The Resurgence of Contextual Advertising is Here and Now


Mark Bembridge, CEO, Smartology, 

Ever since the mid-nineties when Netscape launched an early version of its Mosaic browser incorporating the first ‘cookies’, tracking user behaviour online to the benefit of online advertisers has been a key principle by which digital channels have sought to argue their efficacy over TV, OOH and audio in terms of targeting.  

After all, how could anyone argue that TV ads or city billboards were seen by the key target audiences of brands looking to convert new customers when digital advertising unlocked ‘one to one marketing’ based on its granular understanding of audience and behaviour. The resurgence of Contextual advertising stalled and became the less favoured option.

Quality of data itself has become a lesser important detail

In the rush to ‘target’ behaviour and overlay demographic targeting, the quality of the data itself became a lesser important detail. No campaign was the same without it. But as brands started to explore the effectiveness of results in return for their ‘added value’, a different picture emerged.  

A 2018 study by Lotame found only 1 in 5 marketers were very confident in the accuracy of demographic data they purchased and only 1 in 7 said their audience buys had been very successful. Yet only two thirds of those surveyed even considered the quality of the data before running campaigns. By 2019 Adexchanger was reporting, ‘The accuracy of third-party data is overrated, and we have passed the point of diminishing returns on further modelling.’ 

Worse still when Carbon’s data science team analysed consented URL strings from large players in the space, 10–50 percent proved to be from sites with sensitive data, including child-oriented content, health, well-being related content and more. In the words of Professor Byron Sharp, ‘Targeting is something that marketers learn at school in their textbooks, that “thou shalt target”, and so it hasn’t been questioned. The lure of precision targeting has been massively oversold. The value of targeting small segments is far less than we would ever have thought.’  

The Financial Times reported in March this year, ‘according to an internal Facebook memo included in a recently unsealed court filing, an unnamed product manager wrote in 2016 that “more than half the time we’re showing ads to someone other than the advertisers’ intended audience”. 

P&G, until recently the world’s largest advertiser by spend, slashed its online marketing budget by $350M between 2017-18 after analysing measurement. After a 58% drop in media spend during 2020 due to Covid, Airbnb announced in March, that it still generates 95% of the same online traffic as a year earlier and will ditch performance marketing in favour of brand marketing.  

During the Covid crisis and beyond

During the global Covid crisis and beyond, marketing has an opportunity to pull back and refocus on brand advertising. Budgets are naturally returning to basecamp with a simpler mission of keeping brands front of mind. This realignment also plays into the new climate of privacy first and a move away from precision consumer targeting to broader reach.  

For marketing as a whole this is a healthy and timely shift. This does not mean that technology is taking a back seat. But how that technology is harnessed within marketing will continue to undergo real change.  

The resurgence of contextual targeting

Next generation advertising and the resurgence of contextual advertising and its targeting can speak to users in the moment they are interested in a topic without inferring from past behaviour collected via user data. When combined with branded content, it links short term high impact brand value to longer term brand association. 

Story telling combines the best of creativity, core to advertising success and brand awareness. Enhancing repetition of a brand via quality stories amplified when and where they count, is already proving engagement rates far higher than traditional audience and behavioural targeting techniques. And rather than relying on questionable data from third -parties, contextual advertising strengthens top of the funnel brand awareness with genuinely engaged users. 

Context has always existed, but the resurgence of contextual advertising is timely given the move away from precision targeting alongside industry privacy challenges. At Smartology, we have always maintained that contextual innovation has a major part to play in reshaping the sector for the better to the benefit of brands, agencies, publishers and the wider public.


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