a study done by AdAge. This just validates that there are good reasons to shift to this type of ad space as privacy laws get stricter in the coming years.

Personalized Advertising

We all know the eerie ad that pops up while scrolling through the gram based on a conversation you just had with a friend. This is what is called a personalized advertisement. Companies are investing a lot in this type of advertising now but should they be? Personalized advertising works by using online user data to target users with relevant advertising based on their searches, purchasing history, and now even face recognition to determine the users age, race, gender, etc. Let’s face it, we know that our phones are listening to every conversation that we have. That is definitely some Big Brother stuff. So, what do the numbers say about these types of ads? Well, “companies that use advanced personalization see returns of $20 per 1 cent!” according to a statistic on Startup Bonsai. Therefore, from an advertising standpoint it does have great ROI. However, people do find it creepy when they see a retargeting ad on social sites for items that they have browsed, 35% to be exact (Startup Bonsai). And according to Pew Research, “68% of people view online targeted advertising negatively; they’re averse to targeted ads because they don’t like having their online behavior tracked and analyzed.” BUT, in that same breath, people do want their consumer experience to be somewhat personal and actually, “60% of Millennials said that they would not hesitate from sharing personal information to suit their personal interests” (RRD). It seems to be more of an issue of having their personal information taken without consent in order to tailor their consumer ad experience. Let’s look to Netflix as an example. Users have the option to thumbs up or down the shows that they watch in order to receive a more personalized recommendation to their likes and dislikes. Consumers like this feature because it is of their own accord. That being said, Google has a strict policy regarding personalized advertisements that restricts the use of sensitive interests, clinical trial recruitment, gambling, and more. What is the solution here then? We honestly don’t know but personalized ads do seem to have more ROI than non-targeted advertisements. Although people don’t seem to love the idea of their data being taken and analyzed, they do prefer a more personalized approach when it comes to brand advertising. Seems that some middle ground should be determined in order to please consumers and advertisers alike. We may not know what that looks like just yet but hope to see some compromises in the coming years surrounding privacy.